26th Aug 2020 08:24
(Alliance News) - Provident Financial PLC on Wednesday said it fell into loss in the first half of 2020, as it said it would withhold dividends in preparation for the negative effects of Covid-19 on the economy.
Shares in the FTSE 250-listed doorstep lender were trading 12% higher at 218.76 pence each early on Wednesday morning in London, but remain at less than half their price of 464.00p at the start of the year.
For the six months ended June 30, Provident Financial swung to a pretax loss of GBP28 million from a profit of GBP43.1 million a year prior. This was as revenue fell 11% to GBP445.6 million from GBP501.5 million.
The Bradford, England-based company blamed the swing to loss on lower revenue and higher impairment charges of GBP240.3 million, from GBP165.9 million a year before, due to the Covid-19 pandemic. However, it said its performance was better than its expectations at the start of the lockdown in March.
No interim dividend was declared, compared to 9.0p paid for the first half of 2020, as Provident said it needs to preserve capital and provide financial stability. However, it said it intends to resume dividend payments to shareholders as soon as financial conditions normalise.
Provident said it built strong capital and liquidity positions during the period, with regulatory capital of GBP705 million at the end of June. This equates to a CET1 ratio of 35.4% and a surplus of GBP215 million above the minimum regulatory requirement.
Looking ahead, Chief Executive Malcom Le May said: "The group's response to challenges brought on by the early stages of Covid-19 was swift, putting us in a stronger position heading into the second half of 2020. Since the end of June, some encouraging signs of increased activity levels in our markets can be seen, with improving customer demand and spending trends evident. Indeed, Moneybarn posted record levels of new business in July despite tighter underwriting.
"However, the potential economic shock and uncertainty that Covid-19 will bring to the UK economy over the coming months must not be underestimated. Looking to the full year results, the group continues to trade in line with internal plans," he added.
By Ife Taiwo; [email protected]
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