Vanquis Banking Group PLC · LSE:VANQ
Vanquis Banking — Provident Financial — Investor Day (November 2013)
177 slides from Vanquis Banking's investor day presentation, Nov 27, 2013
Slide 1: Provident Financial plc Investor & Analyst Event
Provident Investor &Financial PLC Analyst Event Presentation Title 1 Provident Financial plc Investor & Analyst Event 27 November 2013
Slide 2: Introduction
Provident Investor &Financial PLC Analyst Event Presentation Title 2 Introduction Investor & Analyst Event 27 November 2013
Slide 3: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 3 AGENDA Timing Topic 10:45 – 11:05 Group update 11:05 – 11:45 Consumer Credit Division (CCD) 11:45 – 12:05 Coffee break 12:05 – 13:15 CCD (including Q&A) 13:15 – 14:15 Lunch 14:15 – 15:15 Vanquis Bank – UK 15:15 – 15:35 Coffee break
Slide 4: Our approach
Provident Investor &Financial PLC Analyst Event Presentation Title 4 OUR APPROACH 1. We focus on small-sum unsecured credit: – High margins and therefore high returns on equity (ROE) are available to companies with sustainable business models 2. Our risks are well spread: – We lend small amounts to
Slide 5: Alignment of dividend policy, gearing and growth
Provident Investor &Financial PLC Analyst Event Presentation Title 5 ALIGNMENT OF DIVIDEND POLICY, GEARING AND GROWTH High ROE businesses Dividend Gearing Growth policy ≤ 3.5x versus covenant Supports receivables Cover ≥ 1.25x of 5.0x growth of £150m - £200m
Slide 6: Delivering shareholder value
Provident Investor &Financial PLC Analyst Event Presentation Title 6 DELIVERING SHAREHOLDER VALUE Earnings per share 100 • We have generated strong, profitable growth since 80 demerger and through the crisis Pence 60 • We have delivered on our dividend commitments stated at the time of demerger: 40
Slide 7: The UK non-standard market in 2007
Provident Investor &Financial PLC Analyst Event Presentation Title 7 THE UK NON-STANDARD MARKET IN 2007 • Over £100bn of advances per annum Prime (c.33m) • Market dominated by and near prime (c.6m) mainstream models and products • Headline prices less than 100% APR with additional fees for Payment P
Slide 8: The UK non-standard market in 2013
Provident Investor &Financial PLC Analyst Event Presentation Title 8 THE UK NON-STANDARD MARKET IN 2013 • Approximately £70bn of advances per annum and Prime (c.33m) growing and near prime (c.7m) • Specialist models and products dominate • More transparent APRs in excess of 100% and into the thousan
Slide 9: Our businesses
Provident Investor &Financial PLC Analyst Event Presentation Title 9 OUR BUSINESSES High return businesses with strong growth potential CONSUMER CREDIT DIVISION VANQUIS BANK FUTURE GROWTH HOME ONLINE UK POLAND CREDIT LOANS RETURNS RETURNS + GROWTH RETURNS + GROWTH RETURNS + GROWTH
Slide 10: Today's presenters
Provident Investor &Financial PLC Analyst Event Presentation Title 10 TODAY’S PRESENTERS Peter Crook Andrew Fisher Group CEO Group CFO CCD VANQUIS Mark Stevens Michael Lenora BANK Managing Managing Director Director Jono Gillespie Andy Parkinson Michael Hutko Sarah Dickins Bob van Breda Technology a
Slide 11: A strong focus on corporate social responsibility
Provident Investor &Financial PLC Analyst Event Presentation Title 11 A STRONG FOCUS ON CORPORATE, SOCIAL RESPONSIBILITY (CSR) • We provide access to credit for those who might otherwise be financially excluded • We lend responsibly keeping the customer at the forefront of our business: – Robust und
Slide 12: Adapting to regulatory change
Provident Investor &Financial PLC Analyst Event Presentation Title 12 ADAPTING TO REGULATORY CHANGE • CCD has been established for over 130 years and Vanquis Bank for over 10 years • Home credit and credit cards are segments that are well-known to regulators and politicians • We invest a lot of time
Slide 13: Our investment case
Provident Investor &Financial PLC Analyst Event Presentation Title 13 OUR INVESTMENT CASE • Winners in non-standard credit will be larger well funded specialist lenders with sustainable business models • We have an attractive mix of businesses: – Cash generative home-collected credit business with a
Slide 14: A new strategy for CCD
Provident Investor &Financial PLC Analyst Event Presentation Title 14 A new strategy for CCD Investor & Analyst Event 27 November 2013
Slide 15: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 15 AGENDA 1. A new strategy for CCD Mark Stevens 2. Update Home Credit and drive for returns • Technology & apps Jono Gillespie • ‘One Best Way’ Andy Parkinson • Collections focus Andy Parkinson • Cost reduction Mark Stevens • Perfor
