31st Jul 2018 09:49
LONDON (Alliance News) - Provident Financial PLC on Tuesday appointed a new chairman, reconfirmed its intention to restore its dividend and said that a weak performance in the core consumer credit division led to a drop in first half pretax profit.
Shares in the company were trading 13% higher at 696.08 pence each in morning trade, the top gainer in the FTSE 250 Index.
The sub-prime lender named former Aviva PLC Chief Executive Patrick Snowball as chairman, replacing interim chairman Stuart Sinclair, who intends to retire. Snowball will take over as chairman on September 21.
Provident Financial also appointed Angela Knight, Elizabeth Chambers and Paul Hewitt as independent non-executive directors with effect from July 31.
Knight is a former UK government minister and is currently CEO of the British Bankers Association. Chambers serves on the board of wealth manager Smith & Williamson. Hewitt formerly served as deputy chief executive and chief financial officer of Co-operative Group.
For the six months to June 30, Provident Financial posted pretax profit of GBP34.6 million, down sharply from GBP90.0 million a year before, on a revenue of GBP572.5 million and GBP619.4 million, respectively. Total costs, including administrative expenses and impairments stood at GBP537.9 million versus GBP529.4 million.
The consumer credit division swung to a pretax loss of GBP23.2 million for the first half from GBP4.7 million pretax profit, due to disruption to its business model back in the second half of 2017. Revenue of the unit fell around 32% to GBP179.4 million, while period-end receivables were down roughly 34% to GBP293.7 million.
Provident Financial said the implementation of a recovery plan for the home credit business is going well, and the company remains in constructive dialogue with the Financial Conduct Authority on the UK regulator's ongoing probe into the company's car finance unit Moneybarn. The unit is being investigated for its practices of deciding on loan applications.
The home credit business is expected to return to profitability in 2019, the lender added.
Vanquis Bank, the company's credit card unit, recorded 6.1% growth in first half pretax profit to GBP97.2 million from GBP91.6 million, on a revenue of GBP331.9 million and GBP319.0 million, respectively. Reported period-end receivables rose 6.5% GBP1,43 billion.
Provident Financial intends to declare a nominal final dividend for 2018, it said.
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