Interim results for the six months ended 30 June 2014
Provident Financial plc is the market-leading provider of credit cards to non-standard consumers in the UK and the market-leading provider of home credit in the UK and Ireland. The group serves 2.5 million customers and its operations consist of Vanquis Bank and the Consumer Credit Division (CCD).
Group performance supports further dividend increase
- First half pre-tax profit before exceptional restructuring cost up 23.0% to £94.1m1 (2013: £76.5m).
- Adjusted earnings per share up 24.6% to 54.2p1 (2013: 43.5p).
- Interim dividend per share up 10.0% to 34.1p (2013: 31.0p).
Robust funding and liquidity position
- Group fully funded until the seasonal peak in 2017.
- Gearing reduced to 2.9 times (2013: 3.1 times).
Strong growth and returns in Vanquis Bank
- UK pre-tax profit up by 36.1% to £68.3m (2013: £50.2m) and Polish start-up loss of £4.6m (2013: £3.6m).
- UK customer and average receivables growth of 17.3% and 32.4% respectively from addressing the under-served, non-standard credit card market.
- UK risk-adjusted margin2 of 33.6% (2013: 34.4%), well ahead of minimum target of 30% with arrears at record lows.
- Development of Polish pilot operation showing encouraging momentum.
Repositioning of CCD progressing well
- Pre-tax profit up 2.5% to £37.0m1 (2013: £36.1m).
- Significant improvement in credit quality and collections from tighter underwriting and standardised arrears processes with annualised impairment to revenue ratio reducing from 38.7% to 35.2% in the first half.
- Annualised risk-adjusted margin2 of 62.9% at June 2014, up from 58.9% at December 2013.
- Deployment of technology to support step change in agent and branch productivity and reinforce compliance progressing ahead of schedule, resulting in a further proposed headcount reduction of 225, delivering savings in a full year of £4.0m at a one-off cost of £4.0m.
- Build-out of Satsuma’s online instalment lending capability progressing well.
Key financial results
|H1 2014||H1 2013||Change|
|Profit before tax and exceptional costs1||£94.1m||£76.5m||23.0%|
|Profit before tax||£90.1m||£72.0m||25.1%|
|Adjusted earnings per share1||54.2p||43.5p||24.6%|
|Basic earnings per share||51.8p||41.0p||26.3%|
|Interim dividend per share||34.1p||31.0p||10.0%|
Peter Crook, Chief Executive, commented:
“Vanquis Bank has delivered further strong growth through developing its presence in the under-served, non-standard credit card market with first-half UK profits up 36.1%. The positive momentum from evolving the marketing and distribution of the credit proposition in the Polish pilot operation is also encouraging.
CCD continues to make excellent progress in repositioning the home credit business as a leaner, better quality business focused on returns rather than growth, whilst the build-out of the capability to support the rapid development of the Satsuma online instalment lending business will be completed by the end of the year.
In the light of this strong trading performance, I am pleased to announce a 10.0% increase in the interim dividend which is also fully supported by adjusted earnings per share growth of 24.6%, strong capital generation and an extremely robust funding and liquidity position.
Credit quality in both businesses is very good and provides the foundation for delivering good quality growth for 2014 as a whole. ”
|David Stevenson, Provident Financial||020 7404 5959||01274 351351|
|Nick Cosgrove/Simone Selzer, Brunswick||020 7404 5959||020 7404 5959|
|Gary Thompson, Provident Financial
|020 7404 5959||01274 351351|
- 2014 first half profit before tax is stated before an exceptional restructuring cost of £4.0m in respect of CCD (2013: £4.5m).
- Revenue less impairment as a percentage of average receivables for the 12 months ended 30 June.