Slide 16: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 16 AGENDA 1. A new strategy for CCD Mark Stevens 2. Update Home Credit and drive for returns • Technology & apps Jono Gillespie • ‘One Best Way’ Andy Parkinson • Collections focus Andy Parkinson • Cost reduction Mark Stevens • Perfor
Slide 17: Home Credit – a robust business model
Provident Investor &Financial PLC Analyst Event Presentation Title 17 HOME CREDIT – A ROBUST BUSINESS MODEL Home Credit is a great business that has stood the test of time • The home credit service fits the needs of home credit customers ‘like a glove’: ‒ Affordable weekly repayments ‒ Certain costs
Slide 18: Strategic background – Home Credit
Provident Investor &Financial PLC Analyst Event Presentation Title 18 STRATEGIC BACKGROUND – HOME CREDIT Home Credit has a long-term future but needs to be updated • Customer satisfaction is high and stable at 92%: ‒ Simple, transparent and flexible product which directly meets customers’ needs • Cu
Slide 19: Customer satisfaction
Provident Investor &Financial PLC Analyst Event Presentation Title 19 CUSTOMER SATISFACTION Customers remain very satisfied with high scores on key brand attributes Customer satisfaction % Brand attributes 100% • 97% of customers agree that Provident is “friendly” 90% • 97% that we are “accessible”
Slide 20: Cost of living pressures
Provident Investor &Financial PLC Analyst Event Presentation Title 20 COST OF LIVING PRESSURES The costs of everyday essentials have risen much faster than incomes 150 140 Index rebased at Jan 07 = 100 130 120 110 100 90 Retail Prices Index Average gas and electricity Average earnings - UK Average e
Slide 21: Customer confidence
Provident Investor &Financial PLC Analyst Event Presentation Title 21 CUSTOMER CONFIDENCE As a result, customer confidence (and therefore demand) remains at historically low levels Customer confidence index (CONFIX) 60 55 The CONFIX comprises 5 attitudinal statements: 50 1. In the last 12 months I h
Slide 22: A digital era
Provident Investor &Financial PLC Analyst Event Presentation Title 22 A DIGITAL ERA 75% of customers are on the internet and half shop online Internet usage 80% 70% 60% 50% 40% 30% 20% 10% -% Access the internet Purchased online in the last 12 months 50% of visits to our website are via smartphones,
Slide 23: A digital era
Provident Investor &Financial PLC Analyst Event Presentation Title 23 A DIGITAL ERA The percentage who agree that we are “modern” is dropping rapidly % customers who agree Provident is modern • 97% of customers agree that Provident 80% is “friendly” • 97% that we are “accessible” 75% • 96% that we a
Slide 24: Home Credit in the future
Provident Investor &Financial PLC Analyst Event Presentation Title 24 HOME CREDIT IN THE FUTURE An updated business driving better returns • Home Credit is a sustainable business, currently in a cyclical down-turn: ‒ It is the right business model for the target demographic ‒ Well-liked by home cred
Slide 25: Strategic background – wider non-standard market
Provident Investor &Financial PLC Analyst Event Presentation Title 25 STRATEGIC BACKGROUND – WIDER NON-STANDARD MARKET There are significant opportunities outside Home Credit • The non-standard market is growing: ‒ c.12 million customers not served by mainstream credit ‒ Banks continue to tighten ri
Slide 26: Online lending
Provident Investor &Financial PLC Analyst Event Presentation Title 26 ONLINE LENDING We estimate the online loans market to already be c.4 times the size of the home credit market and growing much faster 2012 New loans £bn Home credit 1.2 - 1.4 4x Online loans (small-sum), c.5.4 of which: Payday 5.0
Slide 27: CCD strategy
Provident Investor &Financial PLC Analyst Event Presentation Title 27 CCD STRATEGY Our new strategy has 2 elements ‒ We become a lending business not just a home credit business 1. Update Home Credit and drive for returns 2. Win in online loans • Investing in people and technology is a key • Applyin
Slide 28: A new CCD team
Provident Investor &Financial PLC Analyst Event Presentation Title 28 A NEW CCD TEAM To deliver this strategy we have assembled a team with a mix of Provident experience and proven external track records Presenting today Mark Stevens Managing Director Andy Jono Gillespie Phillip Tim Anson Steve Shaw
Slide 29: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 29 AGENDA 1. A new strategy for CCD Mark Stevens 2. Update Home Credit and drive for returns • Technology & apps Jono Gillespie • ‘One Best Way’ Andy Parkinson • Collections focus Andy Parkinson • Cost reduction Mark Stevens • Perfor
Slide 30: Update Home Credit and drive for returns
Provident Investor &Financial PLC Analyst Event Presentation Title 30 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns Much Technology ‘One Best Collections lower & apps Way’ focus
Slide 31: Update Home Credit and drive for returns – Technology & apps
