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Investment costs reduce Provident Financial profit

UK-based personal finance firm Provident Financial revealed a 20% drop in profits for the first six months of 2006 compared to the same period last year due to increased investment in its startup businesses.

Group profits declined from GBP83 million in the first half 2005 to GBP66 million this time around, with investment in startup businesses doubling to just over GBP19 million. The company spent GBP10.7 million on improving its Vanquis Bank credit card business, and almost GBP6 million on its startup businesses in Mexico and Romania.

Provident said that it expects its Vanquis Bank venture to acquire over a quarter of a million customers before the end of the year, and to become profitable in 2007.

2006 is a year of significant investment to enhance the future growth of the group’s UK and international business. The group remains strongly cash and capital generative and the interim dividend has been increased by 3%, said Provident Financial chairman John van Kuffeler.

Provident Financial provides credit card, home credit and motor insurance to almost four million customers through the UK, Ireland, central Europe, and Mexico.