Vanquis takes the credit with rise in customers

The Bradford-based firm, which recently entered the FTSE 100 blue chip index replacing Morrisons, is seeing strong demand from people who need credit cards but have been turned down by mainstream banks because their credit history isn’t good enough. Provident said all ​of its ​businesses traded well through the final quarter of the year and the company is expecting to report 2015 results in line with market expecta- tions.​

Its home collection credit operation is expected to report annual profits marginally ahead of 2014.

Sales benefited from an improvement in credit quality along with modest improvements in demand and customer confidence.

Provident’s chief executive Peter Crook said: “I am pleased to tell you that the group is expected to report 2015 results in line with market expecta- tions.​ ​

“All our businesses have traded well through the final quarter of the year and our funding position remains strong.”

The group said that its vehicle lending division Moneybarn reported strong new business volumes, up 69 per cent on the previous year.

At the end of December customer numbers rose to 31,000, up from 22,000 the previous year, and receivables were close to £220m, up from £151.7m, showing year on year growth of 45 per cent.

Analysts at Killik & Co said in a note: “Vanquis Bank continued to deliver strong growth and good margins in the fourth quarter of the year.

“The customer acquisition programme generated record bookings for 2015, resulting in a 9.9 per cent increase in UK customer numbers and producing average receivables growth for the year of approximately 19.0 per cent.”

Analyst Justin Bates at Liberum said Provident’s share price premium has been justified in recent years due to the extremely successful development of Vanquis Bank.

“However, we have been concerned by the aggressive growth of this division and now detect what looks to be a more competitive environment, coupled with natural maturity that is likely to present growth challenges,” he warned.

“The share price is 11 per cent below the late November 2015 peak and we expect to see continued weakness given what we consider to be a more challenging outlook.”

He issued a sell recommendation on Provident’s shares.