Provident Investor &Financial PLC Analyst Event Presentation Title 31 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns Technology & apps
Slide 32: Technology & apps – why now
Provident Investor &Financial PLC Analyst Event Presentation Title 32 TECHNOLOGY & APPS Why now? • A lot has changed in recent years: ‒ Smartphones and tablets almost ubiquitous (an estimated 75% of agents have a smartphone) ‒ Agents and managers comfortable with devices ‒ Devices and networks much
Slide 33: Technology & apps – developments
Provident Investor &Financial PLC Analyst Event Presentation Title 33 TECHNOLOGY & APPS We are working on a number of developments • The rapidly changing cost/benefit equation means we can now deploy technology to benefit: • Agents: ‒ Collections/CLIP App ‒ Chip & PIN payments ‒ Lending App Leading
Slide 34: Technology & apps – old model
Provident Investor &Financial PLC Analyst Event Presentation Title 34 TECHNOLOGY & APPS The old model is paper based and inefficient • Slow – Data manually entered and received on a weekly cycle • Expensive – Admin teams, paper, printing, couriers Relies on couriers Relies on admin teams to move pap
Slide 35: Technology & apps – new model
Provident Investor &Financial PLC Analyst Event Presentation Title 35 TECHNOLOGY & APPS The new model is mobile and paper free Fast – Data collected, received and processed at source Cheap – Apps relatively inexpensive, no manual intervention, no paper, no couriers Flexible – System changes ar
Slide 36: Technology & apps – agents old model
Provident Investor &Financial PLC Analyst Event Presentation Title 36 TECHNOLOGY & APPS – AGENTS Old model – Example agent working week Friday to Thursday Monday Tuesday Wednesday Visit customers: AM: Visit branch to AM: Visit branch to Collect and issue meet manager and drop off ‘Clip’ and Unable t
Slide 37: Technology & apps – agents new model
Provident Investor &Financial PLC Analyst Event Presentation Title 37 TECHNOLOGY & APPS – AGENTS New model – Example agent working week Friday to Tuesday & Thursday Monday Wednesday Thursday Continue to visit AM: Visit branch (or PM: Open Clip App Visit customers: customers: Collect and somewhere on
Slide 38: Collections/Clip App
Provident Investor &Financial PLC Analyst Event Presentation Title 38 TECHNOLOGY & APPS – AGENTS Collections/Clip App • BYOD model • All info agent needs to collect the round in an app: ‒ Agent records collections/misses in app ‒ Saves significant time • Estimate that c.75% of agents have smartphone
Slide 39: Chip & PIN payments
Provident Investor &Financial PLC Analyst Event Presentation Title 39 TECHNOLOGY & APPS – AGENTS ‘Chip & PIN’ payments • Currently in pilot • Chip & PIN card reader connects via Bluetooth to smartphone • Improves collections and payment options for the customer • Targets customers who do not have ca
Slide 40: Lending App
Provident Investor &Financial PLC Analyst Event Presentation Title 40 TECHNOLOGY & APPS – AGENTS Lending App • In prototype and aiming for Q1 2014 pilot (iOS) • Huge compliance/regulatory benefits • Only allows compliant loans to be issued (but final decision still rests with the agent) • Customer ‘
Slide 41: Technology & apps – managers old model
Provident Investor &Financial PLC Analyst Event Presentation Title 41 TECHNOLOGY & APPS – MANAGERS Old model – Example DM working week Saturday & Monday & Thursday Friday Sunday Wednesday Tuesday Travel to branch Travel to branch Travel to branch Travel to branch Print out Previous weeks Branches Pr
Slide 42: Technology & apps – managers new model
Provident Investor &Financial PLC Analyst Event Presentation Title 42 TECHNOLOGY & APPS – MANAGERS New model – Example DM working week Thursday Saturday & Monday & Friday Tuesday Wednesday Travel to branch Sunday Open app on Open app on Review up-to- Branches Open app on tablet tablet date MI on gen
Slide 43: DM Tablet
Provident Investor &Financial PLC Analyst Event Presentation Title 43 TECHNOLOGY & APPS – MANAGERS DM Tablet • Currently in pilot • iPad mini-based app - Gives DM mobile access to all the information they currently have in branch and more • Saves significant DM downtime (travelling to and from branc
Slide 44: Technology & apps – customers: 24/7
Provident Investor &Financial PLC Analyst Event Presentation Title 44 TECHNOLOGY & APPS – CUSTOMERS 24/7 helps keep Home Credit relevant in the digital age • Half of our customers are buying goods online: ‒ Our cash issue plays a limited part in this spending ‒ This percentage increases each year •
Slide 45: 24/7 – how it works
Provident Investor &Financial PLC Analyst Event Presentation Title 45 TECHNOLOGY & APPS – CUSTOMERS 24/7 ‒ How it works • Agents review customers weekly and enter amount willing to lend each customer onto the system • Customers then able to see via secure portal how much their agent is willing to le
