Provident Slides as Cash-Strapped Clients’ Loan Arrears MountKeith Campbell
Provident Financial Plc, the U.K.’s biggest subprime lender, fell in London trading after saying loan arrears are mounting as rising utility bills hurt customers’ finances.
Shares in Provident slid as much as 7 percent, the most since April 23, and fell 5.6 percent to 1,588 pence as of 3:20 p.m. in London trading, giving the company a market value of 2.2 billion pounds ($3.4 billion). The shares closed at a record 1,683 pence yesterday.
“Household incomes continue to be adversely affected by the persistent rise in day-to-day living costs,” Provident, based in Bradford, England, said in a statement today. “A consequence of the weaker demand through the first quarter is that those existing customers not wishing to take further credit have had less incentive to bring their accounts up to date.”
Impaired loans rose to 35 percent of annualized revenue at the end of the first quarter, up from 33 percent for 2012, according to the statement.
The company said it was still on track to meet its internal plans after growth in the Vanquis credit-card division offset weakness in consumer credit. Provident is focusing on expanding Vanquis, which caters for customers who have been turned away by main-street banks. The lender typically has a 39.9 percent annual charge for its cards.
Provident also said Chairman John van Kuffeler will retire in January and be replaced by Manjit Wolstenholme. Van Kuffeler, the former chief executive officer, became chairman in 1997.