Provident Financial (lon:pfg)
Provident Financial Is It Too Early To Pile In?

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Title: Provident Financial Is It Too Early To Pile In?
Company: PFG - Provident Financial
Share Price Then: 2076p
Author: Ian Smith
Date: Mon 31 Jul 2017
Comments: Three out of four parts of the Provident Group reported good or excellent results, Vanquish (credit cards), Moneybarn (car finance) and Satsuma (short term loans) divisions all performed well.

The Home Loans division got its self into a bit of mess by replacing the self employed door to door seller of loans/collectors of payment with employed people doing the same thing.

The rationale behind the move is sound, a better customer experience by being able to tell employees what to do and when rather than let a self employed person make the decision on their own.

Unfortunately not all of the agents liked the idea of becoming an employee and gave up their ‘rounds’ and as there weren’t enough employed people to cover them payments were not collected and new loans made.

It is not clear how much in uncollected repayments there is and how much of that will be collectable.

This lead to an extra £40m of impairments compared to the previous year, and this is what spooked the market especially as it was only going to be £15m.

Despite this the division was still profitable and whilst there may be some customers who have been lost it is not clear how many.

The dividend has been retained and with debt at about half of its maximum level according to its covenants there is very little to be negative about! The only real question is has the share price reached its trough?
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