Chief executive Peter Crook quits and doorstep lender cancels dividend after slump in debt collection rate to 57%
Provident Financial’s stock market value has more than halved after the doorstep lender issued its second profit warning in months, parted company with its chief executive and cancelled a dividend for shareholders.
The company, which specialises in lending to people in financial difficulty and joined the FTSE 100 in Dec 2015, expects to make losses of up to £120m this year.
Its debt collection rate slumped to 57%, compared with 90% last year.
Its chief executive, Peter Crook, will step down with immediate effect in the light of the company’s poor performance, with Manjit Wolstenholme taking on the role of executive chairman. Provident will also cancel its interim dividend – and “in all likelihood” the full-year payout as well – in an attempt to conserve cash.
The perfect storm of bad news for investors sent shares in the lender plunging more than 60%, from more than £17 to £682p.
Bradford-based Provident has struggled to implement a new way of collecting on the loans it makes, admitting that the changes have led to it “falling a long way short” of targets.
“I am very disappointed to have to announce the rapid deterioration in the outlook for the home credit business,” Wolstenholme said.