Provident’s Profit Beats Estimates on Lower Bad Debts
Provident Financial Plc (PFG), the U.K.’s biggest publicly traded subprime lender, said first-half profit rose 18 percent as bad loans dropped.
Net income rose to 45.8 million pounds ($75 million) in the six months to June 30, compared with 38.9 million pounds in the year-earlier period, the Bradford, England-based company said today in a statement. That beat the 42.8 million-pound estimate of four analysts surveyed by Bloomberg.
“Credit quality in both businesses is very sound as evidenced by the favorable impairment trends in the first half,” Chief Executive Officer Peter Crook said in the statement. “This provides the foundation for delivering good quality growth for 2011 as a whole.”
Investors including BlackRock Inc. (BLK) and Ivaldi Capital LLP have disclosed short positions in Provident’s stock in the last two months, betting that a sluggish U.K. economy and reductions in welfare payments will cause an increase in arrears. While Provident is the most short-sold stock in the FTSE 250, with 16 percent of shares on loan according to Data Explorers, it has risen 18 percent since the beginning of the year.
Impairments dropped 7 percent to 169 million pounds in the six-month period, Provident said. The company raised its first- half dividend 5.1 percent to 26.7 pence a share.
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