Provident Financial sees rosy outlook as profits up

By Rhys Jones

LONDON (Reuters) - Subprime lender Provident Financial (PFG.L) is winning new customers as high-street banks curb lending to risky borrowers, helping it record a forecast-beating 34 percent rise in first-half profit.

Provident, which specialises in doorstep loans of under 500 pounds with weekly repayments, said it had benefited from mainstream lenders tightening criteria, cutting back on lending or withdrawing entirely from the market.

"Market conditions are favourable for us as people are finding it increasingly difficult to obtain credit from high street banks," Chief Executive Peter Cook told Reuters on Wednesday. "Many lenders also have liquidity issues and can't fund the growth they want."

The Bradford-based company said pretax profit from continuing operations rose to 51.3 million for the half-year to the end of June compared to 38.2 million in the same period last year. Citigroup's pretax forecast was for 49.1 million.

Shares in Provident Financial rose 4.8 percent to 859 pence by 0855 GMT, valuing the group at 1.12 billion pounds. The shares have dipped 4 percent this year -- well ahead of the FTSE General Financial Index which has lost more than a fifth of its value.

The group said inflationary pressures and the outlook for unemployment had made it more cautious about extending new credit to customers over the last year.

Despite this, customer numbers at its direct lending arm Home Credit grew 7 percent to 1.66 million and rose 29.4 percent to 374,000 in its Vanquis Bank credit card business.

IMPAIRMENT FALLS