Provident Financial (LON:PFG) has updated investors on its first-quarter performance this morning.
Highlights from the company statement:
2017 is a year of significant investment within the Provident Financial group. Vanquis Bank is making very good progress in developing a range of initiatives to enhance its growth, as evidenced by a sustained uplift in new customer volumes since the third quarter of 2016. Within the Consumer Credit Division (CCD), the transition of the home credit business to a new operating model and the enhancement of Satsuma's digital capability is progressing in line with internal plans. Moneybarn continues to invest in its platform as well as developing its product offering and distribution, all of which are supporting strong growth.
Overall, the group's trading performance during the first quarter of 2017 has been consistent with the market consensus established following the group's Capital Markets Day in early April.
Vanquis Bank has experienced a strong flow of new account bookings in the first quarter of 2017, benefiting from the initiatives put in place in the second half of 2016 to expand credit card distribution, together with the launch of the Chrome branded card to address the nearer prime segment of the non-standard market. First quarter new account bookings of 122,000 were up 45% versus the relatively weak first quarter of 2016. As a result, Vanquis Bank delivered year-on-year customer and receivables growth of 12% and 14% respectively.
Delinquency levels have remained stable during the first quarter of the year, compared with the improving trend experienced through the first nine months of 2016. Accordingly, the annualised risk-adjusted margin has moderated from 32.2% at December 2016 to just under 32% at March 2017.
The Vanquis Bank loans proposition, which was launched in the second half of 2016, continues to make good progress. The focus remains on providing unsecured loans to existing credit card customers during the pilot phase with an open market proposition expected to be developed towards the end of the year.
Overall, Vanquis Bank has delivered first quarter profits in line with its internal plans and in line with last year. This is consistent with previous guidance and reflects the costs associated with the uplift in new account bookings, the anticipated moderation in the risk-adjusted margin and the investment in the programme of initiatives to augment the medium-term growth of the business, including loans and digital.
Vanquis Bank and Moneybarn have made a good start to the year, trading in line with internal plans and making excellent progress in delivering the initiatives to augment their medium-term growth. Within CCD, the transition of home credit's operating model and work to further enhance Satsuma's digital capability are progressing in line with plan. Overall, the group's trading performance during the first quarter of 2017 has been consistent with the market consensus established following the group's Capital Markets Day in early April.