Provident Financial plc is the market-leading provider of home credit in the UK and Ireland, with a successful, growing credit card business. Its operations consist of the Consumer Credit Division (CCD) and Vanquis Bank.
Highlights
Strong group performance and dividend increase
Profit before tax and exceptional credit up 11.7% to £181.1m (2011: £162.1m).
Adjusted earnings per share up 13.8% to 102.0p (2011: 89.6p).
Customer numbers up 8.7% to 2.74m (2011: 2.52m) and average receivables up 12.1% to £1,322.1m (2011: £1,178.9m).
Total dividend per share up 11.9% to 77.2p (2011: 69.0p).
Capital generated of £107.7m, in excess of dividends in respect of 2012 of £104.3m.
Very robust group funding and liquidity position
Group fully funded into 2015.
Gearing stable at 3.2 times (2011: 3.2 times).
Stable CCD result
Pre-tax profit of £125.1m (2011: £127.5m).
Year-on-year receivables and customer numbers flat with credit issued tempered by pressure on household disposable incomes.
Trading result achieved through stable collections performance, continued application of tight credit standards and effective cost control.
Senior management strengthened to support growth initiatives.
Very strong, profitable growth in Vanquis Bank
UK pre-tax profit up by 61.3% to £71.3m (2011: £44.2m).
UK customer and average receivables growth of 30.1% and 37.4% respectively, reflecting step-up in customer acquisition programme targeted at under-served non-standard credit card market.
UK risk-adjusted margin of 34.8% (2011: 35.0%), well ahead of minimum target of 30% with arrears levels running at record lows.
Guidance for medium-term potential size of UK business increased to between 1.3 and 1.5 million customers due to higher penetration of target market (previously between 1.0 and 1.2 million).
Pilot credit card operation in Poland progressing to plan with cost of £3.3m in 2012 and conclusion expected by the half year.
Peter Crook, Chief Executive of Provident Financial, commented:
"I am very pleased to announce adjusted earnings per share growth of 13.8% in 2012 and an 11.9% increase in the dividend for the year which is fully supported by strong capital generation. We have now delivered cumulative earnings per share growth of 42.9% over the last three years.
Our performance is underpinned by the strength of our funding position and lending responsibly through very close attention to credit quality. This has allowed us to generate a stable stream of profits from CCD during a period when customers' household incomes have been under pressure. At the same time, we have continued to invest significantly in growing the customer base and profits from addressing the UK's under-served non-standard credit card market through Vanquis Bank.
We have also revised our assessment of the medium-term potential size of the Vanquis Bank business in the UK to between 1.3 and 1.5 million customers, representing an increase of some 30% on previous guidance.
CCD's collections performance has been sound through the first two months of the year and Vanquis Bank has continued to trade strongly, putting the group in a position to make further good progress in 2013."
