Provident Financial bounces back

Subprime lender Provident Financial said it was expecting a "good result" for the year, since its core credit division had managed to shrug off the effects of the economic slump and was still growing.

Provident Financial was founded in 1880 to provide small cash loans to people on low incomes. The company specialises in loans to people who typically borrow under £500 and pay it back in weekly instalments.

Many subprime lenders have been impacted by the aftermath of the credit crisis.

Cattles which is in the process of restructuring talks, said that its creditors should still brace themselves for heavy losses, while Sterling Green Group last month also reported a loss.

However, Provident Financial has managed to remain profitable, thanks partly to tight cost control.

According to Thomson Reuters Starmine, analysts on average expect Provident Financial to post 2010 earnings per share (EPS) of 77 pence – up from 67.5 pence last year.

The company said on Friday that trading for the nine months to the end of September was in line with its forecasts and that there had been a recent pick-up at its home credit business.

It added it expected the British government's plans to slash spending and cut jobs - part of a move to cut a record budget deficit - to have a "modest" impact on its customers.

"I am encouraged by recent business performance as we enter the peak trading period," Provident Financial chief executive Peter Crook said in a statement.

"We expect the direct impact of the government's spending review on the group's customer base to be modest but continued tight underwriting and close attention to margins and costs will remain in place over the coming months until there is evidence of a sustained economic recovery," added Crook.