Provident Financial continues in its struggle for new and returning customers in the company's consumer credit division. It is expected that the company will post a loss of about 120 million pounds in 2017 accounting year. The firm continues to suffer from a number of problems in its lending business. This is being reflected in its share price. It was down to 887 pence, a 3.8 percent move to the south by 0900 GMT. The numbers are the sharpest drop in FTMC, the Midcap Index of FTSE. The numbers have dipped about 70 percent compared to June.
The Provident company warned about its problems to its investors in June 2017. There was a staff shortage in the company after the reorganization effort in the company went flat. The company had informed its audiences that the situation had worsened. It had also intimated that the business will lose anywhere from 80 million to 120 million pounds in its 2017 financial year. The company's doorstep lending business made for about 115 million pounds of the total loss suffered by the consumer credit division.
Provident Financial is not alone. Other subprime lenders, who have witnessed superlative growth over the last 10 years in the United Kingdom from the time of financial crisis, have earlier profited from banks' aversion to risky lending and the austerity years which compelled the poorer citizens to borrow increasing amounts of money. The good period came to an end when a political backlash, fueled by rising public anger against high-interest rates led to a regulatory crackdown. For Provident, its woes did not end there. The company lost its permanent executive chairman, Manjit Wolstenholme, who suddenly died last year. The latter was responsible for replenishing the fortunes of the business.
Importance of consumer division
Malcolm Le May, the Interim Executive Chairman, said that his company has made much progress in its search for a new chief. Provident also said that its business of home credit will slash a few jobs at the central support functions. The company is taking these actions as it wants to cut costs. For Provident, consumer credit division is an important one. It accounted for about 44 percent of the revenues of the company in 2016. As per analysts, Provident will post a pretax profit of about 127.9 million pounds for 2017. This is markedly less than the 343.9 million pounds the company made in 2016.