Provident begins recovery with buoyant first quarter of 2018
Strong performances across its three businesses have seen doorstep lender Provident Financial post an upbeat trading update for Q1 2018.
The lender has endured a string of issues since August last year, having warned losses could reach £120m for 2017, dropping out of the FTSE 100 and losing chief executive Peter Crook, who was eventually replaced by Malcolm Le May in February.
Its latest figures show that Vanquis Bank has delivered profits ahead of plan in the first quarter as a result of “robust margins and operational leverage”. It added its recovery plan is on track and the home credit business has delivered “a good collections performance” during the first quarter of trading.
Provident said “good progress” is being made in building the capability to refund some 1.2 million repayment option plan customers. A pilot into a small segment of customers has successfully been completed and the rollout of the full refund programme will commence from June 2018, it said.
Provident’s home credit business made “good progress” in its recovery plan, Provident said, with the shortfall in underlying performance in collections against historic levels narrowed from 12 percent in December 2017 to 10 percent in March 2018. Collections performance is expected to return to historic levels during the first half of 2019, said Provident.
The headline collections performance through the first quarter was 70 percent, down from 78 percent reported for the month of December 2017. Customer numbers at the end of March were 491,000, down from 527,000 in December 2017.
As for Moneybarn, the first quarter showed year-on-year growth of over 10 percent for new business volumes and customer numbers at the end of March stood at 53,000, up 24 percent on March 2017. Although impairment has continued to track modestly above expectations, Provident believes delinquency trends are now improving.
Provident said it is strengthening its governance framework during the first quarter including the recruitment of a central risk team to work under its interim chief risk officer
Following a rights issue in April which raised £331m, the group’s capital position and liquidity are both “strong”, it said. Cash on deposit and headroom on the group’s committed debt facilities is currently approximately £345m, it added.
Malcolm Le May, group chief executive, commented: “I am very pleased with the operational and financial performance of the group during the first quarter of the year and we are on-track to deliver results for 2018 in line with internal plans. I would like to thank all our employees for their hard work and efforts in delivering our continued recovery.
“The successful completion of the rights issue provides a strong capital base and ensures access to the funding that will allow the group’s businesses to further develop their market-leading positions.
“We are making good progress in strengthening the group’s governance framework, improving the relationship with our regulators and implementing the changes necessary to our culture to place the customer firmly at the heart of our strategy. This will provide the basis for delivering attractive and sustainable returns to shareholders.”