Cautious optimism for listed lender as economic picture improves
Bradford-based lender Provident Financial has reported group adjusted ongoing pre-tax profits of £63.5m (H1 2020 restated: £4.9m) – excluding its Consumer Credit Division (CCD) which is being closed down.
The business has today published its interim results for the six months ended 30 June 2021. Including losses from CCD, the Group generated a statutory loss before tax of £44.2m for the period.
Total revenue was £316.7m (2020 restated: 443.6m).
The Board is not proposing a dividend with respect to this interim period, explaining its focus remains on preserving capital during the period of closure of the CCD business.
Provident says it will revisit its policy at the year end, allowing time for the Board to assess the impact of the end of furlough, and any future lockdown restrictions on the Group’s customers.
As previously reported, Provident has decided to shut down its troubled Consumer Credit Division and has launched a partial repayment scheme (Scheme of Arrangement) for customers who were mis-sold loans.
Malcolm Le May, chief executive officer, said: “The first six months of 2021 showed a marked contrast to the extremely difficult conditions seen throughout 2020.
“Underlying customer trends and macroeconomic conditions have improved year-on-year, allowing us to focus on the core businesses, which is reflected in our results.
“In March, we notified the market of our intention to launch a Scheme of Arrangement for CCD and in May, regrettably, we took the difficult decision to place the business into a managed run-off.
“I am pleased that the proposed Scheme of Arrangement for CCD, which was provided for in our 2020 accounts, was sanctioned by the High Court on 4 August.
“We can now continue to move forwards with our plans to close the business before paying customer redress claims during 2022.
“During the remainder of 2021, PFG will accelerate its transition towards becoming the leading specialist bank focused on financially underserved customers, serving growing market segments with a range of mid-cost products across credit cards, vehicle finance and unsecured personal loans.”
He added Provident’s core products will be credit cards, vehicle finance and unsecured personal loans.
As a result, it will no longer serve the “high-cost segment” of the credit market.
Le May noted: “We see this transition as being a core part of our drive towards making PFG a more sustainable lender, focused on providing much needed credit to our customers, whilst enabling good customer outcomes, and providing sustainable returns for our shareholders over the medium-term.”
