Provident Financial : Fitch credit rating

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Provident Financial PLC - PFG Fitch credit rating Released 17:14 10-Mar-2020

RNS Number : 6784F

Provident Financial PLC

10 March 2020

Provident Financial plc

Fitch credit rating

Fitch Ratings has today downgraded the group's credit rating from BBB- with a negative outlook to BB+ with a stable outlook. The downgrade results in an increase in the funding rate on the group's syndicated revolving bank facility and the group's senior bonds. This is expected to result in an increase in 2020 funding costs of approximately £3m, representing an annualised increase of approximately £4m per annum.

Simon Thomas, Chief Financial Officer, Provident Financial plc, commented:

'The downgrade to the group's credit rating by Fitch reflects the slower than anticipated recovery of the home credit business since the group was put on negative ratings watch in March 2018. However, in coming to this conclusion, Fitch acknowledged that they expected the gradual improvement in CCD to continue and that the group was better placed to withstand the ongoing elevated level of regulatory risk than its smaller or more concentrated peers. In addition, they continue to recognise the group's recovering profitability, its sound capital and liquidity positions and its franchise strength in the markets in which the group operates.

In line with previous guidance, we continue to expect that CCD will deliver a breakeven result in 2020, before taking account of the increase in the group's funding rate. In addition, we remain confident that the business is capable of delivering the group's target returns in the medium term, particularly given the ongoing market disruption from tougher regulation.

As we set out at our preliminary results announcement, we remain focused on diversifying and lowering the cost of the group's funding which was recently evidenced by the securitisation of Moneybarn's business flows. We do not believe that the downgrade will have a significant impact on the group's ability to secure new funding at competitive rates.'

Enquiries:
Media
Richard King, Provident Financial	0203 620 3073
Nick Cosgrove/Simone Selzer, Brunswick	020 7404 5959
Investor Relations
Gary Thompson/Vicki Turner, Provident Financial	01274 351900
[e-mail]

Notes to Editors

1. Provident Financial plc is a leading provider of credit products which provide financial inclusion for those consumers who are not well served by mainstream lenders. The group serves 2.3 million customers and its operations consist of Vanquis Bank, Moneybarn, and the Consumer Credit Division (CCD) comprising Provident home credit and Satsuma.

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Fitch credit rating - RNS