Vanquis Bank helps Provident Financial makes good start to year

Provident Financial said it had made a good start to the year with the profit performance of all businesses in line with or above internal plans for the first quarter driven by growth in its Vanquis credit card unit.

The company, which provides financial services to people with low credit ratings, said Vanquis Bank delivered year-on-year average receivables growth of 13% in the first quarter and profit growth modestly ahead of that supported by robust margins, operational gearing and lower funding costs, Provident said in a quarterly update.

Delinquency levels remained favourable through the first quarter of 2016, reflecting the sound quality of the receivables book and the stable UK employment market, Provident said.

“As a result, the annualised risk-adjusted margin at the end of March remains little changed from the run rate of 32.8% reported for 2015,” it added.

Vanquis' internet bookings remained strong whilst first quarter year-on-year direct mail bookings were lower because the spend on the 2016 programme is more heavily weighted towards the second half of the year in order to capitalise on a number of identified productivity gains.

In consumer credit, demand and customer confidence “continued to improve gradually and the focus on serving good-quality existing customers has resulted in a modest year-on-year improvement in sales during the first quarter of the year”.

As a result, receivables ended the first quarter 5% lower than March 2015, narrowing the 10% year-on-year reduction reported at December 2015. Customer numbers ended the first quarter at 850,000, some 5% lower than the start of the year which is consistent with the expected seasonal reduction, the company said.