Provident gaining from credit crunch

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The Independent Online

Provident Financial, Britain's biggest doorstep lender, said yesterday that it had funding in place until 2010 and was gaining business as the credit crunch forced mainstream banks to tighten their lending.

The company said more than 350m of agreed loans from its funding banks meant it was not affected by the credit crunch. Unlike Northern Rock, which borrowed short-term funds to lend for long periods, Provident borrows for three or five years and lends small amounts, often for a few weeks. "We don't need to go back to our banks until 2010," Peter Crook, its chief executive, said.

Mr Crook said Provident was already gaining customers as banks tightened lending standards. Vanquis, its online credit card business, has seen a sharp increase in applications and home credit customers are growing more quickly than in the first half.

High street banks that moved into riskier lending during the credit boom are reining in their lending after the the sub-prime crisis blew up. This year, Barclays has sold most of its Monument unsecured lending book and HSBC has agreed to sell its Marbles credit card brand. Others may follow.

"If banks are not geared up to manage these sorts of assets, they may think about things a bit differently," Mr Crook said.

After tightening its own lending criteria, Provident is turning away about a third of customer applications for home credit and about 70 per cent at Vanquis. But the rate of customer growth in home credit still rose to 3.8 per cent in the second half of the year from 1 per cent in the first half.

"The group is very well funded and able to take full advantage of current market conditions at a time when an increasing number of consumers in the UK are having difficulty obtaining credit from high-street lenders," Mr Crook said.

In home credit, Provident's average loan is 323 with an annual percentage rate of 183 per cent. Vanquis says its typical interest rate is 39.9 per cent.