Provident Financial PLC Trading Statement (2980U)
17 January 2017 - 6:00PM
UK Regulatory
TIDMPFG
RNS Number : 2980U
Provident Financial PLC
17 January 2017
Provident Financial plc
Trading update
17 January 2017
Provident Financial plc, the leading UK non-standard lender,
makes the following update on trading for the financial year ended
31 December 2016, ahead of its preliminary results for the year
which will be announced on 28 February 2017.
Group results
The group expects to report results for 2016 in line with market
expectations(*) , with each business meeting its internal
forecast.
Vanquis Bank
Vanquis Bank delivered fourth quarter new account bookings ahead
of the prior year as it continued to develop the distribution of
its expanded credit card proposition. Total new account bookings
for 2016 were 406,000 with momentum continuing to build during the
fourth quarter as a result of a range of new initiatives put in
place during the year. Customer numbers ended the year at
1,545,000, representing year-on-year growth of 9%. The growth in
customer numbers and credit line increases to established customers
combined to produce receivables growth for the year of
approximately 14%.
Underwriting criteria have remained unchanged. Delinquency
levels were stable through the fourth quarter having improved
modestly, and assisted financial performance, through the first
nine months of the year. Accordingly, the annualised risk-adjusted
margin for 2016 remained just above 32%, notwithstanding the
decline in the revenue yield previously communicated.
Consumer Credit Division (CCD)
Demand and customer confidence in the home credit business
through the seasonal peak were robust and, coupled with good credit
quality, supported sales some 3% up on the fourth quarter of 2015.
CCD customer numbers ended the year at a similar level to June
2016. The continued focus on serving good-quality customers has
resulted in year-on-year receivables growth of 7% and a moderation
in the revenue yield from an increase in average loan size and
duration.
Collections performance remained stable through the fourth
quarter of the year. The annualised risk-adjusted margin of around
78% is down from 81% at September 2016 reflecting the reduction in
the revenue yield and a stable delinquency performance compared
with the strong improvements seen in 2015.
Satsuma's success in establishing sound credit standards, cost
efficient product distribution, improvements to the customer
journey, together with the launch of a monthly product in late
November, have supported increased new business volumes and further
lending to established customers during the fourth quarter. The
current development trajectory of Satsuma is encouraging and
customer numbers and receivables ended the year at 55,000 and
GBP18m respectively, up from 49,000 and GBP14m at September 2016.
The start-up loss associated with Satsuma has reduced by
approximately GBP12m in 2016 as the business approaches break
even.
Moneybarn
The demand for second hand cars in the non-standard credit
market moderated during the seasonally quieter fourth quarter which
saw new business volumes increase by approximately 7%. Customer
numbers and receivables ended the year at 41,000 and GBP297m,
showing year-on-year growth of 32% and 35% respectively. The
returns being generated by the business remain unchanged.
Funding
The group's funding position remains strong. The headroom on the
group's committed debt facilities at 31 December 2016 amounted to
approximately GBP140m which, together with the retail deposit
programme at Vanquis Bank, is sufficient to fund maturities and
projected growth until May 2018.
Commenting on the final quarter of the year, Peter Crook, Chief
Executive, said:
"I am pleased to report that each of our businesses continued to
trade well through the final quarter of the year and the group is
expected to report 2016 results in line with market expectations(*)
."
* Market expectations in this announcement represent a consensus
2016 group profit before tax, amortisation of acquisition
intangibles and exceptional items of GBP333.9m based on the average
of forecasts published by 13 equity research analysts.
Enquiries:
Media
David Stevenson/Jade Byrne,
Provident Financial 01274 351900
Nick Cosgrove/Simone Selzer, 020 7404
Brunswick 5959
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
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