How Provident Financial in Bradford bounced back in the first half of this year

The Bradford-based lender generated adjusted ongoing pre-tax profit of £63.5m for the six months ended on June 30, 2021, when its Consumer Credit Division (CCD) was excluded. However, including the CCD it dropped to a statutory loss before tax of £44.2m for the period.

Malcolm Le May, CEO of Provident Financial, said: "The first six months of 2021 showed a marked contrast to the extremely difficult conditions seen throughout 2020.

“Underlying customer trends and macroeconomic conditions have improved year-on-year, allowing us to focus on the core businesses, which is reflected in our results.”

Provident will redress claims in the CCD by 2022 and close the division. It expects the closure of the CCD to lead to losses of up to £100m.

Mr Le May said: “In March, we notified the market of our intention to launch a Scheme of Arrangement for CCD and in May, regrettably, we took the difficult decision to place the business into a managed run-off.

“I am pleased that the proposed Scheme of Arrangement for CCD, which was provided for in our 2020 accounts, was sanctioned by the High Court on August 4.

“We can now continue to move forwards with our plans to close the business before paying customer redress claims during 2022.”

The Bradford-based lender’s Vanquis Bank and Moneybarn were profitable for the period. However, the businesses remain conscious of potential macroeconomic shocks that may arise as the Government’s Covid financial support schemes wind down.

Its credit card and personal loans business Vanquis Bank reported an adjusted pre-tax profit for the first six months of the year of £57.1m, up from £11.8m during the same period last year, driven by lower impairments as a result of more favourable macroeconomic conditions.

New customer bookings for the period were 97,000 as the business retained a cautious approach to risk appetite and as lockdown restrictions reduced customer demand.

Customer expenditure trends improved progressively throughout the first six months of the year as lockdown restrictions were lifted.

At the end of June, expenditure levels were up by 17 per cent year-on-year and were in-line with levels seen in June 2019 on a per customer basis.

The group's vehicle finance business Moneybarn delivered an adjusted pre-tax profit for the period of £15.5m, driven by higher revenue year-on-year, as a result of the growth in its receivables book, and lower impairment.

For the first six months of the year, customer demand for used vehicles improved progressively as lockdown restrictions were eased and this resulted in credit issued increasing by nearly 30 per cent to approximately £150m.

Mr Le May said: “During the remainder of 2021, PFG will accelerate its transition towards becoming the leading specialist bank focused on financially underserved customers, serving growing market segments with a range of mid-cost products across credit cards, vehicle finance and unsecured personal loans.

“We are well positioned to complete this transition successfully and our strategy is underpinned by a robust balance sheet with access to a diverse range of funding options."

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James Mitchinson