Provident Financial reinstated its dividend as the subprime lender returned to annual profit after bad-debt provisions fell.
Adjusted pretax profit was £64.8m in the year to the end of December compared with a £54.6m loss a year earlier as revenue fell to £534.6m from £615.4m.
Provident Financial declared a dividend of 12p a share. There was no dividend in 2020. The company said it expected to increase its payout ratio to about 40% in 2022 from 30% in 2021.
Statutory pretax profit was £4.1m compared with a £113.5m loss the year before. Bad-debt impairments dropped to £50.4m from £312.6m a year earlier.
The FTSE 250 group tightened lending standards during the Covid-19 crisis and scrapped the doorstep lending operation that was once the core of its business. Its business now comprises credit cards, vehicle finance and a new personal loans division.
Malcolm Le May, Provident Financial’s chief executive, said: “The group’s financial performance in FY’21 improved significantly year-on-year and, as a result, our adjusted profit before tax from continuing operations was marginally ahead of market expectations.
“Reflecting the improved performance of the group, I am pleased to report that the board is proposing a dividend of 12p per share.”
Adjusted pretax profit at the credit card business rose to £173.9m from £39.5m as bad-debt provisions fell. The company said new credit card accounts were ahead of expectations in the first quarter of 2022 and delinquency rates were favourable.
