Provident thrives amid crisis
SUB-PRIME lender Provident Financial reported a 3.5 per cent rise in half-year profit and predicted ongoing growth yesterday, despite the effects of the recession.
Pre-tax profit in the first six months of the year reached £53.1m, up from £51.3m in the same period last year.
Provident, which lends to borrowers who cannot secure credit from traditional banks, said it had tightened its lending criteria, while flat levels of bad debt and a good funding position had also helped the bank.
The Bradford-based lender said it expected the economic downturn to continue into next year but was nonetheless upbeat about its short-term prospects.
Chief executive Peter Crook said: “Despite the challenging environment, the group expects to deliver continuing quality growth for the full year.”
The bank has benefited from the woes of rivals occupying the same space, such as Cattles, which is labouring under the burden of increasing bad debts.
Bad debt charges were up slightly at £131.6m, or 31.2 per cent of revenue, compared to £121.2m, 30.4 per cent of revenue, a year earlier.
The company is shielded from the worst effects of unemployment by the fact that around half of its customers receive some sort of state benefit.
Crook added that the firm, which had anticipated higher unemployment, would not need to raise new funds for 18 months, because the company has £280m of untapped bank debt and £60m surplus capital.
Provident Financial’s lending syndicate of 19 banks is headed by Royal Bank of Scotland and Lloyds Banking Group.