Shares in Provident Financial PLC (LON:PFG) perked up after the troubled doorstep lender announced a raft of board room changes along with its interim results.
Patrick Snowball, the former chief executive officer of financial services group, Suncorp, has been appointed as chairman and non-executive director, succeeding interim chairman, Stuart Sinclair.
Angela Knight, Elizabeth G. Chambers and Paul Hewitt have been appointed as non-executive directors.
READ Provident Financial's outlook 'finally looking up' after tough 2017, says Barclays
Former Conservative MP Knight is currently the chair of the Office of Tax Simplification and was previously the chief executive of the British Bankers’ Association.
Chambers currently serves on the board of wealth manager Smith & Williamson while Hewitt is the former deputy chief executive of the Co-operative Group.
“These appointments will add to the board's financial services, consumer finance, regulatory and non-executive director skill set,” said Malcolm Le May, the chief executive officer of Provident.
The group said that adjusted profit before tax in the first half of 2018 fell to £74.9mln from £98.6mln a year earlier. Numis Securities had forecast profit of £71.1mln.
The Vanquis Bank arm saw adjusted profit before tax rise 6.1% to £97.2mln versus a proforma figure of £91.6mln the year before.
Numis Securities had forecast profits for Vanquis of £86.2mln.
The number of new customer accounts declined to 187,000 from 234,000 in the first six months of last year, reflecting the impact from the tightening of underwriting during the third quarter of last year and the cessation of the Argos contract in early 2018.
The home credit division made an adjusted loss before tax of £23.2mln, compared to a proforma profit the year before of £4.7mln.
Numis had forecast a loss of £19.5mln. “Provident has not reconnected with as many customers as planned and they are also seeing a number of customers not making full payments,” the broker noted.
Car loan peddler Moneybarn’s adjusted profit before tax eased up 2.9% to £10.6mln from a proforma £16.9mln the year before.
“Moneybarn was also weaker than forecast with costs (up 30.9%) and interest expense (up 32.4%) growing faster than revenue less impairment (up 21.7%) and average receivables (up 25.6%),” Numis noted.
Shore Capital, which rates the shares a hold, said, Provident had endured a difficult past eighteen months.
There was “the disastrous restructuring of its home credit business” along with regulatory investigations into both Vanquis and Moneybarn, which resulted in significant redress provisions being made.
“However, having completed a £300m (net of fees) rights issue earlier in the year followed by the issue of a new £250m corporate bond, the balance sheet is now on a firm footing, in our view. Furthermore, we are encouraged that the home credit business appears to have been stabilised and remains on track to return to profitability in 2019F,” the broker said, adding that it welcomed the strengthening of the board.
The broker said it is inclined to increase its current fair value estimate of 640p.
Shares in Provident were up 12.6% at 695p heading into the last hour of trading.