By Muvija M
(Reuters) – Provident Financial’s <PFG.L> boss aims to return its troubled home credit unit to profit in the second half of 2020 as the more than century-old lender also moves past a costly and unsolicited takeover attempt by its smaller rival.
Provident, which has 2.4 million customers, has been working to revive its doorstep lending after a badly-executed reorganisation led to a CEO departure, a profit warning and the suspension of its dividend for the first time in 2017.
“The recovery programme is very much in line with our plans… Clearly we have done an awful lot to the business since the difficulties we ran into in 2017 and we are making steady progress against that,” CEO Malcolm Le May told reporters on a call.
“The attractive thing is we’re seeing new customers coming into the group.”
Shares in Provident were up 9.7% and at the top of the FTSE 250 midcap index by 0830 GMT, recovering some of the 23% it has lost so far this year after tanking nearly 70 percent in 2017 when it revealed the problems at its door-to-door lending arm.
Provident said gains in customer addition seen in the last quarter of 2018 had continued into the first half and were about 15% higher from a year earlier.
The comments followed inline first-half profit from the company, which provides credit to people who do not meet the lending criteria of mainstream banks. Adjusted pretax profit was flat at 74.9 million pounds for the six months ended June 30.
LOT OF WOOD TO CHOP
Provident, which recently fended off smaller rival Non-Standard Finance’s hostile takeover attempt, said it would have reported a 76.9% jump in profit if not for the 23.6 million pounds in costs related to the bid and other exceptional items.
On the company’s goal to grow profits at its home credit business in the second half of 2020, Goodbody analyst John Cronin said: “That will absolutely prove a turning point though is a little later than originally expected.”
The company, which had declared a dividend of 10 pence per share for 2018, reinstated an interim dividend of 9 pence per share, which Cronin said “is well ahead of consensus expectations and should be well received by the market”.
Provident also said the Financial Conduct Authority’s investigation into the company’s car and van financing arm was close to being concluded with the expected financial impact within its previously announced provisions.
On the other hand, the company noted that the collection of money lent before the fourth quarter of 2017 remained significantly lower than historic levels and had not shown any improvement.
“Still a lot of wood remains to be chopped, and we’re on it,” Le May said.
(Reporting by Muvija M and additional writing by Noor Zainab Hussain in Bengaluru; Editing by Anil D’Silva and Andrew Cawthorne)