Vanquis Banking Group (VANQ) H1 2024 earnings summary

Executive summary

• 1H24 results were impacted by a detailed Vehicle Finance Stage 3 receivables review and legacy one-off items, resulting in a statutory loss of £35.8m compared to a £15.9m loss in 1H23.

• Strategy focuses on business transformation, diversifying customer offerings, and leveraging technology for efficiency and growth, with new customer volumes growing at better margins.

• Transformation initiatives and cost savings are on track, with £60m targeted by end-2024 and an additional £15m by end-2025.

• Group remains highly liquid and adequately capitalised, with a Tier 1 ratio of 19.8% and retail funding exceeding 86%.

• Customer growth up 91% year-over-year, with strong adoption of new products and digital features.

Financial highlights

• Adjusted loss before tax of £26.8m for H1 2024, mainly due to legacy one-off items and Vehicle Finance review.

• Statutory loss for H1 2024 was £35.8m, with a negative ROTE of 11.5%.

• Net interest income stable at £214.5m, with NIM at 18.8%.

• Gross customer interest earning balances declined 5% to £2,254.2m since December 2023.

• Cost-to-income ratio increased to 68.2%, negatively impacted by one-off items.

Outlook and guidance

• Full-year 2024 expected to report a loss, with cost-to-income ratio revised to 62–65%.

• Medium-term targets reaffirmed: low single-digit ROTE for 2025 and mid-teens ROTE for 2026.

• Additional £15m of cost savings targeted by end of 2025, on top of £60m by end of 2024.

• Modest receivables growth expected in H2 2024, driven by second charge mortgages.

• NIM expected to remain above 18%; retail funding to remain above 85%; Tier 1 ratio target range reset to 18.5–19.5%.