Investors in Britain’s largest sub-prime lender scurried for cover after it warned profits have been hit by ongoing operational problems.
Profit before tax for the first half of the year fell almost 50 per cent to £90m. The lender maintained its dividend, which equated to 94 per cent of earnings per share.
In February, Provident Financial told staff 2,000 jobs were to be cut.
Last month shares plummeted 20 per cent after it admitted it was struggling to deal with spiralling levels of uncollected home credit loans. Analysts concluded this was as a result of axed staff not bothering to do their jobs.
“Interim results from Provident Financial show the impact of their botched introduction of a new way of working in their consumer credit division,” said Hargreaves Lansdown fund manager Steve Clayton.
Provident Financial may not be out of the woods yet, and it will be some time before the new system can be said to have bedded down.
Two of the UK’s best-known fund managers, Woodford and Invesco, have been hit by Provident Financial’s share price fall. The pair each owned a 20 per cent shareholding in the lender as at 30 June, according to the lender’s website.
The lender’s chief executive Peter Crook said: "Whilst I remain disappointed by the higher than expected operational disruption to trading in the home credit business, the new business model was deployed as planned during the first week in July.”
Analysts highlighted the strong long-term performance of Provident Financial. Stuart Duncan of Peel Hunt said: “With the new model in place, the key is proving the disruption is temporary.”