August 20, 2019 / 7:02 AM / 6 months ago

UPDATE 1-Lender NSF posts bigger loss as costs of failed M&A pile up

(Adds background on deal, loan book)

Aug 20 (Reuters) - Lender Non-Standard Finance posted a massive first-half loss on Tuesday, partly due to costs related to its failed takeover attempt of larger rival Provident Financial, while a strong market demand led to a jump in adjusted earnings.

After months of back and forth between the sub-prime lenders, NSF dropped its unsolicited 1.3 billion pound bid to for Provident in June.

It took a charge of 12.7 million pounds related to the failed deal, leading to a much bigger loss of 22.8 million pounds ($27.62 million) for the six months ended June 30 compared with 2.6 million pounds a year earlier.

However, customer additions and a strong loan book helped its normalised earnings climb 12% to 6.3 million pounds.

Total loan book expanded 26% to 335.6 million pounds, thanks to strong demand for guarantor loans, which jumped 53% in the period. A guarantor loan is a type of unsecured loan which needs a guarantor to co-sign the credit agreement.

NSF declared an interim dividend of 0.7 pence per share, which was 17% higher than a year earlier but below the 20% rise it announced in mid-2018.

The lender, which provides credit to people who do not meet the lending criteria of mainstream banks, said it was well-placed to meet full-year targets despite macroeconomic uncertainties.

“We are continuing to see a strong level of demand in both branch-based lending and guarantor loans while in the more mature home credit market, demand remains steady,” NSF Chief Executive Officer John van Kuffeler said.

$1 = 0.8254 pounds Reporting by Muvija M in Bengaluru; Editing by Arun Koyyur

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