Eastern Europe is calling to the home loan group Provident Financial as the king of council estate credit looks for new markets to peddle their old-fashioned wares.
The e-revolution and a change in the way people manage their money – as banks and credit card companies offer more loan services – has made life hard for the Yorkshire-based group.
More than 11,000 part-time agents still offer services door to door, with an average customer a hard-pressed mother in her mid-40s living on a council estate and looking for a loan under #200 to balance the family budget.
The chartered accountant- packed board – chairman John Van Kuffeler, deputy chief executive Robin Ashton and finance director John Harnett – last year opted for rapid expansion, but the strategy backfired with the group forced to set aside #72m to cover a surge in bad debt.
The group blamed an influx of inexperienced agents during expansion, and this year hired 150 managers to impose stricter controls.
In April, Van Kuffeler revealed at the company’s agm that customer numbers were growing at the rate of 4,000 a week.
The board this week will hope that interim results reflects an ease-up in bad debt and some growth in #155m annual pre-tax profits announced in February.
The group is also looking east to the former Soviet bloc for customers, where half a century of communism has created a thirsty if unsophisticated market for western financial services.
Chief executive Howard Bell said: ‘Because of communism, there is little competition and so people are more inclined to pay their debts as they know they can’t easily get a similar service elsewhere.’
Profits are expected in the Czech Republic by the end of the year, while Poland and Eastern Europe are due to go into profit in 2001. ‘We’re going to get one million customers within pretty short shrift,’ said Bell.
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