Woodford pick Provident Financial drops out of FTSE 100

Provident Financial has fallen out of the FTSE 100 after a turbulent fortnight that saw the firm issue a profit warning and its chief executive resign.

The firm entered the FTSE 100 at the end of 2015 and dropped out last night.

Provident is best known for its doorstep lending operation, where representatives extend small loans by visiting houses individually.

The firm made big profits after the credit crunch as large banks curbed riskier lending, leading Provident’s share price to rocket. However, the business model has been beset by competition including payday lenders such as Wonga.

The FT reports that shares in Provident dropped 65 per cent last Tuesday when it issued its second profit warning in three months. The sub-prime doorstep lender is expecting losses of between £80m and £120m.

The trading update said debt collection rates have dropped to 57 per cent from 90 per cent in 2016. Sales are £9m lower per week than in the same period last year.

The news led chief executive Peter Crook to step down.

Founded in 1880, Provident first listed in 1962 and made a profit every year since then.

Despite Woodford’s 18 per cent holding in Provident Financial dropping in value from £300m to £168m, the manager remains bullish on the outlook for the firm, saying the parent group is “still expected to post a profit at the group level of at least £80m this year”.