Provident Financial bounces back to profit after shift away from subprime lending
Subprime lender Provident Financial bounced back into profit last year as it rode an economic rebound and moved away from riskier consumer lending.
Pre-tax profits at the firm hit £4.1m last year despite the balance book weathering a £95.5m hit stemming from the closure of its consumer credit business which offered short term loans at high cost.
Boss Malcolm Le May said the year marked a rebound for the firm.
“I am pleased to report that the group’s financial performance in 2021 improved significantly year-on-year,” he said.
“Most importantly, we achieved all of this whilst maintaining a focus on providing our customers with the credit products they need.”
Le May said the lender had shifted its focus onto providing “mid-cost lending” products to over 1.6m customers.
Provident’s credit card division recorded a drop in revenue, which bosses chalked up to less consumer spending through lockdowns, but still underpinned a profits boost for the group.
Adjusted pre-tax profits for the division increased more than fourfold to £173.9m.
The firm’s exit from the subprime lending market followed a claims mismanagement scandal as borrowers were sold unaffordable loans. The firm said it would pay £50m to meet the claims last year.