The reported credit crisis has proven to be more of a windfall for Provident Financial. The doorstop loan company reported an 11 per cent rise in pre tax profit for 2007.
More than 1.65 million borrowers have been turning to Britain’s largest doorstop lender as a result of the current credit turmoil. High street lenders have abandoned borrowers with poor credit histories, forcing them to take out unsecured loans
from Provident Financial.
Bradford based Provident’s home credit service offers short term cash loans of small amounts up to £500. Interest on Provident Loans
can be more than 100 per cent, and its national network of 11,600 agents collect repayments weekly, door to door.
Peter Crook, Provident’s chief executive, said that the company looks set to remain a dominant lender for 2008, "Current market conditions are favourable for us, as mainstream banks continue to tighten their lending criteria."
Provident call the majority of their borrowers, "non-standard", meaning those who are unable to get loans or credit cards due to a poor credit history or a county court judgement. Mr Crook continued to say that provident believe the number of "non-standard" borrowers has risen to about 10 million.
Provident also own newer credit card business Vanquis, that takes a more cautious approach to its lending, turning away over one in seven people who apply for a credit card. Mr Crook commented,
"That's because the firm is cautious about the economic environment in 2008 and not because it is seeing more people with worse credit situations applying."
Vanquis charges interest of around 39 per cent on its credit cards, and the business moved into profit during the second half of 2007 making their total losses for the year £900,000.
Provident financial is also piloting a new credit business, Real Personal Finance, which will offer larger loans than its home credit business, for longer periods of time. Designed for people who no longer require a weekly visit to ensure they meet their repayments, these loans will be collected by monthly direct debit.
© Fair Investment Company Ltd