City broker Liberum has upgraded its rating for Provident Financial (LON:PFG) to ‘Buy’ following the conclusion of a regulatory investigation into its credit card Repayment Option Plan (ROP) and a rights issue.
“The two major risks facing PFG were the outcome of the FCA’s investigation into ROP and a potential funding gap.
“These have now been neutralised and the group can focus on recovery,” said the broker.
The FTSE 250-listed sub-prime lender had to pay £172mln to settle the ROP investigation at Vanquis Bank, Provident’s credit card arm.
“Upside risks include revenues from new ROP sales coming back online. Downside risks include higher impairment rates in Vanquis, particularly from the existing book”.
Provident shares were little changed at 978.4p.