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RNS Number : 1475E
Provident Financial PLC
04 November 2020
Provident Financial plc
Third Quarter Trading Update
4 November, 2020
Provident Financial plc ('the Group') is the leading provider of
credit products to consumers who are underserved by mainstream
lenders. Today's statement covers the Group's trading from July to
the end of September.
Malcom Le May, Chief Executive Officer, commented:
"The Group continued to trade in-line with internal plans during
the third quarter and remains on-track to meet market expectations
for 2020.
Our capital and liquidity are a source of competitive advantage
and we remain vigilant for possible economic shocks, including
those caused by further local and national lockdowns. Such measures
will inevitably have an impact on customer expenditure patterns and
loan origination. As I have expressed previously, I am immensely
proud of how the Group has responded to the challenges of the
Covid-19 pandemic and supported the financial needs of our
customers throughout. The innovations each of our businesses
introduced, and the collective effort of my colleagues across the
Group, leaves us in a strong position operationally but
considerable uncertainty remains."
Highlights
-- The Group continued to trade in-line with management's
expectations during the third quarter and remains on-track to meet
market expectations for its financial year to December 2020.
-- At the end of September, the Group's balance sheet position
remained robust. Regulatory capital of c.GBP700m equates to
headroom of c.GBP200m above minimum regulatory requirements and a
CET1 ratio of c.36%. Total liquidity at the end of September was
c.GBP1.1bn. Headroom on committed facilities at the Group was
c.GBP180m and c.GBP700m at Vanquis Bank.
-- Vanquis Bank delinquency trends were stable during the
quarter and payment holiday take-up continued to reduce to less
than 1% of customers at the end of September. As expected, customer
booking volumes for the quarter were lower year-on-year, in-line
with the tighter underwriting standards enacted earlier in the
year. Customer spend increased by c.31% on the previous quarter but
remains c.15% lower year-on-year, in-line with trends seen across
the credit card market.
-- Moneybarn continues to see strong levels of demand for used
vehicles across its markets and new business volumes during the
period increased significantly on the previous quarter. Payment
holiday take-up at the end of September was c.1.5% of customers
with a vastly reduced take-up trend.
-- In Home Credit, collections performance remained strong and
has now aligned to pre-Covid levels, with the proportion of
collections being done via remote methods being over 80%.
Home Credit lending to existing customers was over 70% of
normalised third quarter levels and new customer lending was c.60%
of normalised levels, reflecting the impact of tighter lending
criteria. The consultation to reduce headcount within the home
credit business is complete and will result in annualised cost
savings of c.GBP13m with exceptional costs to achieve of c.GBP2m in
2020. As seen across the sector, home credit experienced an
anticipated increase in customer complaints during the period,
which are expected to remain within 2020 forecast levels.
-- The Group continues to adapt to a changing regulatory
environment. Vanquis Bank has responded to the Financial Conduct
Authority's (FCA) paper on persistent debt and Moneybarn is working
towards appropriate customer outcomes following FCA guidance
post-Covid-19. CCD is working with all stakeholders following the
FCA's review of relending practices in the high-cost credit market
and following heightened customer complaints activity, in common
with the sub-prime sector. The Group will continue to engage with
its customers, and provide support where necessary, following the
recently announced six month extension to payment holidays by the
FCA.
Malcom Le May, Chief Executive Officer, continued:
"Turning now to the performance of the Group during the quarter,
delinquency trends across the businesses were stable and the
take-up of payment holidays continued to be lower than our initial
expectations. New business volumes increased during the period and,
importantly, we are well positioned for the traditionally busier
fourth quarter.
In the context of the trends seen in the sub-prime market,
including the impact of Covid-19, the FCA's industry-wide relending
practices review and heightened customer complaint activity across
the sector, I have asked the new Managing Director of CCD, Hamish
Paton, to undertake an operational review of the division. This
will ensure that the business is best positioned, in the context of
these industry dynamics, to return to delivering long-term
sustainable profitability, whilst continuing to focus on good
customer outcomes.
Brexit has taken a back seat in many people's minds during the
Covid-19 pandemic. However, we continue to work on the structure of
the businesses within the Group and, as part of that, to ensure the
most efficient corporate structure for our Republic of Ireland
business post-Brexit.
Finally, I have resumed my position as CEO this week and I would
like to thank my colleagues across the Group for their hard work,
and kind messages of support, during my absence. In particular, I
would like to thank Patrick Snowball, our Chairman, for kindly
agreeing to take the reins and ensuring the continuous support for
our customers. We are working towards our financial and operational
objectives, as well as helping to put our customers on a path to a
better everyday life. I look forward to updating the market on our
progress in due course, which will come in the form of our
preliminary results next year."
Enquiries:
Analysts and shareholders:
Owen Jones, Head of Investor Relations 07341 007842
Owen.jones@providentfinancial.com
Media:
Richard King, Provident Financial 07919 866876
Nick Cosgrove/Simone Selzer, Brunswick 0207 4045959
providentfinancial@brunswickgroup.com
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END
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