Profit warning wipes £750m off finance group’s value

Provident Financial chief executive Peter Crook
Provident Financial chief executive Peter Crook

Bradford lender Provident Financial has seen its share price plummet after warning of a big drop in profits caused by disruption from a major streamlining of its operations.

Investors took fright with shares in the FTSE-100 firm closing at 504p yesterday, a drop of 17.59% – reducing its market value by nearly £750m to £3.6bn.

Its status in the top 100 index will be under threat if its share price doesn’t rally before the next quarterly review, which takes place in September.

The sub-prime lender decided it would be “more efficient and effective” to restructure its home credit field organisation.

Chief executive Peter Crook defended the move arguing “the strategic rationale for the change remains strong”.

While Provident Financial said it has nearly completed the recruitment of 2,500 full-time staff, it said attrition has created vacancy levels of 12% recently, more than double what was expected.

Provident Financial expects the rate of collections “will begin to normalise” next month.

The disruption is now forecast to reduce the pre-exceptional profits from the Consumer Credit Division to around £60m, nearly half of its 2016 levels.

There will also be a one-off exceptional charge of approximately £20m in respect of redundancy, retention and training costs, which is in line with previous guidance.

The group said its other businesses – Vanquis, Moneybarn and Satsuma – continue to trade in line with its plans.

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