Provident Financial returns to profit

Provident's chief executive Malcolm Le May
Provident's chief executive Malcolm Le May
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Credit lender Provident Financial has returned to profit, bolstering its defence against a £1.3bn hostile takeover by smaller rival Non-Standard Finance (NSF).

Bradford-based Provident reported a pre-tax profit of £91m in 2018, up from a loss of £148m in 2017.

It has also reinstated a dividend of 10p a share as a sweetener for shareholders although chief executive Malcolm Le May told the Yorkshire Post it would be inappropriate to say whether the group has won round shareholders who are backing NSF's offer.

Investors must vote on whether to approve the deal, but it has already received the blessing of Neil Woodford, Invesco and Marathon.

Mr Le May said: "Our results show good financial and operational progress.

"This is a strong set of results and we've seen significant progress."

He added that the Moneybarn and Satsuma, the two divisions that NSF plans to sell or close, performed strongly.

"They are both integral parts of the group. To close them down or sell them would be inappropriate," he told the Yorkshire Post.

Adjusted pre-tax profit, the company's preferred measure, increased to £154m from £84m.

Revenue slipped to £1.12bn from £1.2bn.

The company restored its dividend after cancelling its shareholder payout in 2017.

Provident has been bolstering its performance after a botched restructuring of its home credit business two years ago.

The group's Vanquis bank and Moneybarn car and van financing arm have been the subject of probes by the Financial Conduct Authority (FCA) into lending practices that have weighed on the company's profits and share price.

Losses in the home credit business narrowed last year but profits at both its Vanquis Bank credit card unit and Moneybarn car finance unit fell.

Provident said that NSF's takeover approach was "highly opportunistic" and "irresponsible".

The City watchdog has also written to NSF, warning that its proposed takeover of Provident could break consumer protection rules.

Mr Le May said the company believes that the offer made by NSF is not in the interests of all shareholders.

He said the firm's annual results are a "testament to the immense progress that the group has made over the past 18 months".

"We have delivered against each of the objectives we set ourselves for 2018 and have strengthened our relationship with our customers, regulators and other stakeholders," he said.

"We aim to build on the considerable momentum within the group in 2019 and beyond, with a focus on delivering attractive and sustainable returns to our shareholders as we execute on our strategy."