July 31, 2018 / 7:15 AM / 17 days ago

Provident Financial shares rise as lands new chairman

(Reuters) - Provident Financial (PFG.L) named a new chairman and said it would deliver regular dividends from next year, lifting its shares by as much as 15 percent on Tuesday.

The sub-prime lender, which is trying to win back customers after prolonged problems at its home lending arm, said Patrick Snowball would take over as chairman in September and named three non-executive directors.

Snowball, who will replace interim chairman Stuart Sinclair, has been credited with turning around Australian insurer Suncorp (SUN.AX) and has held senior roles at Aviva Plc (AV.L).

“We believe the board additions will be taken well by the market,” Jefferies analysts said.

Shares in Provident were up 13 percent at 697.8 pence at 0903 GMT, the biggest gainer on London's midcap index .FTMC.

The stock lost 70 percent of its value last year after a botched reorganization of Provident’s home credit business led to two profit warnings, the departure of its CEO and the suspension of its dividend.

“It has been a tough last year for the company and for its shareholders, but management has not wasted the opportunity which comes with crisis. The recovery in the business is not yet complete, but the recovery in the share price has not even started,” Cenkos Securities analyst Rae Maile said.

Provident, which provides credit to people who do not meet the lending criteria of mainstream banks, confirmed on Tuesday its intention to restore dividends and signaled a progressive dividend policy from the 2019 financial year.

Provident reported a 24 percent drop in first-half adjusted pre-tax profit, hurt by disappointing collections at its home credit business. Analysts at JP Morgan said profit was in line with its estimate of 75 million pounds.

However, collections in the second quarter were about 10 percent lower than historic levels, and the home credit arm posted an adjusted loss before tax of 23.2 million pounds.

Asked about targets for the unit’s recovery and what percentage of customers Provident hoped to win back, Chief Executive Officer Malcolm Le May said the firm was working on getting it fully authorized by Britain’s financial watchdog.

“We are the market leading player by some considerable margin on any statistic, and its an anathema to me that we should not be authorized,” Le May said on a media call.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr and Alexander Smith

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