Provident Financial suffers 24 per cent drop in first half profit

The City of London. Provident Financial has delivered its half year results. Photo: Ian West/PA Wire

“Collections performance in home credit in the second quarter did not show the improvement we expected mainly due to lower collections from customers who were live during the poorly executed migration to the new operating model last summer,” Chief Executive Officer Malcolm Le May said.

The lender, which provides credit to people who do not meet the lending criteria of mainstream banks, said adjusted pre-tax profit fell to £74.9 million in the six months ended June, from £98.6 million a year earlier.

The company also said Patrick Snowball would take over as chairman on September 21 and interim chairman Stuart Sinclair would retire.

Provident is trying to win back customers after problems at its home lending arm last year.

Provident Financial lost 70 percent of its value last year after a botched reorganisation of its home credit business led to two profit warnings, prompted the departure of its CEO and the suspension of its dividend.

The company’s troubles scuppered hopes that Provident, which provided loans through the Wall Street crash of 1929 and both World Wars, would benefit from a growing consumer base as real wages came under threat from Britain’s exit from the European Union.

Provident Financial set out a recovery plan for its home credit business in October, involving a move from two UK home credit divisions to four units, employing more regional managers and at least 300 part-time staff who used to work as self-employed agents.

Provident has also contended with lost income resulting from a Financial Conduct Authority (FCA) investigation into the Repayment Option Plan (ROP) offered by Provident’s Vanquis Bank and an investigation into Moneybarn, its car and van financing arm.

“The implementation of the home credit operational recovery plan is going well, we have commenced our ROP refund programme after a successful pilot, and we remain engaged in constructive dialogue with the FCA on their investigation at Moneybarn,” Le May said.