Listed lender reveals £33m loss
Sub-prime lender, Provident Financial has revealed its made an adjusted pre tax loss for the first six months of the year to 30 June 2020 of £32.6m.
The Bradford-based business which includes Vanquis Bank, car finance provider Moneybarn and a consumer credit division (CCD) said that the result was “better than our initial view”.
The business also confirmed it plans to repay “HMRC all money received to date in respect of the Government’s job retention scheme as well as all deferred tax payments and to not benefit from future Government support in this respect”, as, “we believe this is the right thing to do”.
The impact of lockdown and the coronavirus pandemic which saw the business suspend face-to-face visits for its home credit business and embrace new technology has resulted in losses more than double in this period to £32.6m for its CCD. This was attributed to a “a significant reduction in receivables and an increase in impairment.”
In contrast its Vanquis and Moneybarn brands both remained profitable, despite taking an 87% and 85% hits respectively.
Malcolm Le May, chief executive, Provident Financial
Malcolm Le May, Provident’s chief executive officer said that the “first six months of this year have been the most difficult and testing in my career.”
He added, “We are reporting an adjusted loss before tax for the period of £32.6m, this result is better than our initial view of Covid-19’s potential impact on our businesses. Pleasingly, within this number Vanquis Bank and Moneybarn were both profitable.
The chief executive also highlighted that the business was advocating for Government support for the funding sector, saying, “Our market will grow due to the pandemic, but at present it appears the supply of credit into the market is decreasing, which cannot be a good outcome for customers, nor a public policy one for the UK.”
Looking to the future the business believes it is in a stronger position heading into the second half of the year. It emphasised that since the end of June, it has seen signs of increased activity levels including “improving customer demand and spending trends”. With Moneybarn posting record levels of new business through July despite.
Despite this Le May is cautious, “The potential economic shock, and uncertainty, that Covid-19 will bring to the UK economy over the coming months must not be underestimated.” As a result the firm has said that it believes its full year results will be in line with internal plans.
Shares in the FTSE 250 business dropped from 269.p9 in March when the market slumped as Covid-19 arrived in the UK, and have struggled to recover. However closed last night at 195.7, giving the business a market value of £496.326m.
