CCD closure could lead to £100m losses, says Provident

This figure included £46.3m of exceptional costs related to the winddown of the consumer credit division (CCD) businesses. 

In addition to this, the group recorded an adjusted ongoing profit before tax, excluding CCD, of £63.5m. This reflects a reduction in impairment and costs year-on-year which combined offset the fall in revenue. 

Alongside this, subsidiaries Vanquis Bank and Moneybarn were profitable in the first half of 2021. 

The results come a week after the High Court approved Provident’s CCD scheme of arrangement, with the firm now beginning to implement it. The deadline for submission of claims from consumers is expected to be towards the end of February 2022 - with it anticipated that all payments to creditors would have been made towards the end of 2022. 

At the end of July, the CCD receivables book stood at approximately £37m, and Provident Financial expects the closure of the CCD to lead to losses of up to £100m. In addition to this, the firm’s liquidity in the first six months of 2021 stood at approximately £510m - down on the £1.2bn generated in the first half of 2020. 

The 2021 figure included £280m held by Vanquis Bank, which “represents” a more normalised level of liquidity for the bank.  

Commenting on the firm’s latest results, its chief executive Malcolm Le May said: “I am pleased that the proposed scheme of arrangement for CCD, which was provided for in our 2020 accounts, was sanctioned by the High Court on 4 August. We can now continue to move forwards with our plans to close the business before paying customer redress claims during 2022. 

“During the remainder of 2021, Provident Financial will accelerate its transition towards becoming the leading specialist bank focused on financially underserved customers, serving growing market segments, with a range of mid-cost products across credit cards, vehicle finance and unsecured personal loans. We are well positioned to complete this transition successfully and our strategy is underpinned by a robust balance sheet with access to a diverse range of funding options.”