Provident Financial reveals profit of £4.1m after suffering losses

Provident Financial has revealed better-than-expected results, following a ‘strategically important’ year. 

The Bradford-based company reported a pre-tax profit of £4.1million, compared to a £113.5million loss in 2020, thanks to a ‘favourable macroeconomic backdrop to the end of 2021’.

Meanwhile, group adjusted profit before tax from continuing operations, excluding exceptional items, was £167.8million, up from £27.8million. 

Provident Financial has revealed better than expected results, following a ‘strategically important’ year 

As a result of the firm’s improved profitability, the board, which axed its dividend at the height of the pandemic, has proposed an interim dividend of 12p per share which will be paid on 20 May. 

Commenting on the results, CEO Malcolm Le May said: ‘2021 was a strategically important year for PFG: we commenced the rebuilding of our cards franchise following the pandemic, we established a personal loans business supported by a brand new IT platform and we closed the Consumer Credit Division (CCD) in response to changing industry dynamics. 

‘We also improved the funding mix of the Group with the issuance of a Tier 2 subordinated bond. Most importantly, we achieved all of this whilst maintaining a focus on providing our customers with the credit products they need.’

The subprime lender previously revealed that customer demand had picked up to pre-pandemic levels in the three months to the end of September 2021. 

Customer spending rose 20 per cent from a year earlier and by 5 per cent compared with September 2019.             

Mark Crouch, an analyst at social investment network eToro, commended Provident Financial on its ability to ‘reposition itself as a specialist bank’.

He said: ‘It wasn’t so long ago that Provident Financial was known as somewhat of a basket case that operated in the murky world of doorstop lending. 

‘The firm has since exited that sector and tried to reposition itself as a specialist bank offering mid-cost credit to the underserved masses.

‘Of course, when you try to reinvent yourself, it helps if the financials back up your decision to change tack. They are starting to with Provident Financial.

‘The lender has swung from a loss to a profit over the past year, driven largely by the release of impairment charges and improving demand for credit after lockdown was lifted.

‘At the same time, all three of its divisions are showing signs of growth and the firm feels that it is now in a position to increase its dividend.’

Looking ahead, Crouch says analysts expect greater demand for credit as households struggle to balance the books in the face of rising inflation, while ‘interest rates should be supportive of banking sector margins’.

This post first appeared on Dailymail.co.uk