Vanquis Bank helps Provident Financial makes good start to year

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.