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RNS Number : 2719Y
Provident Financial PLC
13 January 2022
Provident Financial plc
Fourth Quarter Trading Update
Provident Financial plc ('PFG' or 'the Group'), a leading
specialist bank with a focus on the financially underserved
operating in the mid-cost segment of the market, publishes a
trading update covering the three months to the end of December
2021, unless otherwise stated.
Highlights
-- The Group's trading performance for the fourth quarter of
2021 continued to track ahead of management expectations driven by
favourable macroeconomic conditions and demand for credit from
customers. As previously indicated, the Board intends to declare an
ordinary dividend of approximately 30% of adjusted ongoing earnings
(1) in respect of FY'21 and anticipates providing guidance for a
longer-term, progressive dividend policy with the FY'21
results.
-- The Consumer Credit Division was closed on schedule at the
end of December and in accordance with the previously announced
closure costs of GBP100m.
-- During the fourth quarter, and in-line with its product
strategy, PFG launched the pilot of its new personal loans
offering, Sunflower Loans, supported by a newly developed
cloud-based digital platform, which has the ability to share
customers across product groups. The Vanquis Bank open market loans
pilot has started encouragingly, demonstrating strong demand for a
loans product in its target customer demographic.
-- PFG has also announced today, following regulatory approval,
the next phase of its strategy to reinforce its position as a
leading specialist bank with a focus on the financially
underserved. With effect from today, PFG has restructured the Board
of Vanquis Bank to substantially align its membership with the
Board of PFG.
Malcolm Le May, Chief Executive Officer, commented:
"2021 was a strategically important year for PFG as we
successfully focussed the Group on becoming a leading specialist
bank with a focus on the financially underserved. The Board and I
look forward to 2022 with confidence, as reflected in the Board's
dividend policy guidance. I would like to thank all our
stakeholders without whom such important achievements would not
have been possible. PFG is well positioned to deliver attractive
and sustainable returns to shareholders built on a platform of
credit cards, vehicle finance and personal loans underpinned by a
strong balance sheet."
Fourth quarter trading
-- In the Group's credit card business, credit standards
remained tight and delinquency trends remain benign, consistent
with those outlined at the end of Q3'21. Overall, customer credit
card spend for Q4'21 was in-line with pre-pandemic levels, although
spend levels have been impacted by the spread of Omicron through
December and early January, in-line with the wider market. The
Vanquis Bank open market loans pilot has started encouragingly,
demonstrating strong demand for a loans product in its target
customer demographic.
-- The Group's vehicle finance business, under the leadership of
David Shrimpton (Managing Director), ended 2021 well with
year-on-year growth in its customer numbers, customer feedback
scores remaining positive and pricing of used vehicles at all-time
highs. Arrears trends remained stable during the fourth quarter
overall.
-- As a result of the improved trading conditions in H2'21, the
Board anticipates being able to release approximately GBP20m of
Covid-19 macroeconomic related provisions as it reappraises the
Group's coverage ratios.
-- The Group continued to be underpinned by a strong balance
sheet during Q4'21, which was further strengthened by a Tier 2
subordinated bond issuance in October 2021 for gross proceeds of
GBP200m.
-- The Group anticipates publishing its FY'21 results in early
April, with the previously announced Capital Markets Day to follow
during H1'22.
Product strategy
As part of the Group's strategy to offer relevant products to
its addressable market of approximately GBP16bn(2) in the UK, and
to diversify its product offering, PFG is establishing an unsecured
personal loan business under the leadership of Hamish Paton,
current Managing Director of CCD. This includes an open market
pilot for Vanquis Bank loans and the recently launched pilot for
the Sunflower Loans product. The distinct products are designed to
serve different customers with different risk profiles in the
mid-cost segment. Both are currently in pilot phase and will be
assessed at the end of the first quarter of 2022. PFG has invested
in a highly scalable, cloud-based digital infrastructure known as
'Gateway' to initially support the new Sunflower Loans product.
Gateway will also have the ability in the future to enable
customers to access all of their products from a single mobile app.
It will also enable PFG to configure and bring prospective products
to market rapidly.
Governance strategy
PFG announces the next phase of its strategy to reinforce its
position as a leading specialist bank with a focus on the
financially underserved. With effect from today, PFG has
restructured the Board of Vanquis Bank to substantially align its
membership with the Board of PFG. This is an important step in the
execution of the Group's specialist bank strategy, which includes
the wider use of retail deposit funding across the Group from
H2'22. PFG believes that streamlining the Boards of the two legal
entities in this way will create a simpler, more efficient Group
governance structure, whilst streamlining and enhancing both PFG
and Vanquis Bank's handling of corporate governance. Details of the
changes are set out in the separate announcement also released
today.
Enquiries:
Analysts and shareholders:
Owen Jones, Group Head of Investor
Relations, PFG 07341 007842
Owen.jones@providentfinancial.com
Media:
Richard King, Group Corporate Communications,
PFG
Richard.king@providentfinancial.com 07919 866876
Nick Cosgrove/Simone Selzer, Brunswick 0207 4045959
providentfinancial@brunswickgroup.com
Notes:
(1) Adjusted ongoing earnings is defined as profit after tax
before any losses incurred relating to CCD, amortisation of
acquisition intangibles and any exceptional items including one-off
provision releases.
(2) Based on PFG analysis of TransUnion data (debt outstanding)
as at December 2020 as set out in the PFG H1'21 presentation. The
GBP16bn addressable market comprises GBP4.6bn in Cards, GBP8.6bn in
Vehicle Finance and GBP2.9bn in Personal Loans.
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END
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