* Vanquis Bank customer numbers up 13 pct
* CEO says company has put legacy issues behind it
* Update strengthens bid defence -analyst
* Home credit recovery where it should be- CEO (Adds CEO comments, updates shares)
By Noor Zainab Hussain
May 3 (Reuters) - Sub-prime lender Provident Financial reported an improving picture for its business on Friday, hoping to win over investors in what has become an increasingly bitter hostile bid from smaller rival Non-Standard Finance (NSF).
Provident, established in 1880 and based in the northern English city of Bradford, has been rebuilding after a botched restructuring of its home credit business led to profit warnings and the departure of its CEO in 2017.
Non-Standard Finance (NSF) has expressed “strong confidence” in its takeover bid, giving investors more time to accept its 1.3 billion pound ($1.69 billion) offer. Provident has rejected the offer and hit back at NSF accusations of mismanagement.
Provident tried and failed to reorganise a business that had traditionally relied on self-employed agents offering high-interest loans of up to 1,000 pounds ($1,302) and collecting repayments through weekly household visits.
The company said it had moved on from those legacy issues and reported higher customer numbers and volumes for its main businesses for the first three months of 2019.
“(The home credit business) is where we think it should be at this stage of its recovery,” Chief Executive Officer Malcolm Le May told Reuters.
“It is also encouraging to see how the business is fitting in as part of the group, but recognising that in the longer term it is just a part of the group,” he added.
New and returning UK home credit customer growth was up 27 percent as turnaround efforts continued, while the consumer credit division reported an adjusted pretax loss for 2018.
Shares in Provident, which swung to a pretax profit in 2018, were up 1.2 percent at 518.6 pence at 0917 GMT.
Provident said that customer numbers at Vanquis Bank were up 13 percent year on year. The increase is a welcome boost for a business that Provident has placed at the heart of its bid defence, saying it will focus on expanding the banking business.
“We want to grow, we want to grow responsibly and we want to focus on sustainable returns,” Le May said. “We have a bank, a major part of the group ... we’ll be looking to make more use of that,” he added.
Vanquis, headquartered in the heart of London’s historic financial district, accounts for more than half of Provident’s revenue.
“These points will also strengthen their defence arguments in the context of the NSF offer ... it will certainly convince some investors that management is running the business well,” Goodbody analyst John Cronin told Reuters.
The company also said it expects to record costs of 17 million pounds and 22 million pounds stemming from NSF’s unsolicited offer.
“We can weather those costs, although its not a nice bill to have to pay when you didn’t ask for it,” May said.
($1 = 0.7682 pounds)
Reporting by Noor Zainab Hussain in Bengaluru Editing by Saumyadeb Chakrabarty, Shounak Dasgupta, David Goodman and Kirsten Donovan