Business review

ARG Financial Services: progress in 2006

The ARG FS gross loan book fell by £30m to end the year at £433m. The decline reflects the run-off of personal loan balances resulting from the decision taken in December 2004 to withdraw from this very competitive market.

The Argos and Homebase store card balances grew by 9% to £378m at year-end, primarily due to the success of ‘buy now pay later’ credit offers. The Argos store card funded 9% of sales in 2006, with a 17% increase in the active card base. The Homebase card funded 4% of its sales, with growth in the active base of 33%. Credit offers are supporting initiatives in the retail businesses such as the trial of the Home catalogue in Argos and growing kitchen sales in Homebase.

Modest expansion is expected in the total gross loan book over the next twelve months, reflecting continued growth in store cards but a further runoff in personal loans.

Profit after funding costs increased to £6.1m, driven by increased interest income from the growth in the store card loan book, partially offset by increased provisions for bad debts.