Slide 46: Technology & apps – customers portal
Provident Investor &Financial PLC Analyst Event Presentation Title 46 TECHNOLOGY & APPS ‒ CUSTOMERS Customers load pre-approved loans onto the card via a personalised and secure portal
Slide 47: Technology & apps – summary of benefits
Provident Investor &Financial PLC Analyst Event Presentation Title 47 TECHNOLOGY & APPS ‒ SUMMARY OF BENEFITS Each of the 5 developments outlined brings significant benefits to drive higher returns Clip Lending Chip & Pin DM Tablet 24/7 App App • Cost reduction • Better • Compliance • DM • Customer
Slide 48: Update Home Credit and drive for returns – One Best Way
Provident Investor &Financial PLC Analyst Event Presentation Title 48 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns ‘One Best Way’
Slide 49: One Best Way
Provident Investor &Financial PLC Analyst Event Presentation Title 49 ‘ONE BEST WAY’ We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns Better More Leaner Modern quality profitable People Standardised Smaller Cash generative
Slide 50: One Best Way – scale of our model
Provident Investor &Financial PLC Analyst Event Presentation Title 50 ‘ONE BEST WAY’ A reminder of the scale of our model Andy Parkinson 6 Divisional Managers* Average 40 Regional Managers* tenure c.15 years 240 Area Managers 1,000 Development Managers* c.9,000-9,500 agencies • Narrower focus, bigge
Slide 51: One Best Way – variations in performance
Provident Investor &Financial PLC Analyst Event Presentation Title 51 ‘ONE BEST WAY’ The current operating model leads to variations in performance • Differences in working practices Annual collection performance versus collections 100% 95% • Too much time spent completing Collections performance ad
Slide 52: One Best Way – tried and tested best practice
Provident Investor &Financial PLC Analyst Event Presentation Title 52 ‘ONE BEST WAY’ We will implement ‘tried and tested’ best practice across the business Solution Impact • ‘One Best Way’ of operating • Freeing up agent and DM time for value-added activities: • Process-driven and less personality l
Slide 53: Update Home Credit and drive for returns – Collections focus
Provident Investor &Financial PLC Analyst Event Presentation Title 53 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns Collections focus
Slide 54: Retention and collections focus
Provident Investor &Financial PLC Analyst Event Presentation Title 54 RETENTION AND COLLECTIONS FOCUS The opportunity to improve collections performance is significant Home Credit annualised impairment as a % of revenue 40% 38% 36% 34% 32% 30% 28% 26% 24% 22% 20% Jun-10 Jun-11 Jun-12 Jun-13 Dec-09 D
Slide 55: Collections focus
Provident Investor &Financial PLC Analyst Event Presentation Title 55 COLLECTIONS FOCUS We will drive medium-term improvements in collections performance and retention through a number of activities Consistent day-to-day Tighter Payment options execution scorecards for customers • ‘One Best Way’ in
Slide 56: Update Home Credit and drive for returns – Much lower costs
Provident Investor &Financial PLC Analyst Event Presentation Title 56 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns Much lower costs
Slide 57: Much lower costs
Provident Investor &Financial PLC Analyst Event Presentation Title 57 MUCH LOWER COSTS Employee numbers have recently become out of sync with customer numbers Customers per employee 700 1997 to 2010 average c.570 600 500 Now around 480 even after 400 job losses announced at the 2001 2002 2003 2008 2
Slide 58: Cost reduction
Provident Investor &Financial PLC Analyst Event Presentation Title 58 COST REDUCTION We are applying a 3 phase process to reduce CCD costs very significantly Phase 1 Phase 2 Phase 3 Announced in July Now Early 2015 • Field headcount • Further field headcount • Further efficiencies reductions reducti
Slide 59: Much lower costs – annualised cost reduction
Provident Investor &Financial PLC Analyst Event Presentation Title 59 MUCH LOWER COSTS CCD annualised costs will reduce by over £40 million in 2 years, net of investing £16 million in new activities £m £m (4) 2012 total costs 298 2013 estimated total costs 283 2013 H1 savings (2) Phase 2 (announced
Slide 60: Exceptional costs
Provident Investor &Financial PLC Analyst Event Presentation Title 60 EXCEPTIONAL COSTS The exceptional one-off restructuring cost associated with the c.520 redundancies is c.£13 million in 2013 Exceptional costs Phase 1 (announced at the interims) £6m Phase 2 (announced last week) c.£7m* 2013 total
Slide 61: Update Home Credit and drive for returns – Performance through people
