Lender reveals £32.6m loss

Sub-prime lender, Provident Financial has revealed its made an adjusted pre tax loss of £32.6 million for the first six months of the year to 30th June 2020

The group includes Vanquis Bank, car finance provider Moneybarn and a consumer credit division (CCD) comprising Provident home credit and Satsuma.

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 Officer, said “I would like to thank all my colleagues for their hard work and compassion in helping our customers through a very difficult period in their lives. The first six months of this year have been the most difficult and testing in my career. However, I am very pleased with how well the Group has responded to the challenges brought about by Covid-19, and how effectively we have operated. 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.”

“Looking forward, our strong financial position will mean that we can keep helping, and responsibly lending to, our customers, many of whom are key workers, as we, and they, face the challenge of furlough support ending and unemployment rising in the coming months. Provident Financial has performed robustly in the first half of the year because we focused on our customers, colleagues and strengthening our balance sheet for the challenges the pandemic would bring. In fact financial and operational performance were better than expected, and therefore we have decided to repay all furlough support to the government. We believe this is the right thing to do, and on behalf of customers have also advocated the government should support wider funding for the sector. 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.”