High flying small loans specialist Provident Financial said its Vanquis Bank credit card division continued to trade ahead of expectations in the third quarter.

The bank, which offers credit cards with lower credit limits than are the norm in the sector, has continued to deliver strong growth and strong margins in the second half of 2012.

Heavy investment in the customer acquisition programme, particularly in direct mail, has seen Vanquis's customer numbers rise to 834,000 at the end of September, representing year-on-year growth of 26.6%. The business remains on-track to deliver new account bookings comfortably in excess of 300,000 for all of 2012 against unchanged underwriting standards.

The growth in customer numbers together with the credit line increase programme has supported average receivables growth of around 36% at September 30th, which is slightly higher than reported at the half year.

The group's traditional door-step lending arm division), meanwhile, has traded in line with last year's levels, as it is wary of underwriting business as the disposable income of its customers, who tend to be paid hourly and often work in part-time employment, remains under pressure from continued increases in food and utility bills.

The run-up to Christmas is the busiest time of the year for Provident's Consumer Credit Division and the group has been careful to maintain a sound debt repayment collections performance through the third quarter, which positions it with good credit quality as it enters the peak trading period.

Provident continues to focus on maintaining high credit quality in both businesses and tight credit criteria remain in place, the firm maintained.

"This approach is wholly appropriate during a period when consumers' real incomes are under further pressure from food and utility price inflation and there are risks surrounding the future direction of the labour market," the interim management statement said.

The group's balance sheet gearing at 2.8 times debt to equity at the end of September was comfortably within the covenant limit of 5.0.

Headroom on the group's committed debt facilities at the end of September amounted to £308m, which, together with the retail deposits programme at Vanquis Bank, is sufficient to fund maturities and projected growth in the business until May 2015.

"Credit quality is being reinforced by tight underwriting criteria and, as it enters its peak trading period, the group is on track to deliver good quality growth for 2012," claimed Peter Crook, Chief Executive of Provident Financial.

JH

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