Provident Investor &Financial PLC Analyst Event Presentation Title 61 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns Performance through people
Slide 62: Performance through people
Provident Investor &Financial PLC Analyst Event Presentation Title 62 PERFORMANCE THROUGH PEOPLE Our people plan GET GROW ENGAGE ‘Engaging colleagues ‘Attracting the best’ ‘Growing our capability’ and agents’
Slide 63: Performance through people – agent stability
Provident Investor &Financial PLC Analyst Event Presentation Title 63 PERFORMANCE THROUGH PEOPLE Agent stability is key to driving better performance Annual contibution per agency by length of service • The profitability of an agency increases markedly as the agent gets more experience • We are impr
Slide 64: Performance through people – better agents
Provident Investor &Financial PLC Analyst Event Presentation Title 64 PERFORMANCE THROUGH PEOPLE – BETTER AGENTS Getting the right people and setting them up for success ‘The Right Agent’ ‘ Set up to Deliver’ ‘Driving agency ‘The right agent’ ‘ Set up to deliver’ performance’ Insert picture of Pictu
Slide 65: Performance through people – better leaders
Provident Investor &Financial PLC Analyst Event Presentation Title 65 PERFORMANCE THROUGH PEOPLE Better leaders A simple development agenda • Developing the top-50 leaders ‘Stepping Stones’ • ‘One Best Way’ of attraction and welcome – Field Managers • 12 Learning Academies for ‘Provident Academy’ de
Slide 66: Performance through people – 2014 priorities
Provident Investor &Financial PLC Analyst Event Presentation Title 66 PERFORMANCE THROUGH PEOPLE – 2014 PRIORITIES We want to build on 2013 GET GROW ENGAGE ‘Attracting the ‘Growing our ‘Engaged in the best’ capability’ business’ New look website and Provident Academy – New success factors candidate
Slide 67: Update Home Credit and drive for returns – outcomes
Provident Investor &Financial PLC Analyst Event Presentation Title 67 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns • Responding to changing customer needs • Lower cost Much • Fe
Slide 68: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 68 AGENDA 1. A new strategy for CCD Mark Stevens 2. Update Home Credit and drive for returns • Technology & apps Jono Gillespie • ‘One Best Way’ Andy Parkinson • Collections focus Andy Parkinson • Cost reduction Mark Stevens • Perfor
Slide 69: Market opportunity
Provident Investor &Financial PLC Analyst Event Presentation Title 69 MARKET OPPORTUNITY Now is the right time to enter the online loans market with a unique customer proposition • Large (£5+ billion) and growing (20%+ p.a.) market: ‒ Payday economics under threat from regulation ‒ Provides opportun
Slide 70: Market opportunity – Satsuma vs payday
Provident Investor &Financial PLC Analyst Event Presentation Title 70 MARKET OPPORTUNITY Satsuma is the antidote to payday and better than instalment loan incumbents – Directly meeting core customer needs of certainty and flexibility Certain total cost from the outset Late fees or rollover charges P
Slide 71: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 71 AGENDA 1. A new strategy for CCD Mark Stevens 2. Update Home Credit and drive for returns • Technology & apps Jono Gillespie • ‘One Best Way’ Andy Parkinson • Collections focus Andy Parkinson • Cost reduction Mark Stevens • Perfor
Slide 72: Getting the model right – target customers
Provident Investor &Financial PLC Analyst Event Presentation Title 72 GETTING THE MODEL RIGHT – TARGET CUSTOMERS The Satsuma target customer is incremental to the Home Credit customer base and broadly sits in the wide space between Vanquis Bank and Home Credit Speed/ private Customer expectations/ne
Slide 73: Getting the model right – right product
Provident Investor &Financial PLC Analyst Event Presentation Title 73 GETTING THE MODEL RIGHT – RIGHT PRODUCT Satsuma is the best customer proposition in the market Customers with little leeway Typical instalment in income need…. Payday loan Small sums (on first loan) Up to £300/£500 Up to £300 Up t
Slide 74: Getting the model right – broad marketing reach
Provident Investor &Financial PLC Analyst Event Presentation Title 74 GETTING THE MODEL RIGHT – BROAD MARKETING REACH We will optimise cost per acquired customer through a very broad marketing reach • Tested from May to October as an option on the Provident website: ‒ c.5,000 customers ‒ Referral to
Slide 75: Getting the model right – front of mind brand
Provident Investor &Financial PLC Analyst Event Presentation Title 75 GETTING THE MODEL RIGHT – FRONT OF MIND BRAND We have created a memorable brand and campaign • Branded search is key to success • Memorable and front-of-mind brands and campaigns win out • Fresh and different approach • Hence the
Slide 76: Satsuma website
