Provident Financial plc is the leading non-standard lender in the UK. The group serves 2.4 million customers and its operations consist of Vanquis Bank, the Consumer Credit Division (CCD) comprising Provident, Satsuma and glo, and Moneybarn.

Strong group performance supports further dividend increase
First half adjusted profit before tax1 up 34.5% to £126.6m (2014: £94.1m) and adjusted earnings per share1 up 29.9% to 70.4p (2014: 54.2p).
First half statutory profit before tax up 23.3% to £111.1m (2014: £90.1m) and basic earnings per share up 19.3% to 61.8p (2014: 51.8p).
Return on assets2 strengthened to 15.6% (2014: 14.9%) due to the successful repositioning of the home credit business.
Interim dividend per share up 15.0% to 39.2p (2014: 34.1p).
Robust funding and liquidity position
Group fully funded until May 2018.
Gearing remains unchanged from December 2014 at 2.4 times.
Strong growth and returns in Vanquis Bank
UK profit before tax up 29.6% to £88.5m (2014: £68.3m).
Customer numbers and average receivables growth of 15.5% and 23.2% respectively, reflecting strong momentum from developing the under-served non-standard credit card market.
UK risk-adjusted margin3 of 33.3% (2014: 33.6%), ahead of minimum target of 30%, with arrears at record lows.
Sale of Polish receivables book agreed in April with completion in early August, resulting in residual loss of £1.8m (2014: loss of £4.6m).
Successful repositioning of CCD
First half adjusted profit before tax1 up 2.7% to £38.0m (2014: £37.0m).
Successful repositioning of the home credit business as a smaller but leaner, better-quality business focused on returns:
Year on year customer numbers reduced by 19.2%, with over half attributable to the sale of low value delinquent balances to third party debt purchasers;
Period-end receivables reduced by 18.0% due to tighter credit standards and shortened duration of the book; and
Annualised risk-adjusted margin3 increased to 78.2% (2014: 62.9%) due to significant improvement in credit quality.
Investment in Satsuma stepped-up to support the development of the substantial market opportunity.
Sharp uplift in new business at Moneybarn
Adjusted profit before tax1 of £9.4m in first half of 2015, ahead of internal plans, and 38.2% higher than pro forma4 2014 first half profits.
Significant year on year growth in new business volumes of 88%, reflecting access to the group’s funding.
Stable default rates and unchanged risk-adjusted margin of 24.6% (2014: 24.5%).
2015    H1
2014    Change
Adjusted profit before tax1    £126.6m    £94.1m    34.50%
Statutory profit before tax    £111.1m    £90.1m    23.30%
Adjusted earnings per share1    70.4p    54.2p    29.90%
Basic earnings per share    61.8p    51.8p    19.30%
Annualised return on assets2    15.60%    14.90%    -
Interim dividend per share    39.2p    34.1p    15.00%
Peter Crook, Chief Executive, commented:

“Vanquis Bank has further developed its presence in the under-served, non-standard credit card market and delivered first half UK profits growth of 29.6%.

CCD has delivered increased first half profits, reflecting the successful repositioning of the home credit business as a leaner, better-quality business focused on returns rather than growth. This result is after stepping up the investment in the Satsuma online instalment lending business which is developing rapidly and represents a substantial market opportunity.

The progress of the Moneybarn acquisition is very encouraging with growth in new business volumes and profits running ahead of our internal plans.

In view of this strong trading performance, I am pleased to announce a 15.0% increase in the interim dividend which is fully supported by adjusted earnings per share growth of 29.9%, strong capital generation and an extremely robust funding position.

Credit quality in all three businesses is very good and provides the foundation for delivering good quality growth for 2015 as a whole.”

Enquiries:    Today    Thereafter

David Stevenson, Provident Financial    020 7404 5959    01274 351900
Nick Cosgrove/Simone Selzer, Brunswick    020 7404 5959    020 7404 5959

Investor Relations

Gary Thompson, Provident Financial    020 7404 5959    01274 351900

Adjusted profit before tax is stated before: (i) £3.7m of amortisation in respect of acquisition intangibles established as part of the acquisition of Moneybarn in August 2014 (2014: £nil); and (ii) exceptional costs of £11.8m in respect of business restructuring in CCD (2014: £4.0m).
Adjusted profit before interest after tax as a percentage of average receivables for the 12 months ended 30 June.
Revenue less impairment as a percentage of average receivables for the 12 months ended 30 June.
Adjusted to restate the pre-acquisition funding rate of 10% to the group’s lower marginal cost of funding of 5%.