Provident Financial PLC COVID-19 and Dividend Update (7916H)
27 Marzo 2020 - 1:00AM
UK Regulatory
TIDMPFG
RNS Number : 7916H
Provident Financial PLC
27 March 2020
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
Provident Financial plc
COVID-19 and dividend update
The UK and global economies are currently experiencing
unprecedented uncertainty as a result of COVID-19.
The group's immediate priority has been on safeguarding the
health and wellbeing of our colleagues and customers. Significant
steps have already been taken in this regard in line with
Government guidance and policy. These include working from home for
a significant proportion of colleagues throughout the group;
encouraging more customers to make remote payments through the
internet, apps or via telephone; and introducing technology to
allow some contact centre colleagues to work from home whilst
maintaining telephone contact with customers.
In our home credit business, we have introduced a temporary
pause on face-to-face visits given the Government's recent
measures. Customer Experience Managers (CEMs) are maintaining the
customer relationship through phone, SMS and online to support
customers and encourage repayment through other mechanisms
including the web, card payments via the CEM, contact centre or
post office. Prior to the Government's recent social distancing
measures, approximately 25% of weekly collections were through
non-cash methods. In addition, we are introducing remote lending
capability for CEMs and electronic disbursement of loans for home
credit customers. We have also accelerated the roll out of
Provident Direct to increase repayment optionality for
customers.
In the first eleven weeks of 2020, there was no discernible
impact of COVID-19 on credit issued, credit quality or collections.
However, we continue to assess the impact on our business from the
measures recently announced by the UK Government, together with our
own actions on forbearance where we help customers in difficulty to
manage their repayments over an extended time frame. We expect both
our credit issued and collections performance to be adversely
impacted during this period of uncertainty. It is too early to
quantify the potential financial impact of COVID-19 on the group's
financial performance and, therefore, we consider it prudent to
withdraw any forward guidance for 2020.
We remain heavily focused on managing capital and liquidity
through: (i) tightening underwriting across each of our businesses,
particularly in respect of new business in Moneybarn where loan
values are higher and demand is expected to reduce in the coming
weeks - our focus in all three businesses is on supporting our
existing customers; (ii) maintaining tight control of costs in each
business, particularly discretionary spend; and (iii) preserving
our capital and liquidity positions where possible.
The Board has decided that, given the uncertainties at this
time, the 2019 final dividend of 16.0p per share will no longer be
proposed at the Annual General Meeting (AGM). The cash and capital
impact of the decision to withdraw the dividend is approximately
GBP40m. Future dividend decisions will be made as and when
conditions normalise and an update will be provided with the
group's interim results in July.
The group has strong capital and liquidity positions
comprising:
-- Regulatory capital headroom of approximately GBP200m(1) ,
prior to the capital conservation buffer of approximately GBP55m
which is held and may be used in the event of a stress scenario
such as currently being experienced in the UK.
-- Headroom on committed facilities and surplus cash and liquid
resources amounting to approximately GBP230m. This is in addition
to GBP170m held by Vanquis Bank in respect of their Individual
Liquidity Guidance and ongoing access to the retail deposits
market.
The requirements of persistent debt regulation on credit cards
which was due to come into effect on 1 March 2020 (PD36) has been
deferred by the Financial Conduct Authority (FCA) until 1 October
2020.
The company's AGM is currently scheduled for 7 May 2020. This is
being kept under review and a further announcement will be made in
due course. We plan to provide a further update to the market on
COVID-19 and trading in mid-May.
Malcolm Le May, Group Chief Executive, commented:
"In these trying times, the welfare of our customers and
colleagues has been paramount and I have been very pleased with how
we have adapted our business practices to ensure that we continue
to safely support our customers. I would like to thank all our
colleagues for their hard-work and the way they have risen to this
challenge.
The impact of COVID-19 on the wider UK economy and our own
financial performance clearly remains uncertain. However, the
decisive actions we are taking, together with our strong capital
and liquidity positions, mean that I remain confident in the
group's medium-term opportunity."
1 Regulatory capital headroom is calculated based on the group's
Total Capital Requirement (TCR) of 24.5% (which has reduced by 1%
due to the reduction in the counter cyclical buffer from 1% to 0%)
and includes the dynamic transitional adjustment for IFRS 9 of
approximately GBP20m which was reflected in the group's Pillar 3
disclosures and capital reporting but was conservatively not
reflected in the headroom disclosed in the group's financial
statements (the dynamic transitional adjustment for IFRS 9 allows
70% of new stage 1 and 2 provisions since the adoption of IFRS 9 to
be reversed in line with the transitional arrangements for IFRS
9).
The person responsible for arranging for the release of this
announcement on behalf of the company is Charlotte Davies, Group
Legal Counsel and Company Secretary.
Enquiries:
Media
Richard King, Provident Financial 0203 620 3073
Nick Cosgrove/Simone Selzer, Brunswick 020 7404 5959
Investor Relations
Gary Thompson/Vicki Turner, Provident Financial 01274 351900
investors@providentfinancial.com
Notes to editors:
Provident Financial plc is a leading provider of credit products
which provide financial inclusion for those consumers who are not
well served by mainstream lenders. The group serves 2.3 million
customers and its operations consist of Vanquis Bank, Moneybarn,
and the Consumer Credit Division (CCD) comprising Provident home
credit and Satsuma.
This information is provided by RNS, the news service of the
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END
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