Provident Financial swings to profit while bracing against hostile takeover

Provident Financial has swung to a profit on lower costs as the doorstep lender ramps up its defences against a £1.3 billion hostile bid.

The firm made a pre-tax profit of £90.7 million last year compared with a £147.9 million loss a year earlier.

Adjusted pre-tax profit, the company’s preferred measure, increased to £153.5 million from £84.2 million.

Revenue, however, slipped to £1.12 billion from £1.2 billion.

The company restored its dividend after cancelling its shareholder payout in 2017.

Provident has been bolstering its performance after a botched restructuring of its home credit business two years ago.

Provident Financial Group CEO
Provident Financial Group chief executive Malcolm Le May (Brunswick Group/PA)

The group’s Vanquis bank and Moneybarn car and van financing arm have been the subject of probes by the Financial Conduct Authority (FCA) into lending practices that have weighed on the company’s profits and share price.

Losses in the home credit business narrowed last year but profits at both its Vanquis Bank credit card unit and Moneybarn car finance unit fell.

The results come as Provident fends off advances from smaller rival Non-Standard Finance, with the firm labelling the approach “highly opportunistic” and “irresponsible”.

The City watchdog has also written to NSF, warning that its proposed takeover of Provident could break consumer protection rules.

Provident boss Malcolm Le May said the company continues to “believe that the offer made by NSF is not in the interests of all shareholders”.

Meanwhile, he said the firm’s annual results are a “testament to the immense progress that the group has made over the past 18 months”.

“We have delivered against each of the objectives we set ourselves for 2018 and have strengthened our relationship with our customers, regulators and other stakeholders.

“We aim to build on the considerable momentum within the group in 2019 and beyond, with a focus on delivering attractive and sustainable returns to our shareholders as we execute on our strategy.”

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