A little light.....16 Jan 2018 19:41
"As Vanquis is now in discussions with the FCA over the ROP product, "a large bridge looks like it will be crossed at some point relatively soon", said analysts at Canaccord Genuity, though home credit receivables and active customers were ahead of its estimates of �300m and 0.4-0.5m respectively.
"Combined with plans to right-size the business's centralised support functions, we would argue Home Credit's prospects are much improved. While the business may never return to its former glory, we believe it should start to accrete value to the wider investment case rather than detract from it. In addition, while Satsuma is set for another small loss in 2017, it remains progressive."
Broker Numis, which has forecast a potential �108m cost from the ROP probe, said trading update "showed clear signs of recovery within home credit with collection having improved to 78% from 57% in August and the loan book a little ahead of its forecast �341m.
The cost reduction plan is expect to help return the doorstep lending business to operating profit this year "with all the pain associated with the disconnected customers being fully provided for at the year end".
Home credit's rival Morses only has capacity to take a maximum of less than 3% of Provident's HCC business, Numis believes, predicting the business "can be turned around and very high returns restored even if the business is much smaller", noting that "scale and returns are not strongly linked".