Fundamental Insights About Provident Financial Group PLC (PFG)

  • Feb 26, 2019 GMT
  • Team Kalkine
Fundamental Insights About Provident Financial Group PLC (PFG)


Provident Financial plc was founded in the year 1880 and is headquartered in Bradford, the United Kingdom. The company mainly provides credit products which includes home credit and credit cards to those consumers who are not well served by mainstream lenders. The group operates in the United Kingdom and Ireland, is roughly serving about 2.5 million customers with total employee strength of about 4,949 workforces. Business operations consist of Consumer Credit Division (CCD), Vanquis Bank and Moneybarn. The company trades on the London Stock Exchange and a part of FTSE 250 Index. 

Key Management Team

  • Patrick Snowball, Chairman
  • Malcolm Le May, Chief Executive Officer

Financial Results and Review - 1H FY2018 (£, million)

(Source: Half Yearly Report, Company Website)


Financial Commentary – H1 FY2018

  • The company’s reported revenue of £572.5 million for the half year ending June 2018 as compared to £619.4 million in 2017 for the same period. There was a decrease of 7.6 per cent in revenue of the company due to a decline in revenue from consumer credit division mainly because of a reduction in average receivables.
  • The company’s reported administrative and operating costs had also increased marginally in comparison with the last year mainly due to the incorporation of marketing and acquisition cost as a result of reclassification. Administrative and Operating costs had been raised from £269.7 million in H1 FY2017 to £270.6 million in H1 FY2018.
  • The company’s profit before tax was decreased to £34.6 million in H1 FY2018 as compared to £90.0 million in H1 FY2017.
  • The company’s exceptional costs in the first half of FY2018 amounted to £36.6 million due to expenses related to the implementation of the home credit recovery plan and refinancing of the £250m senior bonds maturing in October 2019.
  • The company’s profit attributable to shareholders was £22.0 million in H1 FY2018 as compared to £67 million in H1 FY2017. There was a decrease of 67.2 per cent due to a decrease in revenue and increasing finance cost.


(Source: Thomson Reuters)

Ratios Commentary

  • EBITDA margin of 52.20 per cent for the first half of the financial year 2018 stood considerably higher than the industry median of 47.9 per cent.
  • Net margin reported was 3.80 per cent in the first half of the financial year 2018, reflecting a decrease of 7 per cent when compared with last year data.
  • Return on equity stood at 3.60 per cent which was lower than the industry median of 7.10 per cent.
  • On leverage front, the debt-equity ratio was significantly higher as compared to the industry median, reflecting the company is highly levered as compared to its peers.

Share Price Commentary


  • On 25th February 2019, Provident Financial Group PLC (PFG) shares closed at GBp 610.0, up by 3.50 per cent against its previous day closing price.
  • Stock’s 52 weeks High and Low is GBp 804.86/GBp 481.09. At the closing price, the share was trading 24.21 per cent lower than its 52w High and 26.80 per cent higher than its 52w low.
  • From the previous three months, Provident Financial Group PLC share price rose significantly by 1.87 per cent, and in the last one year, the stock has delivered 26.97 per cent returns.
  • Stock’s average traded volume for 5 days was 1,138,262.40; 30 days - 883,391.23 and 90 days - 645,906.28. The average traded volume for 5 days was up by 28.85 per cent as compared to 30 days average traded volume.
  • On the valuation front, the stock was trading at a trailing twelve months PE multiple of 12.6x as compared to the industry median of 9.4x.
  • The company’s stock beta was 0.36, reflecting relatively lower volatility as compared to the benchmark index.
  • Total outstanding market capitalisation was around £1.54 billion.

Growth Prospects and Risk Assessments

  • The company is planning to adopt a progressive dividend policy for FY 2019.
  • After completion of the refinancing of the senior bond, the group has a substantial capital and funding position.
  • Each of the company’s business operations enjoys a market-leading position.
  • The group continue to work on improving its core capabilities in underwriting, distribution and collections through greater collaboration.
  • The company had improved its digital capabilities with enhanced use of data and analytics.
  • The group may fail to implement a proper recovery plan in home credit.
  • The group might not be able to assess customer credit risk correctly.


While broad-based challenges can be seen ahead of the group, given the current trading levels which indicate the stock movement towards 52-week high with support coming from growth drivers like strong capital and funding position, the market can keep a watch on Provident Financial Group PLC stock going ahead. Also, growth prospects look strong as the company is planning to restore nominal dividends for FY2018 and adoption of progressive dividend policy for FY 2019.


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