Subprime lender Moneybarn continued to grow in Q3, despite a slowing car market and difficulties at its parent company, Provident, according to a Provident interim management statement.
By the end of September, Moneybarn reported customer numbers and receivables were at 49,000 and £362m, compared to 39,000 and £286m for the same month in 2016.
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This growth came despite a tightening of underwriting on higher risk categories of business during the second quarter and some softness in customer demand, Provident said.
The annualised risk-adjusted margin moderated from 23.4% in June 2017 to 22.7% in September 2017, which was also down from the 23.9% recorded in September 2016. This reflected additional impairment associated with the step-up in new business volumes over the last year, and the flow through of impairment from higher risk categories of business prior to the tightening of underwriting.
While Moneybarn continued to go from strength-to-strength, its parent company continued to struggle.
News of Providents problems first came to light in August, when its long term chief executive officer Peter Crook stepped down, and the share price of the company collapsed.
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By GlobalDataThe problems were caused by a shift from using self-employed agents to full-time Customer Experience Managers (CEMs) in its home credit business.
In its statement, Provident admitted that it expected to post a pre-exceptional loss for its Consumer Credit Division in a range of between £80m and £120m as a whole.
Despite this, Manjit Wolstenholme, executive chairman of the Group said: “Since the last update, we have moved quickly to appoint new leadership in home credit who have a deep understanding of the business and recognise the importance of the relationship between our front-line staff and our customers.
“A recovery plan has been developed and a number of actions have already been implemented to restructure the field organisation in order to provide the foundation for delivering the necessary improvement in customer service and financial performance.”
