Merrill Lynch

Speciality Finance Conference

25 November 2002

International Development

Provident FinancialGroup strategy

> UK home credit: good returns, strong cashflow but relatively mature

> Potential from the export of home credit to new markets

> Target combined pre-tax profit of £75m p.a from our Polish and Czech businesses within 5 years

> Established pilot operations in Hungary and Slovakia in 2001 andannounced full roll out in July this year

> Further countries intended for 2003 and beyond

> International expansion is a key element of strategy for future growth

Provident FinancialVital statistics

> 2001 profit before tax: £170 million

> Market capitalisation: £1.7 billion

> Business sectors: Unsecured consumer lending

Motor insurance underwriting

> Customers: 3.5 million customers

Provident FinancialInternational business

2001

Provident Financial

What is home credit?

Provident FinancialWhat is home credit?

• Small unsecured, cash loans

• Delivered and collected in the home

• Service provided by self-employed agents

• Weekly repayment

• Woman to woman

• Fixed charges

• Simple and convenient

> Small unsecured, cash loans

> Delivered and collected in the home

> Service provided by self-employed agents

> Weekly repayment

> Woman to woman

> Fixed charges

> Simple and convenient

Uses of home creditProvident Financial

> Balancing the household budget

> Holiday spending money

> Christmas presents

> School expenses for children

International home creditProvident Financial

> Poland

> Czech Republic

> Hungary

> Slovakia

Provident FinancialInternational home credit

Poland Czech Hungary Slovakia Total

Population (million) 39 10 10 5 64

Estimated market size (000) 2,000 500 500 250 3,250

Target customers (000) 1,000 250 250 125 1,625

Current customers (000) 576 209 33 15 844

Target annual credit issued percustomer (£) 400 400 400 270 390

Target annual profitper customer (£) 60 60 60 40 58

TargetsPoland

> Population 39 million

> Estimated market size 2 million

> Customers 1 million

> Target annual credit issued per customer £400

> Target annual profit per customer £60

PolandPolandProgress towards targets

Annual profit per customer

Annual credit issued per customer

CustomersEstimated market size

£21

£346

561,0002 million

£60

£400

1 million2 million

June 2002Target

PolandProgress towards targets

49.760.0 10.3Profit

GapTarget 2002Year to 30 June: £m

----

131.3230.9

----

220.0400.0

(35.8)(15.8)(12.6)(14.2)

88.7169.1

ExpensesBad debtInterestAgent commissionRevenueCredit issued

Total costs 160.0 78.4 81.6

Poland

Customer growth: 561,000 1,000,000

Issue per customer: £346 £400

Gross revenue margin: 52% 55%

Costs as % of revenue: 88% 73%

PolandKey performance drivers

> Customer growth

> Issue per customer

> Gross revenue margin

> Costs as % of revenue

1,000,000

£400

55%

73%

561,000

£346

52%

88%

PolandCustomer growth: the market

> 2 million potential market

> Target segments

> Competition

> The market

> Target segments

> Competition

PolandCustomer growth: customer numbers (000’s)

576561504416

305164

7232100.4 3

Dec 97 Jun 98Dec 98 Jun 99 Dec 99 Jun 00 Dec 00 Jun 01Dec 01 Jun 02 Aug 02

PolandIssue per customer

£346

£164

£237

2 loans per year

1.7 loans per year

£400 > Target increase

> Typical first loan issue value

> Average re-serve issue value

> Target loans per customer

> Currently

> Introduction of multiple loans

PolandMarketing materials

Polish TV campaign December 2001Poland

PolandGross revenue margin

26-week(zloty)

39-week(zloty)

52-week(zloty)

Typical loan amount 750 1,100 1,600

Charges 379 723 1,179

Gross revenue margin 50.5% 65.7% 73.7%

Total amount payable 1,129 1,823 2,779

Weekly rate 43.43 46.75 53.44

PolandPolandCosts

*Interest - reported N/A14TotalInterest - like for like*ExpensesBad debtCommission

4684

241723UK12 months to June 2002

Costs as % of revenue

7385-11-40-18-16

TargetPoland

PolandBad debt as a percentage of credit issued

4.2 3.5 4.3 3.95.9

7.59.3

2.8

Dec 98 Jun 99 Dec 99 Jun 00 Dec 00 Jun 01 Dec 01 Jun 02

PolandExpenses

Total

Infrastructure costs

Marketing and PR

Employee related expenses

100

29

10

61

%

PolandEmployee-related costs: employee numbers

23 78 206 326

8001,048

1,505 1,594 1,597 1,599

23

Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00 Jun 01 Dec 01 Jun 02 Aug 02

PolandInfrastructure costs: branches

1 3 7 10

3341

51 53 54

1

Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00 Jun 01 Dec 01 Aug 02

Branches Interview rooms

Szczecin

GorzówWielkopolski

Gdań sk

Poznań

Wrocł aw

Kraków

Warszawa

Lublin

Łódź

Radom

Sochaczew Siedlce

Opole

Kielce

Rzeszów

Biał ystok

Olsztyn

Bydgoszcz

Piotrków Tryb.

Toruń

Czę stochowa

ZielonaGóra

Łomż a

Łowicz

Augustów

Leszno GarwolinSkierniewice

Gniezno

Puł awy

Puł tusk

Rawa Maz.

Radomsko

NowySą cz

Sosnowiec

Łuków

Zawiercie

Wyszków

Wał brzych

Kraś nik

Wł ocł awek

Ruda Ś l.

Inowrocł aw

Tarnów

Zabrze

Starachowice

Kę dzierzyn K.

