Provident Financial’s results were weighed down by the costs of fighting off a hostile takeover bid in the first half of the year, but the company said its core business had nonetheless managed to regain momentum after a series of performance and regulatory problems.
The company, which lends to people with poor credit records, spent more than three months locked in a bitter takeover battle with Non-Standard Finance, a smaller rival led by its former chairman and chief executive. NSF finally walked away from its bid in June, but Provident said on Tuesday the successful defence cost it £23.6m – above the top end of previous estimates of between £17m and £22m.
As a result, pre-tax profit increased only nine per cent year on year to £37.6m. Excluding bid defence costs, profit was up 77 per cent. Profits from its credit card division Vanquis Bank fell 13 per cent, but the decline was offset by a narrowing of losses in its traditional home credit business.
The reduction at Vanquis was expected as the company moved toward lower-risk customers and stopped offering an add-on product that landed it in trouble with the Financial Conduct Authority.
Provident’s 139 year-old home credit – or doorstep lending – business has been mired in difficulties since a bungled restructuring in 2017. Losses in the first half of this year shrank from £23.2m to £15.1m, but the company said it would not return to full profitability until the second half of 2020.
Malcolm Le May, Provident chief executive, said: “Despite the distraction of the unsolicited bid from February to June this year, I am pleased with the group’s operational and financial performance during the first half of the year. We have delivered strong new business volumes whilst maintaining stable delinquency trends and our first half results are in line with our internal plans.”
