Provident still all out of step

Lender issues another profit warning

SHARES in doorstep lender Provident Financial dived yesterday after its fightback plans suffered a setback.

More than £300million was wiped off the Bradford-based business’s value as it issued yet another profit warning.

Provident – known to many customers as “The Provvy” – was founded in 1880 and offers loans to people who can struggle to get money elsewhere.

It is yet to recover from a shakeup of its door-to-door lending staff in 2017. And moves to get approval from the Financial Conduct Authority for staff bonuses have been delayed.

Provident is also in the process of refunding £160m to one million Vanquis credit card customers. This follows an FCA investigation into interest charged on a repayment plan, which led to Provident being fined £2m. The firm has also been hit by the FCA’s clampdown on high cost credit.

Provident chief executive Malcolm Le May said: “I am pleased with the progress we have made in 2018.”

He added there was a market of 10 to 12 million people who “are not well served” by mainstream lenders.

But the Provvy’s share price slumped 20% yesterday – the worst fall since a 66% plunge in late 2017 – as it said full-year profits would be at the bottom end of a £151m to £161m range.

City broker Cenkos said the profit warning was “a stumble, not a trip”. But Gary Greenwood of Shore Capital said it was “another kick in the teeth for the investment case”.

The shares slump comes a week after an MP accused Provident of using “cynical” marketing tactics over the Christmas period to push loans with an interest rate of 535.3% to vulnerable customers.

Rachel Reeves, chairwoman of the Business Select Committee, said in a letter to the FCA that the Provident adverts tried to “tug on people’s heartstrings”.