Our mission is to be the leading non-standard specialist lender in our chosen markets, acting responsibly in all our relationships and playing a positive role in the communities we serve.

At a glance

CHAIRMAN'S REVIEW

"2016 has been a year of significant change and progress in developing the Provident Financial Group."

Manjit Wolstenholme Chairman

CHIEF EXECUTIVE'S REVIEW

"We have delivered a strong financial performance and have made very good progress on a number of important operational developments which will shape the future of the group. "

Peter Crook Chief Executive

3,712
Number of employees
£155.6m
Total tax contribution
£3.1m
Community investment
2.4m
Number of customers

Group overview

Vanquis Bank Consumer Credit Division Satsuma Moneybarn
Non-standard credit cards Home credit Online lending Non-standard vehicle finance

Vanquis Est 2003

Vanquis Bank is the leading supplier of credit cards in the nonstandard credit market. We provide new customers with a low credit limit and only increase it when we have sufficient experience of the customer handling their account responsibly. We maintain a high level of contact with customers, from the initial call welcoming the customer to Vanquis Bank and continuing throughout our relationship.

Provident Est 1880

Provident offers home credit loans, typically of a few hundred pounds, to consumers on low incomes and tight budgets who require affordable credit to manage the household budget or one-off items of expenditure. Customers value the face-to-face relationship of home credit as well as the simple, flexible and transparent nature of the product with its fixed repayments and no extra charges, even if payments are missed.

Satsuma Est 2013 (Start up)

Satsuma is our online instalment loan product. We give new customers a small-sum, short-term loan and collect repayments by continuous payment authority either weekly or monthly, on a day agreed with the customer. Our UK-based call centre is always there to discuss any issues customers may have and just like our home credit product, the total amount repayable is fixed at the outset, so there are no extra charges.

Moneybarn Est 1992

Moneybarn is the market leader in the provision of vehicle finance for people in the non-standard credit market. Moneybarn is able to help those who may have had problems with credit in the past but who are now over them to get to work, take their children to school and live their lives.

1.5m
UK customers
1,516
Employees
0.8m
Customers
1,925
Employees
55,000
Customers
 
 
41,000
Customers
195
Employees
£204.5m
Adjusted profit before tax
£115.2m
Adjusted profit before tax
£100–£1,000
Loan range
£31.1m
Adjusted profit before tax
£250–£4,000
Range of credit limits
£100–£2,000
Loan range
 
 
£4,000–£25,000
Loan range

Note:

  1. Adjusted profit before tax is before exceptional items.

Notes:

  1. Adjusted profit before tax before exceptional costs.
  2. Represents CCD as a whole.

Note:

  1. Before exceptional items and prior to the amortisation of acquisition intangibles.

Customer stories

89%

Vanquis Bank customer satisfaction

Everybody deserves to celebrate

It’s about celebrating together for Laurence and Joanne

“When I was planning my wedding, I wanted a credit card so I could book things online and pay deposits and organise my big day. As I made regular repayments and was using the card sensibly, Vanquis increased my credit limit, which was handy for some of the larger purchases. I receive regular updates from Vanquis about when my payments are due and to review my bill, and they get the balance right so I feel like I’m being reminded in a friendly way without being harassed. I paid off my balance after the wedding and recently used my card again to celebrate my husband’s 50th birthday. I would not hesitate to recommend this card to anyone else.”

41,000

Number of Moneybarn customers

Shifting up a gear

Taking the pain out of Bob’s travelling

“I had been using my old car to travel to visit my family for a long time before I started to suffer with back problems. I realised I needed to get a newer car but could not afford to buy the car outright. Whilst visiting a car supermarket, I arranged finance for my car through Moneybarn. The broker managed to help me with the process which made it quick and easy. I found the repayments manageable and soon noticed an improvement in my health from driving my newer car. I would recommend Moneybarn to my friends.”

93%

Provident customer satisfaction

A satisfying feeling

A family Christmas is everything to Sadie and her sons

“I’ve been with Provident for years and I normally take a loan out once a year, for Christmas. I’m a full-time carer for my youngest son who has autism and speech difficulties. With the loan I can get some pressies for the boys and family, and food shopping. Christmas is so expensive and without the loan I would’ve had to have gone without and waited for the sales and I want my boys to be able to celebrate and have fun too.

My agent is a lovely lady and very friendly. If anyone I know needed a loan I would always say Provident first. I’ve never had cause for complaint, and they provide a nice friendly service and the payments are affordable.”

