Provident thrives amid crisis

SUB-PRIME lender Provident Financial reported a 3.5 per cent rise in half-year profit and predicted ongoing growth yesterday, despite the effects of the recession.<br /><br />Pre-tax profit in the first six months of the year reached &pound;53.1m, up from &pound;51.3m in the same period last year.<br /><br />Provident, which lends to borrowers who cannot secure credit from traditional banks, said it had tightened its lending criteria, while flat levels of bad debt and a good funding position had also helped the bank.<br /><br />The Bradford-based lender said it expected the economic downturn to continue into next year but was nonetheless upbeat about its short-term prospects.<br /><br />Chief executive Peter Crook said: &ldquo;Despite the challenging environment, the group expects to deliver continuing quality growth for the full year.&rdquo;<br /><br />The bank has benefited from the woes of rivals occupying the same space, such as Cattles, which is labouring under the burden of increasing bad debts.<br /><br />Bad debt charges were up slightly at &pound;131.6m, or 31.2 per cent of revenue, compared to &pound;121.2m, 30.4 per cent of revenue, a year earlier.<br /><br />The company is shielded from the worst effects of unemployment by the fact that around half of its customers receive some sort of state benefit.<br /><br />Crook added that the firm, which had anticipated higher unemployment, would not need to raise new funds for 18 months, because the company has &pound;280m of untapped bank debt and &pound;60m surplus capital.<br /><br />Provident Financial&rsquo;s lending syndicate of 19 banks is headed by Royal Bank of Scotland and Lloyds Banking Group.