Provident Financial profits expected to be towards ‘lower end’ of market

Provident Financial, expects its full-year results for 2018 to be on the “lower end” of market expectations. The prediction as was made as part of the company’s trading update for the financial year ending 31st  December, the company said profits are anticipated to be at lower end of the range of market expectations of £151m to £166m.

Provident Financial noted that its subsidiary, Vanquis Bank, has delivered further customer and receivables growth although impairment has been modestly higher than expected.

During the fourth quarter, Vanquis Bank secured new account bookings of 76,000, which was 17,000 lower than the last quarter of 2017. Total new account bookings for 2018 were 366,000, which was also 71,000 lower than the prior year.

Despite this, customer numbers ended the year at 1,773,000, representing year-on-year growth of 3.1%.

The company’s vehicle finance business, Moneybarn, also continued to deliver strong growth with demand and used car prices remaining strong. As a result, fourth quarter new business volumes showed year-on-year growth of 21%. Customer numbers ended the year at 62,000, representing year-on-year growth of approximately 24%,

Last year, Provident Financial saw shares crash by 66% on in one day, wiping £1.7bn off the company’s market value. This led to the firm being relegated from the FTSE100 and the exit of its chief executive.

This led to the Financial Conduct Authority conducting an investigation into the company’s activity, which is still ongoing.

Malcolm Le May, Chief Executive Officer, said “I am very pleased with the progress we have made in 2018 on delivering against the operational objectives we set ourselves at the start of the year. The FCA authorisation of CCD and the substantial completion of the ROP refund programme in Vanquis Bank have been major milestones for the group. In addition, we have made good progress on the FCA investigation at Moneybarn and are working towards concluding this matter in the first half of 2019.”

“We have been progressively tightening our underwriting standards throughout the group in anticipation of the current uncertain UK economic environment we are facing. We will continue to monitor underwriting standards in light of any changes in customer behaviour.”

“The group has strong funding and capital positions and the actions we have taken over the last 18 months have established a solid foundation for continuing to deliver on our strategic aim of being the leading provider of credit products to the 10 to 12 million consumers who are not well served by mainstream lenders.”

The full report results can be found here.