"All of this news hit the share price very hard, and with the share price down by over 70% since June, it may not come as any surprise to investors that has been relegated."
Last week, the doorstep lender announced that pre-tax losses are "now likely to be in a range of between £80m and £120m" after a new business model reduced forecast profits to around £60m.
It admitted that the rate of progress being made is too weak and the business is "falling a long way short" of achieving its objectives. Collections performance is currently running at 57% versus 90% in 2016.
Amidst the losses, Chief Executive Peter Crook also stepped down.
Additionally, the FCA is continuing an investigation into its sister company Vanquis Bank’s Repayment Option Plan. Vanquis agreed with the FCA to enter into a voluntary requirement to suspend all new sales of the ROP in April 2016 and to conduct a customer contact exercise, which has now been completed.
In view of the "substantial deterioration" in trading performance of the home credit business, together with the uncertainty created by the FCA’s investigation, the Provident Board announced that it will not pay an interim dividend and says a full-year dividend is "unlikely".
Shares in the Group, which include Moneybarn and Satsuma alongside Vanquis, slumped by up to 75% last week, upon the announcement.
Graham Spooner, investment research analyst at The Share Centre, commented: “Investors are likely to have seen Provident Financial plastered over the news over the last few weeks as it issued another profit warning. The group, which was once regarded as the leading non-standard lender in the UK, also announced further problems at its Home Credit division, an investigation into Vanquis Bank and the resignation of the CEO.
"Moreover, Provident highlighted that the dividend announced in July had also been cancelled. Unsurprisingly, all of this news hit the share price very hard, and with the share price down by over 70% since June, it may not come as any surprise to investors that has been relegated."
