Provident Financial shares drop nearly 20% after profit warning



Provident Financial Group PLC Updates

Provident Financial, the London-listed subprime lender, lost a fifth of its market value on Tuesday after it said it planned to report annual pre-tax profit at the lower end of the expectation range.

The home-based lender said the warning reflected tighter underwriting and fewer new account bookings in the last quarter of the year.

Provident said £ 159million was the average consensus of 12 analysts of group profit before tax, amortization of acquisition intangibles and exceptionals. The forecast range was between £ 151m and £ 166m, the company said.

Shares fell 18.1% in London. That leaves the stock on track for its biggest drop since August 2017, according to data from Refinitiv.

Provident underwent a regulatory review last year over its disclosures. Vanquis, a credit card transaction that represents 58% of the group’s revenue, had to reimburse 1.2 million customers. He said he has repaid around £ 160million in cash and balance cuts to over a million of his clients and will complete them all by early 2019.

The group’s Moneybarn auto loan business is under investigation by the Financial Conduct Authority into how it treats distressed borrowers.

“We are working on the conclusion of the case [with the FCA] in the first half of 2019, ”said Malcolm Le May, who took over as CEO in February of last year.

Malcolm Le May Pension Director General

Vanquis Bank generated 76,000 new account bookings in the fourth quarter, 17,000 less than the quarterly figure of the previous year, compared to 366,000 for the year as a whole. This is 71,000 less than the previous year, reflecting the impact of a stricter underwriting and the end of a contract with Argos in early 2018.

For the year, the group recorded a growth of 3.1% in the number of customers to 1.8 million.



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