Providence pays off

The corporate video for Provident Financial, the firm he founded 123 years ago, features more images from Central Europe than his home city of Bradford.

But no doubt the Victorian philanthropist would have been impressed by how the business he established to provide affordable credit for Bradford's working-class households in the 1880s has become one of the UK's leading companies.

Since floating in 1962, it has witnessed stunning growth.

And its latest results demonstrate the significance of its success in international markets, with those now accounting for almost half of Provident's customer base.

When Mr Waddilove died in 1920, Provident had already grown into a substantial business, boasting 5,000 agents, 115 branches and a 400-strong head office.

So no doubt he would have been impressed by what the company has achieved since then.

Today the business' core activities remain basically the same as back in 1880. Provident's 12,500 agents visit customers door-to-door lending small sums of money, usually around £100, which are then paid back to the agents in small weekly repayments.

Where the money was once borrowed by Victorian working-class families to pay for much-needed food or clothes, today's loans tend to help people through expensive periods such as Christmas or the school holidays, or towards financing one-off purchases.

The business, along with its motor insurance division which focuses on low risk cover mainly for women drivers, helped Provident Financial reach an annual turnover of £875 million in 2002.

In March, it entered the FTSE 100 of Britain's leading public companies. And Sheffield-born Robin Ashton, who joined the firm from an accountancy giant in 1983, is the man charged with keeping it there.

Mr Ashton, who was educated at Bradford Grammar School and Durham University, took over as chief executive in September 2001.

He admitted that the market for credit was now more competitive than ever.

But Mr Ashton said Provident Financial's niche market for small sums of cash lending remained a vital source of finance for thousands of families with more modest levels of income.

"I think the key is that we offer small sums of credit and affordable repayments," he said. "Today most of our customers in the UK have a bank account and 30 per cent of them have credit cards. They tend to use the money for small purchases, maybe around Christmas or the holidays, but they might use a bank finance company to fund larger purchases."

Provident Financial enjoyed rapid growth during the 1990s with profits soaring from around £13 million to £150 million. It now employs around 450 staff at its Bradford HQ.

Mr Ashton said the growth had been achieved by simplifying the business and focusing on its cash personal loan offering.

But, in recent years, the UK home credit division stabilised, and instead Provident has looked overseas for its big profit growth.

The move into Central Europe was launched in 1995 with a pilot project in Poland led by current UK home credit division managing director Steve Ford, pictured. It was fully rolled out two years later.

The company hoped to secure 2,000 customers in its first two years in the country, but within three years there were 260,000 on the books, and the total overseas customer base now tops 1.1 million.

Whereas the UK business has built up gradually and largely by word of mouth, Provident has relied heavily on advertising to get its message across overseas. The result is that the firm is now the second best-known financial brand in Poland, and has offices in 212 towns across the country.

"It has wildly exceeded all of our expectations," beamed Mr Ashton. "It has been an interesting challenge for the people involved over there but we have been able to recruit good quality people and they have been able to build the business very successfully."

He said the key to success in the former Communist bloc was due to Provident's personal service, lack of bureaucracy and the fact that no guarantor is required for its loans. Almost all other lenders in those markets require a friend or relative to provide a guarantee.

"We have never had more than ten ex-patriots in one of our Central European markets at any one time, and we always have local nationals on the management boards. They are very capable and the business has built up substantially.

"We are going to grow our international home credit business over the next five years, and much of our profit growth will come from our Central European centres." It seems the Provident way, established back in the 19th Century is winning new friends in these new market economies. And Mr Ashton believes it is a successful recipe which can be repeated elsewhere.

"The way we do business is well liked over there and a lot of people still like to talk to a person rather than a voice on the end of a telephone," he said. "I think that is important everywhere, in England, in Central Europe and in Mexico."

The Mexican market is Provident's next target. The firm is about to launch a pilot project in the city of Puebla.

Mr Ashton said the firm was confident it would achieve the kind of results seen in Central Europe in Mexico, rather than the problems experienced in South Africa.

The company had to pull out of that country following its launch in 1998 after suffering from an unusually high level of fraud.

"We have targeted Mexico because it is a large market with a population of 100 million people and it is not well-served by existing banks. Hopefully, by 2005, we will have built up enough customers to know how well it is going to work over there."

Closer to home, Provident, with its roots in the age of Victorian philanthropy, is keen to stress it hasn't sacrificed its community commitment in the search to increased turnover and profit. It even produces an annual corporate responsibility report and has a director committed to the issue.

The firm is actively involved in projects such as Bradford Cares, where teams of staff take part in community projects such as clean-ups and gardening at schools.

"We operate in local communities and, for a long time, we have been putting something back into those communities through local initiatives," said Mr Ashton.

"It is something that we have got to do and be seen to be doing. But, of course, we are also a plc and we have to balance those two things.

"The key is to get people involved. It is easy for big business to write out a cheque, but it is the time and the effort as much as the size of the cheque which really counts."

It is surely a sentiment Joshua Waddilove himself would have approved of.