Provident raises expectations too high

Doorstep lender Provident Financial saw underlying profit grow faster than the rise in receivables as it chose its customers carefully and kept a tight rein on costs.Revenue in the year to 31 December rose 6.2% to £866.4m from £815.6m in 2009, while profit before tax and exceptional costs improved to £144.5m, up 11.1% on 2009's £130.1m.The shares fell back, however, as the market had been expecting a better performance after the company said in mid-January that full-year results would come in slightly ahead of market expectations which, at the time of the January announcement, ranged from £136m to £146.5m for pre-tax profit.In the consumer credit division profit before tax edged up to £129.1m from £128.9m in 2009, with the company seeing a strong pick-up in the fourth quarter growth rate, as the company boosted sales to existing high quality customers.Vanquis Bank's profit before tax surged to £26.7m from £14.1m the year before, as the number of customers grew by just under 28% while average receivables grew by 25.1%."Both Home Credit and Vanquis Bank have made a good start to 2011. Combined with our strong funding and liquidity position, we are well placed to continue to deliver good quality growth through this year. When the UK economy begins to recover, we see an enhanced opportunity to build on our leading position in the UK non-standard consumer lending market," said Peter Crook, the chief executive of Provident Financial.For the group as a whole, customer numbers climbed 5.7% to 2.41m from 2.28m the year before, while average customer receivables - based on an average of month-end receivables throughout the year - rose 4.4% to £1,053.8m from £1,009.8m in 2009.Both the final dividend (38.1p) and the total dividend for the year (63.5p) are unchanged from last year.