August 22, 2017 / 6:41 AM / a year ago

Provident Financial CEO quits, dividend cancelled after fresh profit warning

Aug 22 (Reuters) - Provident Financial said its chief executive Peter Crook is leaving and that it is unlikely to pay a dividend this year as the British subprime lender issued its second profit warning in two months.

The company has been struggling to reorganise its door-to-door subprime lending business, warning in June that its profit would fall as it struggles to switch from using self-employed debt collection agents to employees on its payroll.

Provident Financial, which provides credit to people who do not meet the loan criteria of mainstream banks, billed the reorganisation as a way to create a more efficient and effective home credit business. But it has found it harder than expected to recruit agents.

The firm said on Tuesday the rate of progress being made in the turnaround of the home credit unit is “too weak” and that the business is now falling a long way short of achieving the objectives set out.

Collections performance and sales are both substantially underperforming against last year, Provident Financial said, adding that the pre-exceptional loss for the business is now likely to be in a range of 80 million pounds ($103.09 million) to 120 million pounds.

“In response, a thorough and rapid review of home credit’s performance is underway to secure the turnaround of the business,” the company said.

Manjit Wolstenholme will assume the role of executive chairman as Crook departs,.

“I am very disappointed to have to announce the rapid deterioration in the outlook for the home credit business. Protecting the group’s capital base through withdrawing the interim dividend and in all likelihood the full-year dividend is the appropriate response,” Wolstenholme said. ($1 = 0.7760 pounds) (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Rachel Armstrong)

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