Shares of Bradford-based subprime lender Provident Financial plc (PFG) rose about 10% on Wednesday after it published results for the six months ended June 30, 2021, showing a group statutory loss before tax of £44.2 million which included £46.3 million of exceptional costs related to the wind-down of its Consumer Credit Division (CCD) businesses.
Provident Financial said adjusted ongoing profit before tax, excluding CCD, was £63.5 million, reflecting “a reduction in impairment and costs year-on-year which combined to offset the fall in revenue.”
The company said the closure of its Consumer Credit Division will help accelerate its transition towards becoming “the leading specialist bank focused on financially underserved customers.”
Provident Financial CEO Malcolm Le May said: “The first six months of 2021 showed a marked contrast to the extremely difficult conditions seen throughout 2020.
“Underlying customer trends and macroeconomic conditions have improved year-on-year, allowing us to focus on the core businesses, which is reflected in our results.
“For the first six months of the year, the group generated an adjusted ongoing profit before tax, excluding our Consumer Credit Division (CCD), of £63.5m.
“Including losses from CCD, the group generated a statutory loss before tax of £44.2m for the period.
“In March, we notified the market of our intention to launch a Scheme of Arrangement for CCD and in May, regrettably, we took the difficult decision to place the business into a managed run-off.
“I am pleased that the proposed Scheme of Arrangement for CCD, which was provided for in our 2020 accounts, was sanctioned by the High Court on 4 August.
“We can now continue to move forwards with our plans to close the business before paying customer redress claims during 2022.
“During the remainder of 2021, PFG will accelerate its transition towards becoming the leading specialist bank focused on financially underserved customers, serving growing market segments with a range of mid-cost products across credit cards, vehicle finance and unsecured personal loans.
“We are well positioned to complete this transition successfully and our strategy is underpinned by a robust balance sheet with access to a diverse range of funding options.”