Provident Financial’s share price plunged more than 20 per cent in early morning trading after the sub-prime lender issued a profit warning.
The FTSE 250 firm led the market fallers today after saying that it expects earnings for 2018 to be at the lower end of expectations, blaming modestly higher payment arrangements at its credit card business Vanquis Bank.
Provident Financial said profit for the year would be towards the lower end of a £151m to £166m range forecast by the market, triggering this morning's fall, before shares partly recovered to a 17 per cent drop.
“We have been progressively tightening our underwriting standards throughout the group in anticipation of the current uncertain UK economic environment we are facing,” the company said.
Meanwhile the lender’s car loans arm, Moneybarn, is still under investigation by the Financial Conduct Authority (FCA) over how it decides whether applicants can afford its loans.
Provident said it hopes the investigation will conclude in the first half of 2019.
Vanquis saw new account bookings drop by 17,000 in the fourth quarter, with total new bookings standing at 366,000 - 71,000 lower than 2017.
Moneybarn, however, grew customer numbers by a quarter compared to last year, ending the year with 62,000 of them.
“I am very pleased with the progress we have made in 2018 on delivering against the operational objectives we set ourselves at the start of the year,” chief executive Malcolm Le May said.
“We have been progressively tightening our underwriting standards throughout the group in anticipation of the current uncertain UK economic environment we are facing. We will continue to monitor underwriting standards in light of any changes in customer behaviour.
“The group has strong funding and capital positions and the actions we have taken over the last 18 months have established a solid foundation for continuing to deliver on our strategic aim of being the leading provider of credit products to the 10m to 12m consumers who are not well served by mainstream lenders.”