Provident Financial on the road to recovery after torrid 2017
The doorstep lender issued two profit warnings last year and said goodbye to its chief executive.
Embattled doorstep lender Provident Financial has said it is on the road to recovery after a torrid year of profit warnings and regulatory sanctions.
Provident, which sells high-cost credit through its Vanquis Bank, Moneybarn and consumer credit businesses, said its recovery plan was on track and it would meet its annual targets.
The company’s shares jumped by more than 7% following the upbeat statement.
Customer numbers at Vanquis Bank rose 7.8% to 1,723,000 in the quarter, but numbers in Provident’s home credit business fell from 527,000 to 491,000, a drop of 7%.
At Moneybarn, the car finance arm which was fined over affordability checks, customer numbers rose by more than 10% to 53,000.
Provident has lost more than 70% of its market value after two profit warnings in 2017, prompting the resignation of former chief executive Peter Crook.
The lender has completed an investor cash call successfully, bringing in a net £300 million, leaving the group with around £120 million more than required by regulators.
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The subprime lender was forced to embark on the rights issue when the Financial Conduct Authority fined credit card lender Vanquis £2 million and ordered it to pay £168.8 million in compensation for failing to disclose charges of its popular repayment option plan (ROP).
Now, Provident insists its capital and liquidity positions are strong, although it warned its collection rate from customers dipped in the first quarter.
Malcolm Le May, group chief executive, said: “We are making good progress in strengthening the group’s governance framework, improving the relationship with our regulators and implementing the changes necessary to our culture to place the customer firmly at the heart of our strategy.
“This will provide the basis for delivering attractive and sustainable returns to shareholders.”
Provident is still searching for a new chairman and a number of non-executive directors.
“For Provident Financial investors who’ve stuck with it through thick and thin, there’s been a lot of thin lately,” said Neil Wilson, chief market analyst at Markets.com.
“But today’s upbeat management statement suggested a bit more optimism as they turn things around.
“All businesses are said to be performing well, although we might want to take issue with collection rates.”