Vanquis Banking Group PLC · LSE:VANQ
Vanquis Banking — Provident Financial — FY2019 Earnings Presentation
24 slides from Vanquis Banking's earnings presentation, 2020
Slide 1: Purpose & progress
Purpose & progress Provident Financial plc 2019 preliminary results
Slide 2: Today's presentation
INTRODUCTION Today’s presentation Highlights and operational progress Malcolm Le May Financial review Simon Thomas Malcolm Le May - CEO Strategy and outlook Malcolm Le May Questions Glossary of definitions Contacts Simon Thomas - CFO 1 Provident Financial plc - 2019 preliminary results
Slide 3: Highlights and operational progress
Highlights and operational progress Malcolm Le May Chief Executive Officer 2
Slide 4: Continued good operational and financial recovery of the group
HIGHLIGHTS AND OPERATIONAL PROGRESS Continued good operational and financial recovery of the group Group adjusted profit before tax • Group adjusted profit before tax up 1.6% to £162.6m • Continued strengthening of regulatory relationships and positive progress on delivering cultural change £162.6m
Slide 5: Operational progress – Vanquis Bank
HIGHLIGHTS AND OPERATIONAL PROGRESS Operational progress – Vanquis Bank New customer bookings (‘000) • Strengthened management team under the 500 437 leadership of Neil Chandler 400 366 369 • Higher minimum payments and recommended payments in response to CCMS measures on 300 persistent debt 200 • C
Slide 6: Operational progress – Moneybarn
HIGHLIGHTS AND OPERATIONAL PROGRESS Operational progress – Moneybarn Receivables (£m) • Continued strong growth and development of the 600 proposition 502 500 416 • Underwriting tightened in Q4 2019 and collections 400 334 processes strengthened 300 • FCA investigation into affordability, forbearanc
Slide 7: Operational progress – CCD
HIGHLIGHTS AND OPERATIONAL PROGRESS Operational progress – CCD • Revised sales processes following implementation Adjusted loss before tax (£m) of high-cost credit review 2017 2018 2019 - • Enhanced performance management and variable (20) pay rolled out (20.8) (40) • Successful test of Provident Di
Slide 8: Financial review
Financial review Simon Thomas Chief Financial Officer 7
Slide 9: Group results
FINANCIAL REVIEW Group results Year ended 31 December 2019 2018 Change • Restatement of 2018 comparatives for (restated1) three changes in accounting treatment: Adjusted profit/(loss) before tax £m £m % – Directly attributable deferred Vanquis Bank 173.5 190.9 (9.1) acquisition costs in Vanquis Bank
Slide 10: Exceptional items
FINANCIAL REVIEW Exceptional items Year ended 31 December Charge/(credit) 2019 2018 £m £m Bid defence costs associated with NSF’s unsolicited offer for the group 23.8 - Restructuring costs, primarily in respect of the ongoing turnaround of CCD 19.3 29.9 Release of provisions in respect of ROP refund
Slide 11: Vanquis Bank results
FINANCIAL REVIEW Vanquis Bank results Year ended 31 December • Expected reduction in profits due to 2019 2018 Change reduction in ROP income (£20m) and 2018 (restated1) benefitting from accruals releases (£10m) £m £m % • New customer account bookings up 3k to Customer numbers (‘000) 1,720 1,773 (3.0
Slide 12: Moneybarn results
FINANCIAL REVIEW Moneybarn results Year ended 31 December 2019 2018 Change (restated1) • Increase in adjusted profit reflects £m £m % continued strong growth in customers and receivables Customer numbers (‘000) 77 62 24.2 Year-end receivables 502.1 416.4 20.6 • Growth in new business volumes of 30%
Slide 13: CCD results
FINANCIAL REVIEW CCD results Year ended 31 December • Significant reduction in adjusted loss 2019 2018 Change reflects continued improvement in £m £m % new customer acquisition, collections Customer numbers (‘000) 522 560 (6.8) performance and cost efficiency Year-end receivables 249.0 292.5 (14.9)
Slide 14: Diversifying and lowering the cost of funding
FINANCIAL REVIEW Diversifying and lowering the cost of funding At 31 Dec 2019 Proforma • Moneybarn securitisation signed in actual post-securitisation January 2020: £m £m – £100m initial funding growing to Vanquis Bank: £275m over next 18 months Retail deposits 1,345 1,345 – Bank facility reduced fr
Slide 15: Robust regulatory capital base
FINANCIAL REVIEW Robust regulatory capital base Regulatory capital headroom reconciliation – 12 months ending 31 Dec 2019 £m Regulatory capital headroom at 1 Jan 2019 96 • CET 1 ratio of 30.7% compared with fully loaded TCR of 25.5% Year 2 IFRS 9 transitional impact (18) • Regulatory capital headroo
Slide 16: Strategy and outlook
Strategy and outlook Malcolm Le May Chief Executive Officer 15
Slide 17: Our purpose: We help put people on a path to a better everyday life
STRATEGY AND OUTLOOK Our purpose: We help put people on a path to a better everyday life Our purpose is underpinned by four strategic drivers: Customer progression Human experiences Head AND heart decisions Fighting fit We will build products, services and We will build enduring relationships We wil
Slide 18: Significant opportunities to take the group forward
STRATEGY AND OUTLOOK Significant opportunities to take the group forward Market and product 1 Growing markets and / or growing market share 2 Expanding product range, distribution and digital 3 • Digital personal loans Moving into other non-mainstream markets • Near prime motor finance Costs, fundin
Slide 19: Clear 'Vision for the Future' underpinned by growth and efficiency initiatives
STRATEGY AND OUTLOOK Clear ‘Vision for the Future’ underpinned by a number of growth and efficiency initiatives Now Medium term Growth – core cards innovations, loans, partnerships, self-employed Cost and digital focus Evolving model to new regulation Continued core market growth Core market asset c
Slide 20: Sustainable, attractive shareholder returns based on medium term targets
STRATEGY AND OUTLOOK Sustainable, attractive shareholder returns based on medium term targets Receivables growth c.5-10% p.a. Cost income ratio 38% over next 5 years in 2022 (2019: £2.2bn) (2019: 43%) ROE c.20-25% Dividend cover ≥ 1.4x in 2021 Evolving cover as CCD returns to profitability (2019: 18
Slide 21: Outlook
STRATEGY AND OUTLOOK Outlook • Despite continuing regulatory headwinds, we are well-placed both operationally and financially as we enter 2020 • Collections performance and impairment trends have remained stable in the important post-Christmas period • Focus in 2020 will be on progressing our strate
Slide 22: Questions
Questions • Glossary of definitions • Contacts 21
Slide 23: Glossary of definitions
GLOSSARY OF DEFINITIONS Glossary of definitions • Adjusted profit before tax - Profit before tax prior to the amortisation of acquisition intangibles and exceptional items • Average receivables - Average of month end receivables for the 12 months ended 31 December • Revenue yield - Revenue as a perc
Slide 24: Contact details
CONTACTS Contact details Provident Financial plc No.1 Godwin Street Bradford BD1 2SU Contacts: Gary Thompson – Director of Group Finance and Investor Relations Vicki Turner – Group Financial Controller Telephone: +44 (0)1274 351900 Email: investors@providentfinancial.com Website: www.providentfinanc