Provident Financial swings to interim profit

Subprime lender Provident Financial said on Wednesday that it swung to an interim profit following the wind down of its consumer credit division (CCD).

In the six months to 30 June, the company swung to a statutory pre-tax profit of £37.3m from a loss of £44.2m in the same period a year earlier. Provident said this includes £3.7m of exceptional costs related to corporate costs incurred centrally and £9.6m of discontinued items related to the wind-down of the CCD.

The company’s credit card business reported a pre-tax profit of £75.8m, up from £57m a year earlier, driven by receivables growth and active customer spend levels being maintained year-on-year.

Meanwhile, the vehicle finance business delivered a pre-tax profit of £20.2m, up from £15.5m. Provident said this was driven by higher revenue year-on-year, as a result of the growth in the average receivables book, and lower interest and impairment costs.

Following the wind-down of the CCD, Provident now focuses exclusively on the mid-cost and near-prime segments of the credit market.

"This is expected to have a positive impact on the impairment and cost profile of the group," it said. "Combined with its strong balance sheet, this is expected to enable the group to deliver focussed and sustainable growth whilst also delivering attractive returns to shareholders."