Provident Financial boosted by Vanquis Bank

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PROVIDENT Financial said its quarterly trading has been robust, driven by strong growth at its credit card business.

The Bradford-based firm said in an update its Vanquis Bank credit card unit grew customers by 12% and outstanding loans by 21% in the 15 weeks to October 15 compared with a year ago.

It said it was benefiting from the UK’s improving employment market and stable cost of living due to prolonged low inflation. Shares lifted by more than 5%.

The financial group, which offers credit to customers who struggle to borrow from mainstream players, said customer numbers at its doorstep lending business were cut by 15% to around one million over the last 12 months, as it sold delinquent accounts to third party debt collectors.

It added it also trimmed its doorstep lending business, which it calls its Consumer Credit Division (CCD), during this period with the introduction of tighter credit standards.

Since the financial crisis City watchdog the Financial Conduct Authority has pushed through stricter lending criteria among payday and sub-prime lenders.

The firm’s online lender Satsuma increased its customer base by almost 18% to 53,000 at the end of September compared with a year ago, and saw outstanding loans rise by 19% to £13.8 million.

Its recently acquired car finance outfit Moneybarn lifted customer numbers by 11.5% to 29,000 compared with a year ago, as outstanding loans jumped by 12% to £209 million.

The group added that Glo, its trial unit which makes larger loans of between £1,000 and £7,000 over one to five years, had successfully completed its test phase and would be rolled out nationally next year.

The group said it was confident of meeting its full-year targets.

Chief executive Peter Crook said: “Vanquis Bank continues to outperform and CCD and Moneybarn are both performing in line with internal plans.

“Credit quality in all three businesses is sound, which leaves the group in good shape to deliver further good quality growth as it enters the important fourth-quarter trading period.”

Shore Capital analyst Gary Greenwood said: “The key message to come out of Provident Financial’s third quarter trading update is that Vanquis UK continues to exceed expectations, with the Consumer Credit Division and Moneybarn broadly in line.”

Shore Capital lifted its annual pre-tax profit forecast for Provident Financial by 1% to £293.5 million.