Provident Financial plunged into crisis

The crisis at Britain’s biggest doorstep lender deepened yesterday as a senior executive quit and profits collapsed.

Mark Stevens, head of Provident Financial’s consumer credit division, resigned as he took the blame for a botched restructuring drive that left the company desperately short-staffed and unable to collect cash from many creditors.

This had a catastrophic effect on the business and drove profits down to £90m for the first half of 2017 – a 45.6pc fall on the same period last year.

Provident lends at high interest rates to the most vulnerable customers and its results are likely to be seen by some as a canary in the coal mine for the economy.

Analysts at Numis warned the figures showed ‘early signs of a deterioration in credit quality’ and shares closed down last night 5.8pc or 134p at 2163p.

The disastrous results came just a day after senior Bank of england official Alex Brazier warned that Britain’s debt binge was getting out of control.

‘The economic dangers of debt can be so costly that all else pales in comparison,’ Brazier said.

In a separate report yesterday, price comparison firm MoneySupermarket said that more than one in four people using its website to look for a loan wanted to borrow an amount worth at least half their annual income.

Bad loans in Provident’s doorstep lending arm surged 64.1pc to £115.5m and profits for the divi- sion dropped from £43.5m to £6.3m. But chief executive Peter Crook said it would be ‘fake news’ to blame this on an economic downturn – or reckless lending by the company. ‘I’m perfectly happy with the asset quality in that business,’ he said. ‘The issues are very much of our own making, they’re not credit issues.’

The problems stem from a major restructuring drive launched in February, Crook said. Provident scrapped 4,500 selfemployed agents and sought to hire 2,500 permanent staff members to replace them. But this unexpectedly trigged a surge in vacancies as it struggled to find full-time employees. Debts went uncollected as a result and there was an exodus of customers, with numbers falling from 875,000 to 801,000 during the period. Shares dived almost 18pc when the problems were unveiled to the mar- ket, wiping more than £754m off the value of the company. Crook said that Stevens quit because of the catastrophe. Despite the overall fall in profits, bosses kept Provident’s interim dividend flat at 43.2p per share.