Financial highlights

Adjusted profit before tax 1 £m

£334.1m

+14.1%

bar
  • Adjusted profit before tax
2012
  • 178.4
2013
  • 196.1
2014
  • 234.4
2015
  • 292.9
2016
  • 334.1

Statutory profit before tax £m

£343.9m

+25.7%

bar
  • Statutory profit before tax
2012
  • 194.0
2013
  • 182.4
2014
  • 224.6
2015
  • 273.6
2016
  • 343.9

Adjusted basic earnings per share 1 p

177.5p

+9.2%

bar
  • Adjusted basic earnings per share
2012
  • 100.4
2013
  • 112.0
2014
  • 132.6
2015
  • 162.6
2016
  • 177.5

Basic earnings per share p

181.8p

+19.8%

bar
  • Basic earnings per share
2012
  • 108.9
2013
  • 104.2
2014
  • 126.5
2015
  • 151.8
2016
  • 181.8

Dividend per share p

134.6p

+12.1%

bar
  • Dividend per share
2012
  • 77.2
2013
  • 85.0
2014
  • 98.0
2015
  • 120.1
2016
  • 134.6

Dividend cover 1 times

1.32 times

bar
  • Dividend cover
2012
  • 1.30
2013
  • 1.32
2014
  • 1.35
2015
  • 1.35
2016
  • 1.32

Return on assets 2 %

15.3%

bar
  • Return on assets
2012
  • 14.5
2013
  • 14.2
2014
  • 15.1
2015
  • 16.1
2016
  • 15.3

Gearing times

2.3 times

bar
  • Gearing
2012
  • 3.2
2013
  • 3.0
2014
  • 2.4
2015
  • 2.2
2016
  • 2.3

Customer numbers m

2.448m

+2.0%

bar
  • Customer numbers
2012
  • 2.738
2013
  • 2.635
2014
  • 2.445
2015
  • 2.400
2016
  • 2.448

Community investment £m

£3.1m

bar
  • Community investment
2012
  • 1.9
2013
  • 2.0
2014
  • 2.4
2015
  • 3.1
2016
  • 3.1

Employee costs £m

£185.9m

+2.1%

bar
  • Employee costs
2012
  • 127.0
2013
  • 158.6
2014
  • 158.4
2015
  • 182.1
2016
  • 185.9

Total tax contribution 3 £m

£155.6m

+14.8%

bar
  • Total tax contribution
2012
  • 110.2
2013
  • 109.3
2014
  • 124.5
2015
  • 135.5
2016
  • 155.6
  1. Stated prior to the amortisation of acquisition intangibles and exceptional items.
  2. Adjusted profit before interest after tax as a percentage of average receivables.
  3. Comprises both direct and indirect tax contributions.

Business model

The group is successful in lending to customers whom others find it difficult to serve because of the way we manage the customer relationship and the solid foundations that we have built for our business.

  • 1: Secure longer-term, lower rate funding

    We borrow longer, at lower rates than we lend, from diverse wholesale and retail sources, always with at least a years’ headroom. We do this through strong relationships with our banks, deposit taking, a BBB credit rating and a FTSE 100 listing. We create value by allowing investors to participate in our markets indirectly and our businesses to meet customer demand throughout the cycle. Our funders enjoy a reliable source of good solid diversified income. Our customers enjoy affordable, sustainable, and responsible access to credit.

  • 2: Develop tailored products to meet customers’ needs

    We focus on the UK non-standard credit market, developing simple, transparent products with flexibility to help customers cope with life. Adapting to the needs of a specific target market, we generate high customer satisfaction and loyalty. We create value by covering the higher cost included in serving non-standard consumers with loans at affordable rates, enabling us to lend to those otherwise financially excluded. We have longer experience, and a wider range of specialised products than our competitors, better suiting the market diversity and dynamism. We continue to innovate to match consumer trends.

  • 3: Attract target customers

    We use many ways to reach non-standard consumers. We target our offers using mailing and increasingly digital methods, as well as face-to-face and partners such as brokers, agents and retailers. We create value for customers and third parties by responsibly offering credit to the otherwise excluded and enabling them to make purchases or deal with life on tight incomes. Consumers are able to shop in the modern world, get to work and deal with larger expenses. Partners earn commission, and retailers make more sales. Our longer experience makes us more effective than our competitors. Our ability to lend and commitment throughout the cycle has earnt us trust and loyalty of both intermediaries and customers.

  • 4: Assess affordability and credit worthiness

    We carefully assess applicant creditworthiness, along with affordability, suitability and sustainability. We use internal and external data, including face-to-face interactions, taking into account the current situation and the likely future. Our specialisation, experience, and bespoke approach allows us to create value by maximising approvals while maintaining sufficient returns. Customers get the credit they need more often, where responsible, and each assessment and outcome adds experience and knowledge, improving future decisions. We have been active in the non-standard market for longer than most, with a wider range of products at a larger scale helping us to maintain our advantage in assessing applications.

  • 5: Lend responsibly

    We tend to lend smaller amounts over shorter periods and take a ‘low and grow’ approach as customers demonstrate sustainability. Where a vehicle or guarantor is involved, we can lend more, longer and sooner. We create value by helping customers enter or re-enter the credit market, stay in control and build credit scores for greater future access and choice. Our customers are no longer financially excluded from modern life, now or in the future. Our focus and specialised experience makes us better at helping customers on this journey than our direct competitors, and able to lend where mainstream lenders cannot.

