Provident Financial (PFG) continued its rehabilitation efforts during the first half, following last year’s disastrous restructuring of its home credit division. That included strengthening the board by appointing Patrick Snowball as chairman and three non-executive directors. However, recovery has not been going as smoothly as hoped, with the second-quarter collections shortfall standing at 10 per cent compared with historical performance.
That was largely due to the poor performance of the back book, with around 190,000 customers ceasing payments following last year’s disruption. What’s more, with new customer recruitment down around by half at the home credit business – resulting in a 9 per cent drop in customer numbers – receivables for the business dropped more than a third. The consumer credit division reported an underlying pre-tax loss of £23m. That meant that even after adjusting for tighter impairment accounting rules under IFRS9, group pre-tax profits declined almost a quarter on the same time last year.
At Vanquis Bank, the previously announced loss of the Argos contract and tighter underwriting standards meant customer bookings declined by a quarter. However, customer numbers ended the period up 7 per cent, while average receivables rose 12.5 per cent to £1.5bn.
Analysts at Shore Capital expect adjusted earnings per share of 53.4p for the full year, rising to 68.1p in 2019.
| PROVIDENT FINANCIAL (PFG) | ||||
| ORD PRICE: | 684.4p | MARKET VALUE: | £1.73bn | |
| TOUCH: | 684.4-686p | 12-MONTH HIGH: | 1,569p | LOW: 312p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 268p | LEVERAGE: | 5.3 | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 619 | 90.0 | 33.8 | 43.2 |
| 2018 | 573 | 34.6 | 9.8 | nil |
| % change | -8 | -62 | -71 | - |
| Ex-div: | na | |||
| Payment: | na |
