Provident share price: Group posts rise in FY profit before tax

on Feb 28, 2017
Updated: Oct 21, 2019
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Provident Financial (LON:PFG) has updated investors on its full-year performance this morning.

**Highlights from the company statement:**
The group has reported a strong set of results with profit before tax, amortisation of acquisition intangibles and exceptional items up 14.1% to £334.1m (2015: £292.9m). This reflects strong growth in profits at Vanquis Bank and Moneybarn and an improved profit performance in CCD following a reduction in the start-up losses associated with Satsuma. Statutory profit before tax increased by 25.7% to £343.9m (2015: £273.6m). Adjusted basic earnings per share of 177.5p (2015: 162.6p) grew by 9.2%, a lower rate than adjusted pre-tax profits due to the impact of the 8% bank corporation tax surcharge on Vanquis Bank’s profits in excess of £25m which was effective from 1 January 2016. Basic earnings per share increased by 19.8% to 181.8p (2015: 151.8p).

Dividends

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The proposed final dividend per share has been increased by 13.0% to 91.4p (2015: 80.9p) which, together with the 10.2% increase in the interim dividend, represents a 12.1% increase in the total dividend per share to 134.6p (2015: 120.1p). Dividend cover for 2016, prior to the amortisation of acquisition intangibles and exceptional items, is 1.32 times (2015: 1.35 times) and is consistent with the group’s stated target of maintaining annual dividend cover of at least 1.25 times. The increase in the full-year dividend is supported by the group’s growth in earnings and strong capital generation.

Outlook

Vanquis Bank continues to deliver a strong financial performance. The momentum of new account bookings is excellent with a good pipeline of initiatives to further augment growth in 2017 and beyond. The performance of the recently launched unsecured loans pilot is encouraging and represents a significant opportunity within both the Vanquis Bank customer base and the wider market which is an under-served area of the non-standard market.

The repositioned Provident home credit business delivered a robust performance in 2016. The business is now actively pursuing its plans to secure significant financial benefits from migrating to a more effective and efficient field organisation structure during 2017 supported by the deployment of further technology. Satsuma has made good progress in developing the underwriting and marketing of its online instalment loan product and it is now on course to deliver profitable growth from the attractive market opportunity available to it.

Moneybarn has achieved another significant uplift in new business volumes, supported by access to the group’s funding lines and product development. This has reinforced its primacy across the broker network which, when combined with further product development opportunities, leaves the business in excellent shape to deliver strong growth.

The group’s funding and liquidity positions are strong, allowing it to meet contractual debt maturities and fund its internal growth plans through to October 2019.

The group has made a good start to 2017. Vanquis Bank and Moneybarn have continued to trade very well and the home credit business has produced a sound collections performance.
As of 07:10 GMT, Tuesday, 28 February, Provident Financial plc share price is 2,911.24p.

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