Provident Financial PLC (LON:PFG) said collections in the home credit business were still 10% below historical levels in the third quarter following a restructuring of the business.
Shares in the subprime lender fell 2.2% to 542p in late morning trading.
The home credit division racked up a deficit of nearly £119mln last year following a disastrous decision to switch from commission-based agents to an in-house sales team. The botched reorganisation sparked a serious of profit warnings, led to a dividend suspension and the departure of chief executive Peter Crook.
In today’s third-quarter update, Provident said it had almost completed a recovery plan for the home credit division but customer numbers dropped to 449,000 at the end of the period from 464,000 at June.
READ: Provident Financial surges as it beefs up board and home credit business stabilises
“The home credit business is still experiencing the drag on collections performance from those customers who were active during the poorly executed migration to the new operating model in the third quarter of 2017,” said chief executive Malcolm Le May.
Vanquis Bank customer numbers rise but bookings flat
The group’s Vanquis Bank subsidiary, which the Financial Conduct Authority fined £2mln and ordered to pay £169mln to customers in compensation for mis-selling a repayment option plan (ROP) last year, saw customer numbers rise 6.3% to 1.79mln in the quarter.
However, customer bookings were flat at 103,000 due to the tightening of credit standards over the past 18 months and the end of a contract with Argos early this year.
Provident said its refund programme to some 1.2mln current and past ROP customers is on track to be mostly completed in early 2019.
Moneybarn continues to co-operate in FCA probe
The car finance arm Moneybarn delivered a 16% rise in new business volumes in the quarter with customer numbers rising 22% to 59,000 despite tighter underwriting standards.
The FCA has been investigating Moneybarn in relation to how the business decides whether applicants can afford its loans, and on how it treats customers who fall into financial difficulty.
Le May said talks with the FCA on the investigation at Moneybarn "continues in a constructive manner".
“The growth and operating performance of Vanquis Bank and Moneybarn are both good and in line with management's plans,” he added.
“The group's funding and capital positions are strong and I believe the group is well placed to achieve its strategic aim of being the leading provider of credit to the underserved sector.”