Provident Financial eyes dividend as trading improves
By Sean Farrell
Date: Thursday 21 Oct 2021
(Sharecast News) - Provident Financial said it was considering paying out 30% of profit as dividends if economic conditions continue to improve.
The subprime lender said trading improved in the three months to the end of September as the economy picked up and that customer demand returned to pre-pandemic levels. Provident said the trends reduced the need to account for expected losses and that it would consider releasing bad-debt provisions with its annual results.
Provident scrapped its dividend during the pandemic but said it would consider paying out 30% of annual profit if conditions continued to pick up.
Delinquency trends in the credit card and personal loans business were stable and customer spending rose 20% from a year earlier and by 5% compared with September 2019. Receivables rose by 5% in the third quarter. Vehicle finance benefited from a booming market in second-hand cars with credit issued rising 3% but with volumes down on an unusually buoyant year-earlier period.
Provident said early signs were that the end of the government's furlough programme at the end of September would lead to fewer job losses than expected.
Chief Executive Malcolm Le May said: "The group's trading performance during the third quarter improved significantly as a result of more favourable macroeconomic conditions reducing the impact of IFRS 9 accounting combined with customer demand for credit returning to pre-pandemic levels.
"Subject to these improvements continuing on a similar trajectory until the end of the year, the board would consider declaring an ordinary dividend pay-out of approximately 30% of adjusted ongoing PBT1 in respect of FY'21."
Provident announced the closure of its once-core doorstep lending business in May. On Thursday the company said the closure was proceeding as expected and was on track to cost up to £100m as expected.
Shares of Provident Financial rose 1.5% to 321.33p at 08:58 BST.
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