Provident Investor &Financial PLC Analyst Event Presentation Title 76 SATSUMA WEBSITE A distinctive and fresh look and feel
Slide 77: Getting the model right – initial underwriting
Provident Investor &Financial PLC Analyst Event Presentation Title 77 GETTING THE MODEL RIGHT – INITIAL UNDERWRITING We build on proprietary knowledge across CCD and Vanquis Bank • Combining unique proprietary knowledge: ‒ Deep understanding of weekly instalment loans in Home Credit ‒ Deep understan
Slide 78: Getting the model right – further loans
Provident Investor &Financial PLC Analyst Event Presentation Title 78 GETTING THE MODEL RIGHT – FURTHER LOANS We follow the tried and tested ‘low and grow’ model building on the unique personal contact • The ‘agent on the phone’ positions further lending in the welcome call and any subsequent contac
Slide 79: Getting the model right – best in class collections
Provident Investor &Financial PLC Analyst Event Presentation Title 79 GETTING THE MODEL RIGHT – BEST IN CLASS COLLECTIONS Satsuma will use Vanquis Bank’s world class collections and recoveries capabilities • In the test, collections activity has been handled in Bradford by the CCD welcome call team:
Slide 80: Getting the model right – summary
Provident Investor &Financial PLC Analyst Event Presentation Title 80 GETTING THE MODEL RIGHT – SUMMARY Strong capabilities at every part of the customer journey • Target customer is incremental sitting between Vanquis Bank and Home Credit: ‒ This demographic is not currently served by the group • B
Slide 81: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 81 AGENDA 1. A new strategy for CCD Mark Stevens 2. Update Home Credit and drive for returns • Technology & apps Jono Gillespie • ‘One Best Way’ Andy Parkinson • Collections focus Andy Parkinson • Cost reduction Mark Stevens • Perfor
Slide 82: Proforma returns
Provident Investor &Financial PLC Analyst Event Presentation Title 82 PROFORMA RETURNS Based on the test results we expect Satsuma margins at a steady state to be as good as Home Credit 100 (30) (10) +40 100 Contribution per customer (1) (indexed) Comparable Impact of Higher No agent Online Home Cre
Slide 83: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 83 AGENDA 1. A new strategy for CCD Mark Stevens 2. Update Home Credit and drive for returns • Technology & apps Jono Gillespie • ‘One Best Way’ Andy Parkinson • Collections focus Andy Parkinson • Cost reduction Mark Stevens • Perfor
Slide 84: Update Home Credit and drive for returns
Provident Investor &Financial PLC Analyst Event Presentation Title 84 UPDATE HOME CREDIT AND DRIVE FOR RETURNS We will create a leaner, better-quality, modern, more profitable Home Credit business Update Home Credit and drive for returns Much Technology ‘One Best Collections lower & apps Way’ focus
Slide 85: Win in online lending
Provident Investor &Financial PLC Analyst Event Presentation Title 85 WIN IN ONLINE LENDING We will use our competitive advantages to achieve a top-3 market position within 3 to 5 years Win in online lending Best Broad Best in class Best in class customer marketing underwriting collections propositi
Slide 86: Concluding comments
Provident Investor &Financial PLC Analyst Event Presentation Title 86 CONCLUDING COMMENTS Action Outcome • Repositioning of CCD • Substantial Home Credit transformation to be completed by mid-2015 • Clear, focused and deliverable strategy and plan • Financial contribution from Satsuma from 2015 onwa
Slide 87: CCD – Questions
Provident Investor &Financial PLC Analyst Event Presentation Title 87 CCD – QUESTIONS
Slide 88: Vanquis Bank – Delivering growth in the UK and overseas
Provident Investor &Financial PLC Analyst Event Presentation Title 88 Vanquis Bank – Delivering growth in the UK and overseas Investor & Analyst Event 27 November 2013
Slide 89: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 89 AGENDA 1. A unique business model Michael Lenora 2. Consistently strong UK performance Bob van Breda 3. Poland – Our next growth opportunity Michael Hutko 4. Concluding comments and Q&A Michael Lenora
Slide 90: Vanquis Bank – the investment case
Provident Investor &Financial PLC Analyst Event Presentation Title 90 VANQUIS BANK The investment case • A unique business model for the non-standard market • State of the art IT and platform • Strong demand and limited competition • High returns and strong capital generation
Slide 91: Staff
Provident Investor &Financial PLC Analyst Event Presentation Title 91 STAFF A specialist team with over 90 years of credit card and 170 years of financial services experience Michael Lenora Managing • Expertise has depth throughout the Director organisation Bob van Breda Michael Hutko • Further key
Slide 92: What is Vanquis Bank?
