Vanquis Banking Group (VANQ) Trading Update summary

Trading performance and business transformation

• Trading performance improved towards the end of H1 2024, with customer growth and a return to receivables growth in June.

• New customer volumes exceeded plan, and second charge mortgage bookings outperformed expectations after launching Interbridge Mortgages.

• Net interest income remained stable year-on-year, with completed re-pricing initiatives and stable underlying credit quality.

• Technology and operational efficiency projects are on track, targeting £60m in cost savings by year-end.

• Complaint costs are within guidance, and industry-wide actions against spurious complaints continue.

Balance sheet review and one-off items

• A comprehensive balance sheet review led to a £29m downward revaluation of Vehicle Finance Stage 3 balances, with £16m restated to prior years and the remainder in H1 2024.

• Additional one-off write-downs of £11m were identified, including a redundant mobile app and property dilapidations.

• These write-downs impacted the capital position, resulting in a Tier 1 ratio of 19.7% at 30 June 2024.

Key financial metrics and restatements

• Gross customer interest-earning balances at 30 June 2024 were £2,254.2m, down from £2,402.8m at 31 Dec 2023.

• Net interest margin was 18.8% at 30 June 2024, up from 18.6% at 31 Dec 2023.

• Restatements related to Vehicle Finance led to adjustments in prior period results, including a £16m reduction in net receivables and an £8m increase in statutory loss before tax for 2023.