13th Mar 2019 09:17
LONDON (Alliance News) - Provident Financial PLC swung to a profit in 2018 after making "immense progress" in the year as it continues to face regulatory pressure and a hostile takeover from smaller peer Non-Standard Finance PLC.
In 2018, Provident Financial, which makes unsecured sub-prime loans, swung to a pretax profit of GBP90.7 million from a GBP147.9 million loss in 2017, on revenue of GBP1.12 billion and GBP1.20 million, respectively.
Total costs, including administrative expenses and impairments stood at GBP1.03 billion in 2018 versus GBP1.32 billion in 2017.
Provident declared a nominal dividend of 10.0 pence per share for 2018, having paid none in 2017. For 2019, it intends to pay an interim dividend for 2019 in September and a final dividend in May 2020.
Chief Executive Malcolm Le May said Provident made "immense progress" in 2018, as its Vanquis Bank repayment option plan nears completion, its Consumer Credit Division received UK regulatory approval late in the year, and its Moneybarn unit made "significant progress" with its own regulator investigation.
"We have delivered against each of the objectives we set ourselves for 2018 and have strengthened our relationship with our customers, regulators and other stakeholders. We aim to build on the considerable momentum within the group in 2019 and beyond, with a focus on delivering attractive and sustainable returns to our shareholders as we execute on our strategy.," said Le May.
The consumer credit division narrowed its adjusted pretax loss to GBP38.7 million in 2018 from GBP106.3 million in 2017, on the implementation of its home credit recovery plan which received regulatory approval in the second half of the year.
Revenue of the unit fell 29% to GBP342.2 million, while period-end receivables were down 16% to GBP292.5 million.
The unit ended 2018 with 28% fewer customers, at 560,000, which Provident claimed was a direct result of its "poorly managed" UK home credit operating model in 2017.
Vanquis Bank, the company's credit card unit, recorded 1.6% growth in 2018 adjusted pretax profit to GBP184.3 million from GBP181.4 million, on a broadly flat revenue of GBP650.3 million. Reported period-end receivables rose 4.3% to GBP1.47 billion.
Provident's car finance unit Moneybarn saw a 28% rise in adjusted pretax profit to GBP28.1 million on a 24% increase in revenue to GBP131.9 million. The unit's period-end receivables also increased 24%, rising to GBP396.6 million.
Provident's group common equity tier one ratio at December 31 stood at 29.7% compared to the fully loaded minimum regulatory capital requirement of 25.5%, giving Provident about GBP95 million headroom on its GBP2.2 billion risk-weighted assets.
The company said it intends to main a regulatory capital "buffer" in excess of GBP50 million.
Provident did not give any updates on the "unsolicited" offer from Non-Standard Finance, reiterating its belief that the offer "undervalues" Provident and presents a "significant" operational and execution risk.
Provident said the offer has "major flaws" and based on a "misguided view" that Provident's regulatory approach would be different under the management of Non-Standard Finance.
Le May added: "The board is confident in the strategic direction for the group, anchored in both the opportunities presented by Vanquis Bank and the ability of the group's other businesses to work more closely with Vanquis Bank going forward. The management team is in the process of developing and implementing a number of planned growth and efficiency initiatives which the board believes will have benefits both for customers in terms of improved experience and for shareholders in terms of delivering attractive and sustainable returns. The board confirms that PFG continues to trade in line with expectations."
Shares in Provident Financial were up 2.5% Tuesday morning at 577.24 pence each.
Related Shares:
PFG.LNSF.L