- Annual results to be in line with market forecast
- Vanquis Bank achieves strong growth
- Home Credit Business customer numbers drop
- Restructuring of CCD division progresses
UK lender Provident Financial expects to report 2013 results in line with market expectations, according to a trading update on Wednesday.
Annual profit before tax and exceptional costs for 2013 is tipped to come in at £197m, based on the average of forecasts published by 13 equity research analysts.
The group said its Vanquis Bank subsidiary continued to generate strong growth and margins through the fourth quarter of the year.
UK customers rose 22.2% year-on-year to 1.09m and average receivables growth for the year was about 37%, on the back of high demand.
The customer acquisition programme generated bookings of 411,000 for 2013, up from 375,000 in 2012, notwithstanding a modest increase in marketing activity by competitors.
"The combination of a benign UK employment market together with the consistent application of tight underwriting criteria has meant that delinquency levels have remained stable at record lows for the business and, as a result, the annualised risk-adjusted margin of around 34% as at September 2013 was maintained through the final quarter," Provident said.
Provident's Consumer Credit Division (CCD) saw customer numbers fall 17.3% on the year in the Home Credit Business and year-end receivables edge 15% lower as consumers remained cautious and demand for credit was weak.
Trading conditions for the Home Credit business remained challenging in the fourth quarter with low customer confidence and continued pressure on disposable incomes from rising food and utility prices.
However, the group made progress in its plans to reposition the CCD division over the next two years by focusing on returns within the core Home Credit business.
The group is working to broaden the customer and product proposition through the roll-out of its new loan programme Satsuma.
Cost reduction measures taken in July 2013 successfully delivered second-half savings of about £10m.
In December the company also completed actions to deliver further planned cost savings in 2014, including axing jobs by 340.
An exceptional cost of approximately £13m in 2013 will be incurred for the restructuring of CCD, including redundancy costs associated with 520 individuals who left the business last year.
"The group's funding position remains strong," the company added. "Headroom on the group's committed debt facilities at December 31st 2013 amounted to approximately £235m which, together with the retail deposit programme at Vanquis Bank, is sufficient to fund maturities and projected growth until the seasonal peak in 2016."