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Summary
- The customer spends at Vanquis Bank, a subsidiary of Provident Financial, rose nearly by 31 per cent in the July-September quarter
- The stock of Provident Financial gained as much as 4.37 per cent to hit a one-month high of GBX 243.60 on Wednesday
Shares of Provident Financial Plc (LON:PFG), Bradford-headquartered subprime lender, jumped more than 4 per cent in the mid-morning trades on Wednesday, 4 November 2020 after the company reported quarterly growth in the business. Provident Financial remains on-track to meet the market expectations for the present financial year ending 31 December 2020, the lender said in an exchange filing.
The stock of Provident Financial gained as much as 4.37 per cent to hit a one-month high of GBX 243.60 on Wednesday from the previous closing price of GBX 233.40. The stock of Provident Financial managed to sustain the morning gains after falling marginally from the day’s peak.
Provident Financial Plc (1-month performance)
(Source: Thomson Reuters)
Performance in Q3
The customer spends at Vanquis Bank, a subsidiary of Provident Financial, rose nearly by 31 per cent in the July-September quarter as compared to the previous quarter but are still 15 per cent lower as against the customer spends in the similar period of the last year. The “delinquency trends” at the bank were stable during the reporting period with a continuous drop in the payment holiday take-up, the lender said. The customer booking volumes with the bank in the reporting quarter were lower on a year-on-year basis.
The new business volumes at Moneybarn, the Hampshire-based vehicle credit arm of Provident Financial, has increased significantly during the July-September quarter as compared to the immediate previous quarter with the enterprise witnessing strong levels of demand for used vehicles across its markets. A vastly reduced payment holiday take-up trend was seen at Moneybarn with a take-up of approximately 1.5 per cent of customers at the end of September.
As far as the home credit is concerned, the collections performance stood strong in the quarter gone by with more than 80 per cent of the collections being done via remote methods. The collection performance has now been aligned to the pre-Covid levels, Provident Financial said.
The home credit encountered an anticipated increase in customer complaints, as seen across the sector, during the July-September period but are likely to remain within 2020 forecast levels. In the reporting quarter, the home credit lending to the existing pool of customers grew more than 70 per cent of the normalised third-quarter levels, whereas the lending to new customers stood at 60 per cent of the normalised levels.
Streamlining business
The home credit business is expected to save nearly £13 million in a year as the consultation to reduce the headcount within the enterprise has been completed. Provident Financial has closed the September quarter with a regulatory capital of £700 million equating to a headroom of £200 million above minimum regulatory requirements and a CET1 ratio of 36 per cent.
Provident Financial is continuously adapting to the modifications in the regulatory framework, the company said, adding, Vanquis Bank has responded to the Financial Conduct Authority's (FCA) paper on persistent debt and Moneybarn is working towards appropriating customer outcomes following FCA guidance post-Covid-19. The group has a total liquidity of approximately £1.1 billion at the end of September 2020.
