Provident plays down effect of credit crisis

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The Independent Online

Provident Financial, the doorstep lender, and its former international business both shrugged off the liquidity squeeze yesterday, saying they had funding in place and could benefit from banks tightening their belts.

Provident said it had agreed bank lending of £1.4bn, enough to get through to the end of 2009.

"We are completely unaffected by the current credit crisis that is affecting some lenders," said Peter Crook, chief executive of Provident Financial.

The company turned down 50,000 new customers in the first half of the year after improving its risk controls, but said it could still gain from borrowers being turned down by banks. Banks are tightening their lending criteria amid the credit crunch, and Mr Crook said this would open up opportunities for Provident as customers look elsewhere for credit.

Mr Crook said Provident's customers will be relatively unaffected by the prospect of rising borrowing costs for mortgages because only about 20 per cent of them own homes. Provident uses long-term bank finance to make short-term loans averaging £330 to customers who cannot get credit from high-street banks.

The company's first-half pre-tax profit from continuing operations rose 19 per cent to £38.2m.

Provident split itself in two in July by demerging its international business, which trades as International Personal Finance.

Christopher Rodrigues, chairman of IPF, said the company had secured £51m of bank financing during the credit squeeze at the same rate as before the crisis started and that it had enough to fund itself for two-and-a half years.

IPF does doorstep lending in central European developing markets and is expanding in Mexico. The company is on the verge of getting a banking licence in Russia and is looking at forming a joint venture to set up in India.

Pre-tax profit for the first half rose 31 per cent to £15.9m. Mr Rodrigues said he was comfortable with market expectations that IPF would hit its target of £95m profit from central European operations by 2009 or 2010.

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