UPDATE 1-UK Provident home credit collections return to pre-virus levels, 2020 on track

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Nov. 4 (Reuters) – Door lender Provident Financial Plc said on Wednesday that the collection performance of its mortgage business was now in line with pre-pandemic levels, with the company ready to meet market expectations for This year.

“Regarding the Group’s performance during the quarter, business failure trends are stable and the use of payment holidays has remained below our initial expectations,” said Managing Director Malcom Le May.

Provident was working to make its mortgage division profitable, which had undergone a poorly executed restructuring, when the COVID-19 pandemic struck.

Higher write-downs pushed the segment into an even larger loss for the first half of August, with customer numbers also declining.

In June, rival Non-Standard Finance Plc, which tried unsuccessfully to buy Provident last year, reported going concern risks as the pandemic disrupted people’s borrowing habits.

But Provident, which provides loans to people outside of traditional banks, said new business volumes increased in the third quarter ended September 30.

He added that the group was well positioned for the traditionally busier last quarter, when people often take out loans for Christmas shopping.

The UK-listed company reported a Common Equity Tier 1 (CET1) ratio – a closely watched measure of its balance sheet strength – of 36% at the end of September. This was slightly higher than the 35.4% posted in August.

To deal with an expected increase in loan losses amid the global health crisis, Provident has already set aside 240 million pounds ($ 311.62 million). ($ 1 = 0.7702 lb) (Reporting by Muvija M in Bangalore; Editing by Rashmi Aich)