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Provident Financial Pretax Profit Rises 12% on Vanquis Bank

Feb. 26 (Bloomberg) -- Provident Financial Plc, the U.K.’s biggest subprime lender, said full-year pretax profit rose 12 percent on growth in its Vanquis credit-card division.

Net income climbed to 148 million pounds ($224 million) in 2012 from 119.8 million pounds a year earlier, the Bradford, England-based company said today in a statement. Pretax profit before a one-time gain increased 12 percent to 181.1 million pounds, matching the 181 million-pound average estimate of eight analysts, according to data compiled by Bloomberg.

“Our performance is underpinned by the strength of our funding position and lending responsibly through very close attention to credit quality,” Chief Executive Officer Peter Crook said in the statement. The group is “in a position to make further good progress in 2013.”

Provident is focusing on expanding its credit-card unit Vanquis, which caters for customers who have been turned away by main-street banks as higher food and energy costs weigh on its doorstep lending business. The lender, which is testing the market for subprime credit cards in Poland, typically has a 39.9 percent annual charge for its cards.

Pretax profit at Vanquis in the U.K. rose 61 percent to 71.3 million pounds. The firm expects to make a decision on whether to proceed in Poland by the middle of the year, Crook said in a telephone interview.

Pretax profit in the consumer-credit division fell 2 percent to 125.1 million pounds as customers struggling with rising expenses pared back borrowing.

“It’s a tough environment for that business as people on low incomes are suffering from higher household bills, which has tended to both dampen demand for credit and make us slightly more cautious in terms of how much we’re willing to lend,” Crook said.

Shares in Provident fell 1.7 percent to 1,498 pence per share at 8:45 a.m. in London trading, giving the company a market value of 2.1 billion pounds.

To contact the reporters on this story: Liam Vaughan in London at lvaughan6@bloomberg.net; 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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