Troubled doorstep lender Provident Financial "on track" for recovery as 2018 starts a fresh chapter

Lucy White
Ascot Races
Provident financial suffered £123m of losses last year (Source: Getty)

The Neil Woodford-backed doorstep lender Provident Financial has today said its "recovery plan is on track", as it attempts to make up lost ground after a torrid 2017.

In a trading update this morning, the business said 2018 has started with "positive momentum" and its process to recruit a new chairman after the death of Manjit Wolstenholme was "well underway".

The firm's shares soared almost seven per cent on the open, as investors seemed encouraged by the company's update.

Read more: Provident Financial share price soars as it confirms £123m loss and rights issue

"We are making good progress in strengthening the group's governance framework, improving the relationship with our regulators and implementing the changes necessary to our culture to place the customer firmly at the heart of our strategy," said chief executive Malcolm Le May.

"This will provide the basis for delivering attractive and sustainable returns to shareholders."

Provi's Vanquis Bank, which serves customers who have been refused credit elsewhere, "delivered profits ahead of plan in the first quarter as a result of robust margins and operational leverage", the company said.

Meanwhile the home credit business "delivered a good collections performance during the critical first quarter trading period".

Read more: Provident Financial share surge makes it "a proper short again" as hedge funds sense a fresh opportunity

Provi's car finance branch, Moneybarn, delivered "strong new business volumes" in the first quarter. Though impairment, or the likelihood that the full loan will not be repaid, has "continued to track modestly above expectations", Provi said there were indications that delinquency (or late payment) trends are now improving.

Last month, the lender completed a £331m rights issue which has helped to boost the amount of cash Provi holds to protect it in case of a financial crisis.

Yet the firm is not entirely out of the woods yet, as major investor Aberdeen Standard is suing the business over an investigation into Vanquis.

Meanwhile activist investor Elliott has quietly been building up a stake in Provi, which is around 49 per cent owned by retail giants Woodford and Invesco.

Read more: Provident Financial moved into the crosshairs of activist giant Elliott Advisors

Related articles