Northern powerhouse Provident Financial (PFG) is top of UK 100 after posting a gleaming first set of numbers as a UK blue-chip. It’s a lender specialising in the higher risk end of the market – loans to those with poor credit scores – and the risk seems to have paid off. While a 22% rise in 2015 pre-tax profits is good news from whoever delivers it, it’s even better when management can disclose that the trend has continued into the new, highly challenging financial year 2016 with a ‘good start.’ Furthermore, shares in the Bradford-based lender are benefitting from a 23% increase in dividend which is tempting income seekers into the stock – and let me tell you, there are one or two income seekers around at the moment!

You see, many had forecast that 2016 would see income yielding shares outperform in what’s been a right choppy market, lad.
Such forecasts have been dealt a severe blow in the past few weeks as the UK’s mining and oil companies engage in some pretty serious cost saving measures. And while such measures are not necessarily anything new, the targeting of hitherto untouchable dividends is a signal the worst is not yet over. From the abandonment of dividend policies (‘they’ll either go up or stay the same, but they’ll never go down…’) to all-out scrapping, the outlook for the UK’s income investors has grown muddy. ‘Commodities’ looks like a growth-only investment arena these days.

Not so for companies that sit slightly to the left of the financials field, and while all good for Provident shares today, its focus on providing loans to those with a poor credit history does beg the question about how the future will pan out for Provident Financial. This is, after all, a higher risk activity where one is rewarded by greater returns. After doing an increasing volume of business while rates are at artificial lows, and with a generation now seeing an interest rate rise – or indeed anything other rates near zero – as an alien concept, what will happen when the BoE eventually starts to hike and normalise?

That is something that’s unlikely to happen for the foreseeable future since short term economic risk has been inflated by the Brexit debate, but it does warrant attention. Nonetheless, the short term potential for Provident shares to re-visit Nov/Dec all-time highs could prove encouraging for both growth and income fans.