Provident 2010 Net Rises on Collections, Misses Estimates

Provident Financial Plc, the U.K.’s biggest subprime lender, said full-year profit rose 15 percent on higher revenue and collections from customers.

Net income climbed to 101.5 million pounds ($165 million) from 88.6 million pounds a year earlier, the Bradford, England- based company said in a statement today. That missed the 102.5 million-pound median estimate of 10 analysts surveyed by Bloomberg.

“We have been able to expand the flow of credit to consumers whilst continuing to lend responsibly,” Chief Executive Officer Peter Crook said in the statement.

Provident Financial, which typically charges 500 pounds for a 300-pound loan, has risen by nearly a third since Oct. 22 when Crook said the government’s record spending cuts on welfare would only have a “modest” impact on customers’ ability to repay loans. Hedge fund investors including Odey Asset Management LLP, BlackRock Inc. and Fortelus Capital Management LLP have disclosed short positions in Provident stock over the past three months.

The lender is the second-most short-sold stock in the FTSE 250 Index with 17 percent of the shares on loan, according to Data Explorers. Short sellers bet on falling prices by borrowing a stock and selling it in the hope of buying it back more cheaply later and returning it to its original owner.

Revenue climbed to 866.4 million pounds in 2010 from 815.6 million pounds a year earlier, Provident said.

The company had “sound collections performance with a strong performance in the final quarter,” it said in the statement.

To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net;

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