Provident Financial posts serious first-half improvement

Non-standard lender Provident Financial posted results for the six months to 30 June on Tuesday, with first-half adjusted profit before tax up 17.6% to £148.9m and adjusted earnings per share up 10.7% to 77.9p.

The FTSE 100 firm said first-half statutory profit before tax improved 48.9% to £165.4m, and basic earnings per share were up 39.2% to 86p.

Provident reported a stable annualised return on assets of 15.7%, up from 15.6% at the same time last year, after absorbing the impact of the 8% bank corporation tax surcharge on Vanquis Bank’s profits from 1 January this year.

The company’s board declared an interim dividend per share of 43.2p, an increase of 10.2%.

“I am pleased to report that all three businesses have delivered excellent performances through the first half of the year and contributed to the strong increase in adjusted profit before tax of 17.6%,” said Provident chief executive Peter Crook.

“The bank corporation tax surcharge introduced on 1 January 2016 moderated the growth in adjusted earnings per share to 10.7% and is also reflected in the interim dividend increase of 10.2%.”

Crook said credit quality in all three businesses remained “very sound”, and the group is fully funded through to May 2018 as a result of its funding capacity and strong liquidity position.

“This, together with the strong start to the second half, provides the foundation for delivering good quality growth for 2016 as a whole, continuing to deliver on the group's medium-term growth objectives as well as trading soundly through any slowdown that may emerge from the uncertainties currently present in the UK macroeconomic outlook,” Crook added.