Provident Financial on track for 2020

Provident Financial said it was on course to meet market expectations for 2020 but that Covid-19 lockdowns would hit customer spending and borrowing.

The subprime lender said trading in the third quarter was in line with management forecasts. It has ordered an operational review of its consumer credit division (CDD), which includes its main doorstep lending business.

Delinquency trends at the Vanquis credit card business were stable but customer booking volumes were lower than a year earlier. Customer spending at Vanquis was 31% up on the previous quarter but 15% lower than a year earlier.

Home credit lending to existing customers was more than 70% of normalised levels for the third quarter and loans to new customers were at about 60%, the FTSE 250 company said. The consumer credit business, which also includes online loans, has been hit by Covid-19, stricter rules and a rise in customer complaints.

Chief Executive Malcolm Le May said: "We remain vigilant for possible economic shocks, including those caused by further local and national lockdowns. Such measures will inevitably have an impact on customer expenditure patterns and loan origination.

"I have asked the new managing director of CCD, Hamish Paton, to undertake an operational review of the division. This will ensure that the business is best positioned, in the context of these industry dynamics, to return to delivering long-term sustainable profitability, whilst continuing to focus on good customer outcomes."

Le May said Provident had £700m of regulatory capital at the end of September - £200m more than the regulatory minimum.

Provident shares rose 2.9% to 240.20p at 08:28 GMT.