  • 6: Collect repayments due

    We offer many ways to pay in cash and remotely, maintaining high levels of frequent customer contact. We stay close to customers through call centre, digital communications and face-to-face meetings weekly in the home. We help our customers to stay on track and build better credit scores by adapting our methods to suit the realities of customers’ lives in an understanding way. Self-employed agents earn income from successful payments encouraging them to build skills and experience in dealing with customers. The scale of our high-tech contact centres and our experienced well-trained employees set us apart from our competitors, and our volumes help us to maintain our superior performance. We share these best in class collections capabilities across the group to help established and new businesses improve quicker and earlier.

  • 7: Manage arrears and customer difficulties

    We establish early contact and an ongoing dialogue with customers who have difficulties, with a sympathetic approach, trying to understand and offer forbearance. Our focus is on making a difficult situation easier to deal with by taking a personal approach to resolving inevitable problems. Our customers value this understanding highly, as it minimises their arrears, and damage to their credit score. It also maximises recoveries, and enables customers to qualify for further credit. Our far more rapid, intensive and personal approach sets us apart from mainstream lenders and our scale, experience and greater investment differentiates us from other specialists. We are able to share our arrears management capabilities across the group to help established and new businesses improve performance and customer satisfaction.

  • 8: Pay for funds and generate surplus capital to deploy

    We grow our high ROA, cash and capital generative businesses, under a funding model that pays 80% of earnings in dividends and retains 20% equity to combine with external funds at a low gearing to fund growth. We create shareholder value by delivering superior returns throughout the cycle and our strong capital base sustains our ability to grow and attract external funding. Investors and funders rely on good returns. Business units rely on funding being available, and customers rely on credit availability regardless of constraints elsewhere. We enjoy better capital generation and less reliance on external funding through the cycle, allowing us to plan longer term with confidence to take advantage of market opportunities.

Strategy

Our KPIs are helpful in assessing progress but are not exhaustive as management also takes account of a wide range of other measures in assessing underlying performance.

1 Growing high-return businesses in non-standard markets

2 Generating high shareholder returns

3 Maintaining a secure funding and capital structure

4 Acting responsibly and with integrity in all we do

Apply exacting standards in allocating capital to organic and acquisition opportunities to invest in businesses that:

  • Generate high returns in order to provide high returns to shareholders. High returns are available in the non-standard market to those companies with the right business model which focuses on delivering the best possible customer outcomes.
  • Are sustainable and maintain high levels of regulatory compliance at all times.
  • Have good growth potential to deliver future earnings and dividends growth.
  • Enjoy a strong market position, preferably a top-3 market position in each segment of the non-standard market in order to develop the market in a responsible manner.
  • Have good management and cultural fit.

Our focus for 2017

  • Maintain consistent underwriting standards.
  • Develop the digital agenda, including the launch of new apps in Vanquis Bank and Satsuma.
  • Improve the interaction between businesses and how best practice is shared, including the development of a group wide customer prospects database.
  • Deliver good customer outcomes.
  • Maintain a constructive dialogue with the regulator.
  • Maintain divisional ROAs above the group’s minimum threshold of 12%.
  • Generate sustainable growth in profits and dividends to deliver increasing shareholder returns.
  • Maintain a dividend cover of at least 1.25 times.

Our focus for 2017

  • Invest in Vanquis Bank growth and the proposed extension to the home credit operating model during 2017 to deliver strong payback from 2018 onwards.
  • Deliver further earnings per share and total shareholder return growth.
  • Maintain a minimum dividend cover of at least 1.25 times.
  • Maintain borrowing facilities which, together with Vanquis Bank’s retail deposits programme, meet contractual maturities and fund growth over at least the next 12 months.
  • Maintain a maximum gearing ratio of 3.5 times to ensure alignment with the minimum dividend cover target of 1.25 times and the group’s growth plans, whilst maintaining a comfortable surplus of regulatory capital over the capital requirements set by the Prudential Regulation Authority (PRA).
  • Continue to diversify the group’s sources of funding.

Our focus for 2017

  • Maintain capital and gearing at prudent levels.
  • Continue to manage the flow of retail deposits in Vanquis Bank to ensure an appropriate amount of headroom is maintained on the group’s committed facilities.
  • Review and consider additional funding options to support growth in Moneybarn and Satsuma.
  • Manage regulatory capital and liquidity in accordance with PRA regulations.
  • Operating our core business of lending to our customers in a responsible and sustainable manner, putting their needs at the heart of everything we do.
  • Acting responsibly and sustainably in all our stakeholder relationships in order to:
    • Create a working environment that is safe, inclusive and meritocratic;
    • Treat our suppliers fairly; and
    • Support our communities.

Our focus for 2017

  • Maintain or improve customer satisfaction levels in all businesses.
  • tax in the community through various community programmes, money advice programmes and social research.
  • Continue to place positive customer outcomes at the forefront of our product and service offering.

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