Vanquis Banking Group (VANQ) H2 2024 earnings summary

Executive summary

• 2024 marked a pivotal year with strategic transformation, cost discipline exceeding targets, and significant operational and financial challenges addressed, including improved credit quality and elevated complaint costs.

• Balance sheet was cleaned up, focusing on sustainable performance, simplified organization, and measured business growth.

• Technology transformation (Gateway) and digitization initiatives advanced, including AI deployment, Snoop integration, and improved colleague engagement.

• Retail funding now exceeds 92% of total funding, strengthening liquidity and customer engagement.

• Customer satisfaction improved, with Trustpilot scores of 4.2 (Vanquis) and 4.4 (Moneybarn).

Financial highlights

• Adjusted loss before tax was GBP 34.8 million; statutory loss before tax was GBP 136.3 million, including a GBP 71.2 million goodwill write-off.

• Net interest margin (NIM) at 18.4%, up to 18.9% excluding second-charge mortgages; net interest income fell 5% to £420.0m.

• Adjusted cost-income ratio at 64.2%-65.9%, within guidance.

• Tier 1 Capital Ratio ended at 18.8%, supporting growth plans.

• Retail deposit funding grew by 25% to GBP 2.4 billion.

Outlook and guidance

• Gross customer interest earning balances expected to reach GBP 2.6 billion by end-2025 and GBP 3 billion by end-2026.

• NIM guidance lowered to >17% in 2025 and >16% in 2026 due to higher second-charge mortgage growth.

• Tier 1 Capital Ratio guidance updated to >17.5%.

• ROTE expected to be low single digits in 2025, low double digits in 2026, and mid-teens by 2027.

• Board to review capital allocation and dividend policy in 2026; regulatory capital requirements may be re-evaluated.