Provident Investor &Financial PLC Analyst Event Presentation Title 92 WHAT IS VANQUIS BANK? In many ways it looks and acts like any other credit card provider • Contact centre operations • Operates like any other card • Internet sales and servicing • Accepted at over 15 million locations • Visa bran
Slide 93: Target market
Provident Investor &Financial PLC Analyst Event Presentation Title 93 TARGET MARKET Our target customers have a materially different profile to standard issuers • Customer status Prime issuer Vanquis Bank Employment status Employed Employed Annual income £25k+ p.a. £15-30k p.a. Residential status Ho
Slide 94: Why Vanquis Bank?
Provident Investor &Financial PLC Analyst Event Presentation Title 94 WHY VANQUIS BANK? Why do customers take a Vanquis Bank credit card? Top 5 merchants • Access to credit for the first time 1. Tesco • Inherent value in card utility: 2. Asda – Internet purchases 3. Sainsbury’s – Discounts 4. Argos
Slide 95: Our business model
Provident Investor &Financial PLC Analyst Event Presentation Title 95 OUR BUSINESS MODEL Our approach provides the right product and service for our customers whilst delivering strong returns for our shareholders Right product and service applied through the customer lifecycle Strong returns Growth
Slide 96: New account acquisition
Provident Investor &Financial PLC Analyst Event Presentation Title 96 NEW ACCOUNT ACQUISITION In the face of increasing competition Vanquis Bank has steadily increased its new account booking volumes New account bookings 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - 2003 2004 2005
Slide 97: New account acquisition – channels
Provident Investor &Financial PLC Analyst Event Presentation Title 97 NEW ACCOUNT ACQUISITION Internet and direct mail provided the foundations and are still major channels to market
Slide 98: New account acquisition – brands and price points
Provident Investor &Financial PLC Analyst Event Presentation Title 98 NEW ACCOUNT ACQUISITION Our strategy has been to supplement core proposition with new brands........and price points
Slide 99: New account acquisition – new channels
Provident Investor &Financial PLC Analyst Event Presentation Title 99 NEW ACCOUNT ACQUISITION We also continue to develop new channels to market • Point of sale finance • Face to face • Door drops
Slide 100: Underwriting
Provident Investor &Financial PLC Analyst Event Presentation Title 100 UNDERWRITING Our bespoke underwriting processes have been developed over the last 10 years Multiple channel Internet Direct mail Face to face Point of sale Door drop New channels Credit bureau Multiple scorecards • Application da
Slide 101: Underwriting – low and grow
Provident Investor &Financial PLC Analyst Event Presentation Title 101 UNDERWRITING At the heart of our underwriting strategy is ‘low and grow’ and marginal decision making based on first-class analytics • We consider projected returns over an account’s lifetime and for each specific year. • Account
Slide 102: Underwriting – low and grow
Provident Investor &Financial PLC Analyst Event Presentation Title 102 UNDERWRITING – LOW AND GROW Line increase decisions are crucial, representing two thirds of underwriting 2,500 • Further bureau data • Additional internal behavioural 2,000 scorecards 1,500 £ Post line increase behaviour and 1,00
Slide 103: Customer service
Provident Investor &Financial PLC Analyst Event Presentation Title 103 CUSTOMER SERVICE We have a high contact customer service model • Customer segmentation • Higher service standards for Gold customers £1,500+ (e.g. <1% abandonment) • High quality complaints handling
Slide 104: Customer focus
Provident Investor &Financial PLC Analyst Event Presentation Title 104 CUSTOMER FOCUS We are proud of our customer service record % of complaints resolved by FOS in favour of the customer 100% Average 90% Vanquis Bank 80% American Express 70% Capital One 60% Egg 50% HFC 40% Marks & Spencer 30% MBNA
Slide 105: Collections
Provident Investor &Financial PLC Analyst Event Presentation Title 105 COLLECTIONS Our collections has developed into a world class function • Data intensive: – Pre collections – Immediate/overnight contact – Segmentation key to maximise efficiency – High quality of contact data is maintained • Mult
Slide 106: Collections process
Provident Investor &Financial PLC Analyst Event Presentation Title 106 COLLECTIONS We have a well-established process which ensures accounts are quickly cycled through each stage to maximise value Day <0 30 Days 60 Days + 130 Days+ 210 Days + 300 Days + Pre-delinquency Vanquis Early cycle Vanquis In
Slide 107: Collections – data management
Provident Investor &Financial PLC Analyst Event Presentation Title 107 COLLECTIONS Recent enterprise-wide data management development maintains high quality contact information Null contact rates Penetration late stage arrears 4.5% 92% 4.0% 90% 88% 3.5% Penetration rate 86% 3.0% 84% 2.5% 82% 80% 2.0
Slide 108: Collections – customer engagement
