Provident Financial expects profits to be at lower end of expectations

Provident Financial has provided an update for the City. Photo: Chris Radburn/PA Wire
Provident Financial has provided an update for the City. Photo: Chris Radburn/PA Wire
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Provident Financial Plc said it expects profits for 2018 to be at the lower end of market expectations, citing modestly higher payment arrangements at its credit card business Vanquis Bank.

Provident Financial, which traces its history back to 1880, said profit for the year would be toward the lower end of £151 million to £166 million forecast by the market.

The FTSE 250 company pegged exceptional costs of about £55 million in 2018 for its home credit recovery plan, among other items.

The company, which provides credit to people who do not meet the loan criteria of bigger banks, said the addition of new customers in its home credit business was marginally above plan during the last quarter of 2018.

“We have been progressively tightening our underwriting standards throughout the group in anticipation of the current uncertain UK economic environment we are facing,” the company said as it reported a

71,000 drop in new account bookings in Vanquis for 2018.

Malcolm Le May, Chief Executive Officer, said: “I am very pleased with the progress we have made in 2018 on delivering against the operational objectives we set ourselves at the start of the year.

“The FCA authorisation of CCD and the substantial completion of the ROP refund programme in Vanquis Bank have been major milestones for the group. In addition, we have made good progress on the FCA investigation at Moneybarn and are working towards concluding this matter in the first half of 2019.

“The group has strong funding and capital positions and the actions we have taken over the last 18 months have established a solid foundation for continuing to deliver on our strategic aim of being the leading provider of credit products to the 10 to 12 million consumers who are not well served by mainstream lenders.”