(Reuters) - Doorstep lender Provident Financial Plc (L:PFG) said on Wednesday tighter underwriting rules led to a drop in business volumes in April, while adding that it saw signs of a modest recovery in May.
The company, which provides credit to people who do not meet the lending criteria of mainstream banks, said loans to existing consumer credit division (CCD) customers are currently at just one-third of the expected volumes.
Provident set out to return CCD to profitability, after successfully fending off a hostile takeover bid from smaller rival Non-Standard Finance (L:NSF) last year.
The COVID-19 pandemic, however, halted face-to-face visits due to a government-ordered lockdown, forcing the company to withdraw its 2020 targets.
Provident said all home credit collections were now being carried out remotely, tracking at over 80% of what its expectations were before the coronavirus crisis.
New customer bookings at credit card business Vanquis Bank, which has been a growth driver for the firm, reduced by about three-fourths due to tighter lending.
However, the lender said it was in a strong liquidity position, with regulatory capital of 710 million pounds ($875.29 million) equating to a common equity tier 1 ratio of 33.4%.