Moneybarn, the car finance division of subprime lender Provident Financial, has reported a 10% year-on-year growth in business volumes for the first quarter of the year, as it looks to shed higher-risk business.
The company reported a 24% increase in customers to 53,000. It did not provide absolute numbers for business volumes.
It said risk-adjusted margins continued to reflect higher impairments from larger business volumes, as well as the flow of defaults from business originated prior to the tightening of underwriting in Q2 2017.
Moneybarn said it will “curtail a tier of lower value business which was only marginally profitable”. Motor Finance understands this to refer to higher credit risk customers.
The company added “additional investment” had been made in collections and recoveries, and delinquency trends were improving despite “modestly above expectations” impairments.
Moneybarn said work was continuing on the Financial Conduct Authority (FCA) investigation over the lender’s affordability, forbearance and termination options. In February, Provident estimated Moneybarn’s liabilities over the investigation to be in the range of £20m.
The Provident group fell into trouble following a reorganisation of its collections operations in 2016.
Over 2017, it executed a reshuffle of its executive team, appointing Malcolm Le May as chief executive.
Another FCA investigation into one of Provident’s division, Vanquis Bank’s credit card business, resulted in Provident refunding £169m to clients.
Last year, the group reported £124m in losses. The company recently raised £331m through a rights issue.
Le May said: “We are on-track to deliver results for 2018 in line with internal plans.
“The successful completion of the rights issue provides a strong capital base a nd ensures access to the funding that will allow the group’s businesses to further develop their market-leading positions.
“We are making good progress in strengthening the group’s governance framework, improving the relationship with our regulators and implementing the changes necessary to our culture to place the customer firmly at the heart of our strategy.“