LONDON (ShareCast) - (Sharecast News) - Provident Financial swung to a loss in the first half as revenue fell and bad debts increased but the subprime lender said business had picked up in the second half.
The FTSE 250 company reported a £32.6m adjusted pretax loss for the six months to the end of June compared with an £80.4m profit a year earlier as group revenue fell to £445.6m from £501.5m.

Provident said the results were better than it expected at the start of the Covid-19 crisis and the company's shares jumped after it said activity had increased since the end of June. The shares rose 11.9% to 219p at 08:25 BST and were the biggest gainers in the FTSE 350 index.

Provident's consumer business, which includes doorstep lending, suffered a £37.6m loss compared with a £15.1m loss a year earlier. Profit at the Vanquis Bank card business fell to £11.8m from £90.5m and at the Moneybarn vehicle finance unit profit fell to £2.4m from £15.5m.

Group impairment charges rose to £240.3m from £165.9m with the biggest increase at Vanquis, where provisions rose to £149.9m from £96.6m.

At the consumer credit division customer numbers fell to 379,000 from 531,000 a year earlier and receivables fell to £146.9m from £245.4m as the company struggled to add new customers during the Covid-19 crisis. Provident said it would cut about 300 jobs at the consumer business because of reduced business.

Chief Executive Malcolm Le May said: "This result is better than our initial view of Covid-19's potential impact on our businesses. Since the end of June, some encouraging signs of increased activity levels in our markets can be seen, with improving customer demand and spending trends evident.

"However, the potential economic shock, and uncertainty, that Covid-19 will bring to the UK economy over the coming months must not be underestimated."

Provident said it had £705m of regulatory capital at the end of June, a surplus of £215m over the regulatory minimum. The company will not pay a dividend in 2020 and said it would return taxpayer support received during the crisis.

Peel Hunt analyst Stuart Duncan, who recommends buying Provident Financial shares, said: "The interim results, although loss making, were generally positive, showing that the business is proving resilient and trading better than internal plans."

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