The 12-month trajectory of Provident Financial’s (PFG) share price suggests many doubt a long-promised recovery is actually under way. The doorstep lender’s board isn’t among the sceptics, however, and used half-year numbers to sign off on the return of a half-year dividend just 1p-a-share short of 2018’s full payout.
That’s certainly one way to move the discussion on from a period overshadowed by Non-Standard Finance’s time-sapping and ultimately fruitless bid for the group. The full bill for defending the takeover attempt came to £23.6m, erasing much of what otherwise would have been a 77 per cent rise in pre-tax profits.
Aside from the reinstated dividend, there were other glimmers of hope. Losses at Provident’s consumer credit division, fell a third year on year to £15.1m, while robust demand and improved credit quality powered a 46 per cent increase in adjusted pre-tax profits at sub-prime car finance arm Moneybarn.
However, questions remain over when credit card division Vanquis Bank will stabilise. In the six months to June, pre-tax profit dropped 13 per cent year on year to £85m, owing to an expected reduction in income from repayment option plans and a shift to more credit-worthy customers. But given the division is now seen as the “fulcrum of the group”, profits will need to return to growth if a 2021 targeted return on assets of 10 per cent is to be achieved.
Analysts at Numis forecast earnings of 39.6p a share this year, rising to 46.3p in 2020.
| PROVIDENT FINANCIAL (PFG) | ||||
| ORD PRICE: | 428p | MARKET VALUE: | £1.08bn | |
| TOUCH: | 428-430p | 12-MONTH HIGH: | 716p | LOW: 386p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 268p | LEVERAGE | 5.2 | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 573 | 34.6 | 9.8 | nil |
| 2019 | 524 | 37.6 | 8.1 | 9 |
| % change | -8 | +9 | -17 | - |
| Ex-div: | 15 Aug | |||
| Payment: | 26 Sep |
