While there has been deafening noise around the lapsed Provident Financial (PFG) bid, the fundamental outlook for NSF is unchanged. It still has the market-leading network in unsecured branch-based lending and is number two in guarantor loans, both growing strongly. It is number three in home credit. The direct costs of the bid were ca.5% of NSF’s market capitalisation and we estimate a further disruption/ extra finance effect of 2%-3%. This may be compared with a share price fall of 28%. Delivery of consensus earnings and franchise growth expectations will be the key to restoring management credibility and reducing the discount to the peer group.
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