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Provident Financial see decrease in profits

The doorstep lender Provident Financial has seen a decrease in profits due to a change in consumer’s behaviour during the last year. Provident Financial has claimed that many potential customers have become more careful about borrowing.

The change in borrowers' behaviour meant Provident reported a 2.4% fall in profits to £125.7m ($187m) last year.

With unemployment still high many consumers are unsurprisingly cautious about taking on new loans. Provident Financial specialises in short-term loans averaging less than £500, which are paid back in weekly instalments.

However the firm has been criticised in the past due to its high rates of interest charged on its loans. The children’s charity Barnardo's says the quicker the loan is repaid the higher the rates. But Provident has argued that, because it charges a flat fee, everyone knows what they will pay and its system is fair, the BBC reports.

Commenting on the decrease in profits Provident said the weather had not helped the picture. It said: "Existing customers exhibited increasingly cautious behaviour during 2009 which tempered demand for credit and was exacerbated by the adverse weather conditions during the peak trading weeks in December."

 

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