Provident Financial PLC Interim Management Statement (5086M)
October 14 2016 - 1:00AM
UK Regulatory
TIDMPFG
RNS Number : 5086M
Provident Financial PLC
14 October 2016
Provident Financial plc
Interim Management Statement
14 October 2016
Provident Financial plc, the leading UK non-standard lender,
makes the following Interim Management Statement today covering the
period from 1 July 2016 to 13 October 2016.
Group
The group has continued to perform well and produced a third
quarter profit performance in line with its internal plans.
Vanquis Bank
Vanquis Bank has delivered good growth and margins through the
third quarter of the year. New account bookings through the third
quarter were in line with the prior year, benefiting from increased
direct mail activity, and the credit line increase programme to
good quality established customers remains strong. As a result,
customer numbers and receivables at the end of September showed
year-on-year growth of 7% and 13% compared with 6.5% and 11.7% at
June.
Delinquency levels have remained favourable through the third
quarter of 2016, reflecting the sound quality of the receivables
book and the stable UK employment market, and the annualised
risk-adjusted margin remained above 32% to the end of
September.
Good progress continues to be made on developing the pipeline of
opportunities to augment the medium-term growth of the business.
These include extending the reach of the business through
partnerships with other lending institutions, brokers or providers
of retail finance. One important new relationship has been
established in recent weeks which is expected to deliver a good
flow of new business in 2017. Vanquis Bank is close to completing
the platform to support a wider loans proposition, which will also
support the development of guarantor lending through 2017.
CCD
Demand and customer confidence in home credit have remained
robust. As a result, CCD customer numbers ended the third quarter
at a similar level to June. The continued focus on serving good
quality existing customers has resulted in year-on-year receivables
growth of 5% at the end of September, up from 2.6% at June.
Collections performance and revenue yield both remain stable and
CCD's annualised risk-adjusted margin of around 81% is broadly
unchanged from June 2016. The sound quality of the receivables book
leaves the business well positioned for the important fourth
quarter trading period.
Satsuma has continued to make good progress during the third
quarter and its performance continues to benefit from the
significant tightening of credit standards implemented towards the
end of last year, the development of cost effective distribution
channels and ongoing improvements to the customer journey. Customer
login functionality has recently been implemented, a mobile app is
currently in testing prior to full roll-out and a monthly product
will be launched during the fourth quarter.
The credit quality of Satsuma's 2016 lending is developing
satisfactorily and the business is generating a strong flow of
further lending to established, good quality customers which is
fundamental to building business profitability. Satsuma's customer
numbers and receivables ended the seasonally quiet third quarter at
49,000 (June 2016: 48,000) and GBP14m (June 2016: GBP12.6m) and the
business is expected to make a small loss for the year as a
whole.
Moneybarn
Moneybarn has enjoyed a strong flow of new business volumes
during the third quarter of the year. Customer numbers and
receivables ended September at 39,000 (June 2016: 36,000) and
GBP286m (June 2016: GBP264.4m) respectively, representing
year-on-year growth of approximately 36%. The returns being
generated by the business are consistent with 2015.
Funding and capital
The group's funding and liquidity positions remain strong with
balance sheet gearing at the end of September of 2.1 times
(September 2015: 2.2 times) compared with a covenant limit of 5.0
times.
Headroom on the group's committed debt facilities at September
2016 amounted to GBP131m, which together with the retail deposits
programme at Vanquis Bank, is sufficient to fund maturities and
projected growth in the business until May 2018.
Regulation
The uncertainties and risks most relevant to the group's
performance continue to be in respect of UK regulation.
CCD continues to operate under an interim permission awaiting
full authorisation, consistent with the other sizeable firms
operating in the home credit market. CCD continues to have a
constructive dialogue with the FCA and the process is approaching
its conclusion.
In July 2016, the FCA published its final report following its
market-wide study of the UK credit card industry. The FCA and UK
credit card industry have agreed in principle to three
informational remedies which are not expected to have a significant
impact on Vanquis Bank. As part of its market-wide study, the FCA
is continuing its review of persistent debt and how the industry
applies credit limit increases to cardholder accounts.
Outlook
The group performed well through the third quarter of the year.
Credit quality in all three businesses is very sound and reinforces
confidence in delivering good results for 2016 as a whole.
Commenting on the group's performance, Peter Crook, Chief
Executive, said:
"I am pleased to report that the group has continued to perform
in line with its internal plans through the third quarter and is in
good shape to deliver further good quality growth as it enters the
important fourth quarter trading period."
Enquiries:
Media
David Stevenson, Provident Financial 01274 351900
Nick Cosgrove/Simone Selzer, Brunswick 0207 4045959
providentfinancial@brunswickgroup.com
Investor relations
Gary Thompson/Vicki Turner, Provident Financial 01274 351900
investors@providentfinancial.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTBLBDGXSBBGLX
(END) Dow Jones Newswires
October 14, 2016 02:00 ET (06:00 GMT)
Provident Financial (LSE:PFG)
Historical Stock Chart
From Apr 2024 to May 2024
Provident Financial (LSE:PFG)
Historical Stock Chart
From May 2023 to May 2024