Provident Financial ahead after cost cuts

SHARES IN Provident Financial leapt 15p to 524p after the consumer lending group announced a 21 per cent rise in pre-tax profits to pounds 12.8m for the six months to 30 June.

The market was clearly pleased with the results, achieved on turnover that rose 12 per cent to pounds 184m, but the shares later settled at 520p. Provident makes most of its money from short-term lending at interest rates of up to 100 per cent APR to 1.3 million customers, most of whom live in council houses. The repayments are collected weekly by an army of door-to-door agents.

John van Kuffeler, chief executive, said there had been a 7 per cent increase in loans, but most of the extra profits had been squeezed from cost reductions. The company closed 34 branches and cut 800 jobs.

The insurance division, which concentrates on motor business, made a pounds 1m profit. The banking division, which mainly provides car finance, made pounds 100,000, against a pounds 1.5m loss last year.

Analysts predict pounds 40-pounds 42m for the full year, against pounds 34m last time. The interim dividend rises to 9.25p (8.5p).