Bradford lender Provident Financial returns to interim profit as it winds down doorstep lending unit

Lenders, which benefited from increased borrowing as the market recovered from the pandemic, are now battling a possible spike in bad loans as the cost-of-living crisis deepens.

The Bradford-based firm, which has placed its doorstep lending unit into a managed run-off since May 2021 after a surge in complaints, said it is in talks with regulators regarding future capital requirements after the unit winds down.

Provident is also looking to focus more on lower risk customer segments amid uncertain macroeconomic conditions.

The company reported a pre-tax profit of £37.3m for the six months ended June 30, compared to a loss of £44.2m a year ago.

Malcolm Le May, CEO of Provident, said: "I am delighted with the group's first half performance. We have delivered growth and returns in line with market expectations and, reflecting the Board's confidence and our robust financial position, we are recommending an interim dividend of 5p per share.

“We have successfully repositioned PFG as a specialist banking group focused on the mid-cost and near-prime sectors, increasing the size of our addressable market to some 14 million people in the UK.

“We are investing in our IT infrastructure to deliver future efficiency savings and broadening our service proposition with Vanquis Personal Loans.

“CCD is in the final stages of being wound down and the PRA have confirmed that they will review the Group's capital requirements during the second half of the year.

“The FCA has also decided not to proceed with their investigation into historic lending at CCD. We are all acutely aware of the potential challenges that the macroeconomic environment might present.

“However, we are confident that our increased focus on lower risk customer segments together with our capital strength position us well to withstand the challenges ahead, support our customers and deliver sustainable growth and returns to our shareholders."