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Provident Financial quits doorstep lending, threatening 2,100 jobs
10th May 2021 07:30
(Sharecast News) - Provident Financial said it was pulling out of doorstep lending after more than 100 years as the subprime lender plunged to a £113.5m annual loss.
The FTSE 250 group said it would place its troubled home-credit business into run-off or consider a sale, putting 2,100 jobs at risk and costing about £100m. Provident will stop offering high-cost or home-collected loans and will concentrate on "mid-cost" personal loans.
A £74.9m loss at the home-credit business sent Provident Financial to a £113.5m pretax loss for the year to the end of December from a £119m profit a year earlier. The group swung to an adjusted pretax loss of £47.1m from a £152.8m profit a year earlier.
Provident Financial was founded in 1880 when Joshua Widdilove, an insurance agent, spotted that families were struggling to pay for basic items such as furniture and clothes. He lent them money and employed agents to collect the debt in small weekly instalments.
In recent years the home credit business has caused Provident problems, forcing a series of profit warnings after a botched overhaul and attracting an investigation by the Financial Conduct Authority into its handling of claims. Customer complaints have soared, threatening the business with collapse.
Malcolm Le May, Provident's chief executive, said: "In light of the changing industry and regulatory dynamics in the home credit sector, as well as shifting customer preferences, it is with deepest regret that we have decided to withdraw from the home credit market and we intend to either place the business into managed run-off or consider a disposal."
Provident shares fell 9.9% to 232.72p at 08:47 BST.
The FTSE 250 group said it would place its troubled home-credit business into run-off or consider a sale, putting 2,100 jobs at risk and costing about £100m. Provident will stop offering high-cost or home-collected loans and will concentrate on "mid-cost" personal loans.
A £74.9m loss at the home-credit business sent Provident Financial to a £113.5m pretax loss for the year to the end of December from a £119m profit a year earlier. The group swung to an adjusted pretax loss of £47.1m from a £152.8m profit a year earlier.
Provident Financial was founded in 1880 when Joshua Widdilove, an insurance agent, spotted that families were struggling to pay for basic items such as furniture and clothes. He lent them money and employed agents to collect the debt in small weekly instalments.
In recent years the home credit business has caused Provident problems, forcing a series of profit warnings after a botched overhaul and attracting an investigation by the Financial Conduct Authority into its handling of claims. Customer complaints have soared, threatening the business with collapse.
Malcolm Le May, Provident's chief executive, said: "In light of the changing industry and regulatory dynamics in the home credit sector, as well as shifting customer preferences, it is with deepest regret that we have decided to withdraw from the home credit market and we intend to either place the business into managed run-off or consider a disposal."
Provident shares fell 9.9% to 232.72p at 08:47 BST.