Provident Financial expects fall

PROVIDENT Financial, the consumer credit company facing a Competition Commission inquiry into doorstep lending where it holds half the UK market, today said profits from this division are likely to fall in its first half.

It said the market for small sum credit is increasingly competitive, and it had seen a reduction in the number of customers and the amount of debt they had taken on.

In the first five months of the year, the number of borrowers and the amount of credit issued have been 5% lower than last year.

The group has been under fire since a cross-party committee of MPs called for lending rates to be capped at a maximum of 48% back in June.

Earlier this month, the National Consumer Council asked the Office of Fair Trading to investigate the doorstep lending market.

Provident shares have fallen 20% since they peaked at 771 1/2p.

On the other side of the scales, Yes Car Credit which provides larger loans for people with poor credit ratings to buy second-hand cars, saw the number of vehicles sold in the five months to May increase by 22% with a particularly strong first quarter.

This means the company is on course to report increased profits for the half year.

The insurance division has reduced the number of policies it writes as it concentrates on pricing for profit, with the result that its half year performance should be better than last year's.