OstrowiecŚw.

Chrzanów

Gł ogów

Chorzów

Zduń ska Wola

Pł oń sk

Legnica

Rawicz

Tczew

Wejherowo

Miń skMaz.

Sandomierz

Ciechanów

Opoczno

Tychy

Tarnowskie Góry

Nysa

Bolesł awiec Cheł m

Tomaszów Maz.

Jarocin

Pił a Ostrów Maz.

Ostroł ę ka

Koszalin

Bielsko-Biał a

Kalisz

Wieluń

Pionki

Świnoujś cie

Goleniów

Gryfice

Stargard Szczeciń ski

Pyrzyce

Malbork

Starogard Gd.

Chojnice

Świecie

Grudzią dz

Brodnica

Mł awa

Bartoszyce

Kę trzyn

Nidzica

Sierpc

Woł omin

Żyrardów OtwockBiał a

Podlaska

Strzelce Krajeń skie

Nowa Sól

Żary

Krosno Odrz.

Kostrzyn

Świebodzin

Kł odzko

Dzierż oniów

ZgorzelecKluczbork

Brzeg Lubliniec

Jaworzno

KrosnoPrzemyś l

Mielec

Suwał ki

Bielsk Podl.

Ił awa

Turek

Beł chatów

Pł ock

Świdnica

Grójec

Zamoś ć

Rybnik

Jelenia Góra

Bę dzinBytom

Elblą g

Stalowa Wola

Eł kMrą gowo

Piaseczno

Radzymin

Siemiatycze

Łę czycaZgierz

Drawsko-Pomorskie

Koł obrzeg

Szczecinek

Lę bork Gdynia

Lubin

JaworGryfów-Ś l.

Ostrów Wlkp.

Konin

Trzebnica

Syców

Strzelin

Nowa-RudaKamienna Góra

Koniecpol

Skarż ysko-Kamienna

Koń skie

Busko Zdrój

Bochnia

NowyTarg

Olkusz

Oś wię cim

PruszkówNw. Tomyś l

Ś rem

Sł upskLidzbark Warm.

CiechanowiecHajnówka

Moń ki

Zambrów

Sokół ka

Giż ycko

Pisz

Ostróda

Szczytno

Przasnysz

Braniewo

Kwidzyn

Mysł owice

Cieszyn

Żory

Wieruszów

Gostynin

Sulejówek

TomaszówLubelski

Legionowo

RacibórzKatowiceKnurów

Brzeziny

Kutno

Kł odawa

Olecko

Żuromin

Grodzisk Maz.

Racią ż

Sokoł ówPodl.

Krasnystaw

Zł otów

Jelcz Laskowice

Jastrzę bie Zdrój

21

3

R3

R19

R7

R6

R8R11

R12R13

R1

R2

R5

R4

R9 R10

R14

R17R15

R18

Żywiec

4Gliwice

Oborniki

Dział dowo

Pasł ę k

Jarosł aw

Koś cierzyna

PolandInfrastructure costs: current locations

PolandMarketing and public relations costs

> 10% of overheads

> Similar cost per customer going forward

PolandExpenses summary

> 40% of gross revenue

> Nearly 80% relatively fixed in nature

> Target of 73% of gross revenue

> 40% of gross revenue

> Relatively fixed in nature

> Target of 24% is achievable

PolandCosts and profit as a % of revenue

97 91 88

3 9 12

111

153141

-11

-53-41

-100

-50

0

50

100

150

200

D 99 J 00 D 00 J 01 D 01 J 02

Costs*Profit

PolandThe future

> Build on successes

> Target of 1 million customers

> Target of £400 annual issue per customer

> Controlled growth

> Target of £60 pre-tax profit per customer per annum

Czech RepublicTargets

> Population 10 million

> Estimated market size 500,000

> Customers 250,000

> Target annual credit issued per customer £400

> Target annual profit per customer £60

Poland

Progress towards targetsCzech Republic

Annual profit per customer

Annual credit issued per customer

CustomersEstimated market size

£19

£309

206,000500,000

£60

£400

250,000500,000

June 2002Target

International home creditCentral European market potential

Poland Czech Hungary Slovakia Total

Population (million) 39 10 10 5 64

Estimated market size (000) 2,000 500 500 250 3,250

Target customers (000) 1,000 250 250 125 1,625

Current customers (000) 576 209 33 15 844

Target annual credit issued percustomer (£) 400 400 400 270 390

Target annual profitper customer (£) 60 60 60 40 58

International home creditCentral European market potential

> UK home credit model can be successfully introduced overseas

> Customer and agent relationship similar in all countries

> Good quality, well educated workforce essential

> Key early skills: recruitment, training, advertising, brand building

> Simple, distributed IT systems a strength

> As arrears work builds, added support and training needed

> Need to balance growth, costs and bad debt

International home creditLessons learned

> New country development draws heavily on central resources

> Staged, low risk approach is best

> Early introduction of a full management team covering all functions aids development

> “In country” research is most valuable

> Pilot operation is best indicator of market dynamics

International home creditCountry selection: where next?

> Rule of law

> Relatively stable economy

> Safe to lend and collect

> Urbanised

> Can be funded in local currency

> Well educated workforce

> Sufficient potential

International home creditCountry selection: the future

> Eastern European countries not yet suitable

> Potential in Western Europe

> Potential further afield

> Low risk entry approach preferred

International home creditThe future

> Entered Hungary and Slovakia during 2001-progressing well

> Outstanding opportunities for further expansion-2003 onwards

> We will maintain our risk controlled approach

> Excellent prospects for generating additional shareholder value