Provident, the parent of sub-prime motor lender Moneybarn, saw its profits drop by 25% to £74.9m in H1 2018 from £115.3m on H1 2017.
However, Moneybarn fared better, with adjusted profit before tax up 2.9% to £10.6m (2017: adjusted profit before tax of £10.3m,) which Provident said reflected improved credit quality and investment in augmenting the senior management team and resources in customer services and collections.
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Moneybarn had significant growth in new business volumes of 16%, notwithstanding tighter credit standards, said Provident.
“Default rates and arrears levels have now stabilised and the credit quality of new business being written is now materially better than 18 months ago following the tightening of underwriting in 2017,” the results stated.
“Moneybarn continues in a constructive dialogue with the FCA on the investigation into affordability, forbearance and termination options.”
Provident said that its home credit operational recovery plan is expected to be substantially completed during the second half of the year with the objective of obtaining full authorisation from the Financial Conduct Authority (FCA) by the end of the year.
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By GlobalDataBoard changes
The business also made changes to its board, appointing Patrick Snowball as chairman.
Patrick Snowball will join the board on 21 September 2018 as chairman and Stuart Sinclair, the current Interim Chairman, will retire from the Board.
Angela Knight, Elizabeth Chambers and Paul Hewitt join the board as non-executive directors with effect from 31 July 2018.
New chairman
Snowball is an experienced chairman, non-executive director and chief executive, with a long career in insurance and retail banking.
Among his key roles, he was chief executive of Suncorp Group, an Australian financial services group from 2009 until 2015, where he successfully turned round the group following the global financial crisis.
Prior to that, he was a director at Aviva from 2001 till 2007, and as chief executive he played a key role in merging and consolidating Norwich Union, Commercial Union General Accident and London and Edinburgh into Aviva General Insurance.
He became a director and chairman of IntegraFin Holdings in October 2017 and the company completed a successful initial public offering (IPO) in February 2018.
Chief executive statement
Malcolm Le May, chief executive, said: “I am pleased to report good progress against the 2018 goals we set out at results back in February. The implementation of the home credit operational recovery plan is going well, we have commenced our ROP refund programme after a successful pilot, and we remain engaged in constructive dialogue with the FCA on their investigation at Moneybarn. I am confident we are well placed to make good progress on all three goals during the second half of the year and within the provisions we made in 2017.
“Today we have also significantly strengthened the board, another key objective, with the appointment of Patrick Snowball as chairman, and three new non-executive directors. These appointments will add to the Board’s financial services, consumer finance, regulatory and non-executive director skill set.
Operationally we have made good progress. Collections performance in home credit in the second quarter did not show the improvement we expected mainly due to lower collections from customers who were live during the poorly executed migration to the new operating model last summer. However, customers who took credit from us since then are performing in line with historic levels, indicating to me the changes we are making to our model are working. Vanquis Bank continues to perform well and in line with our expectations and has made the necessary changes required to meet the new regulatory requirements introduced by the FCA’s new rules addressing persistent debt. Moneybarn has delivered strong growth and continues to perform in line with our expectations.
I believe the group is well placed to champion the underserved, and through greater collaboration across our businesses we can provide them with the credit they need, when they need it, and on responsible terms. I look forward to continuing the journey of repositioning the group as the leading provider of credit to this underserved sector, and would like to thank all my colleagues for their hard work over the last six months.”
