Provident Financial PLC Third quarter 2022 trading update (3250D)
October 19 2022 - 2:00AM
UK Regulatory
TIDMPFG
RNS Number : 3250D
Provident Financial PLC
19 October 2022
Provident Financial plc
Third quarter 2022 trading update
Provident Financial plc ('PFG' or 'the Group'), a leading
specialist banking group focused on customers in the underserved
near-prime and mid-cost parts of the credit market, publishes a
trading update covering the three months to the end of September
2022, unless otherwise stated.
Malcolm Le May, Chief Executive Officer, commented:
" I am pleased to report that the Group continued to perform
in-line with management's expectations throughout the third quarter
of 2022 and into October. Notwithstanding the macroeconomic
backdrop, the Group remains on track to meet market expectations
for the full year. This performance continues to reflect our move
to lower risk customers following the repositioning of the Group
over the last two years towards the mid-cost and near-prime parts
of the market.
The prevailing macroeconomic conditions during the period were
challenging, with the effects of high inflation and an increased
cost of living being experienced by everyone, but the Group's asset
quality remained high across all products. PFG's strong focus on
risk management, its rigorous underwriting processes and its
strategic repositioning, leaves it well placed to navigate market
conditions, whilst supporting our customers by providing them with
a valuable source of credit. Underpinning this is the Group's
strong balance sheet, which remains well-capitalised to support our
medium-term growth and diversification ambitions."
Highlights
-- The Group continued to perform in-line with management's
expectations during the third quarter of 2022 and into October and,
as a result, remains on track to meet market expectations for
FY'22.
-- The Group continues to see attractive opportunities for
growth, as demonstrated by its performance year to date, but will
balance these opportunities by continuing a prudent approach to
credit risk management given the prevailing macroeconomic
conditions. Indeed, during the third quarter of 2022, the Group
continued to experience a stable and consistent trend in the asset
quality in all of its products. As the macroeconomic environment
evolves, the Group will continue to assess its options to deploy
its capital for growth and sustainable returns.
-- The Group continues to focus on cost control and delivering
financial and customer experience benefits from the investment it
is making in its platforms and operations.
-- In the Group's credit card business, delinquency trends
remained stable and consistent with the experience seen in the year
to date. Customer spend trends for the period were stable and, in
aggregate, spend per active customer for the period was higher
versus the previous quarter. As a result, and together with the
prudent focus on underwriting and maintaining strong asset quality,
the receivables book grew by approximately 5% during the third
quarter. Furthermore, since September, Vanquis and thimbl.
customers have been able to add their credit card to their Google
Wallet, an important milestone for the credit card business and its
customers. The early results from this development are
encouraging.
-- The Group's vehicle finance business also continued to see an
improving arrears trend during the period and the arrears rate at
the end of September was lower year-on-year. In July, the vehicle
finance business signed a new agreement with a retail distribution
partner which has the potential to add meaningful new business
opportunities going forwards. At 30 September, receivables were
approximately 3% higher than H1'22.
-- The Group's personal loans business continues to establish
itself in the large and growing personal loans market. For the
first time, the personal loans business reported receivables of
over GBP50m at the end of September illustrating the strong
progress it has made to date. The personal loans business has added
new price points during the quarter and now offers loans of between
18 and 44.9 percent APR. During the remainder of H2'22, work will
continue to transition the Vanquis branded loans business on to the
new Gateway IT platform, which is a key enabler of expanding the
product and service offering to customers in the future.
Funding and balance sheet update
The Group's balance sheet position at the end of September
remained robust, with regulatory capital of c.GBP660m, a CET1 ratio
of 26.3% and a total capital ratio of 37.7% which includes the
Group's Tier 2 bond. Headroom on committed facilities and surplus
cash and liquid resources available to the non-bank Group amounted
to approximately GBP145m (GBP80m of which has been placed on
deposit with Vanquis Bank). Inclusive of the GBP80m deposit,
Vanquis Bank is holding approximately GBP240m of liquid resources
above Group Liquidity Coverage Ratio requirements and has ongoing
access to the retail deposits market.
In addition, the Group has submitted its latest Internal Capital
Adequacy Assessment Process (ICAAP) to the Prudential Regulation
Authority. This latest submission reflects the closure of our
Consumer Credit Division and PFG's strategic move towards the
near-prime, mid-cost parts of the market and towards lower risk
customers.
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
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