Provident Investor &Financial PLC Analyst Event Presentation Title 108 COLLECTIONS There is significant emphasis to ensure every customer engagement is appropriate based on the individual circumstances of the customer Promise kept rate First positive outcome rate on 100% one-down accounts to days si
Slide 109: Key principles – what makes us different
Provident Investor &Financial PLC Analyst Event Presentation Title 109 KEY PRINCIPLES – WHAT MAKES US DIFFERENT AND UNIQUE? Our principles remain the same....and we will apply them in all geographies • Right people, right culture • Logical approach, analytical and decision expertise • Robust ‘low an
Slide 110: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 110 AGENDA 1. A unique business model Michael Lenora 2. Consistently strong UK performance Bob van Breda 3. Poland – Our next growth opportunity Michael Hutko 4. Concluding comments and Q&A Michael Lenora
Slide 111: Financial performance
Provident Investor &Financial PLC Analyst Event Presentation Title 111 FINANCIAL PERFORMANCE Consistently strong UK performance – Agenda • Profit and volume growth • Impairment performance • Cohort returns • Growth targets • Capital generation
Slide 112: Financials
Provident Investor &Financial PLC Analyst Event Presentation Title 112 FINANCIALS Strong financial performance through the economic cycle Profit before tax (£m) 50 40 30 20 10 - (10) (20) H1 2006 H2 2011 H1 2003 H2 2003 H1 2004 H2 2004 H1 2005 H2 2005 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009
Slide 113: Growth
- 100 200 300 400 500 600 700 800 H1 2003 H2 2003 H1 2004 H2 2004 GROWTH H1 2005 H2 2005 H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 Reported receivables (£m) H2 2011 H1 2012 H2 2012 Expansion has been steady and prudent H1 2013 - 1,000 1,200 200 400 600 8
Slide 114: Stability of impairment – why utilisation matters
Provident Investor &Financial PLC Analyst Event Presentation Title 114 STABILITY OF IMPAIRMENT – WHY UTILISATION MATTERS A prime portfolio requires a much larger number of good customers to cover the losses incurred from a single bad customer Typical prime Typical Vanquis card customer Bank customer
Slide 115: Stability of impairment
Provident Investor &Financial PLC Analyst Event Presentation Title 115 STABILITY OF IMPAIRMENT Our bespoke underwriting, robust collections processes and approach of lending to customers with limited indebtedness results in low impairment volatility compared to prime/standard files Credit card write
Slide 116: Consistent performance of seasoned accounts
Provident Investor &Financial PLC Analyst Event Presentation Title 116 CONSISTENT PERFORMANCE OF SEASONED ACCOUNTS Seasoned accounts are monitored closely to ensure performance is sustained after the line increase programme has stopped Vintage charge-off rates Observations: (annualised 3 month avera
Slide 117: Cohort profitability per original account
Provident Investor &Financial PLC Analyst Event Presentation Title 117 COHORT PROFITABILITY PER ORIGINAL ACCOUNT There has been a continuous improvement in returns due to the development of credit techniques, pricing decisions and from leveraging the fixed cost base Profit per original booked accoun
Slide 118: Overall cohort profitability
Provident Investor &Financial PLC Analyst Event Presentation Title 118 OVERALL COHORT PROFITABILITY Our business model drives stable cohort profitability and underlines the potential for sustainable future growth Profit of accounts booked by year £m 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 119: UK growth targets
Provident Investor &Financial PLC Analyst Event Presentation Title 119 UK GROWTH TARGETS To deliver sustainable growth with a minimum post-tax ROE of 30% • We believe that Vanquis Bank has the potential for: – 1.3 to 1.5 million customers – With an average balance of between £800 to £1,000 • Progres
Slide 120: Basis for growth targets – attrition levels
Provident Investor &Financial PLC Analyst Event Presentation Title 120 BASIS FOR GROWTH TARGETS – ATTRITION LEVELS Attrition levels have remained stable with an average account life being 4 years Attrition levels 100% 90% 2003 80% 2004 70% 2005 60% 2006 50% 2007 40% 2008 2009 30% 2010 20% 2011 10% 2
Slide 121: Basis for growth targets – account numbers
Provident Investor &Financial PLC Analyst Event Presentation Title 121 BASIS FOR GROWTH TARGETS – ACCOUNT NUMBERS Our long-term steady state growth target was recently revised upwards following front- end marketing success New account bookings 400,000 375,000 new accounts at an average life of 4 yea
Slide 122: Basis for growth targets – average balances
Provident Investor &Financial PLC Analyst Event Presentation Title 122 BASIS FOR GROWTH TARGETS – AVERAGE BALANCES The typical average balance curve is also predictable and improving Average balance 2003 1600 2004 1400 2005 1200 2006 1000 2007 800 2008 600 2009 400 2010 200 2011 0 2012 Yr 1 Yr2 Yr 3
Slide 123: Growth targets – infrastructure
Provident Investor &Financial PLC Analyst Event Presentation Title 123 GROWTH TARGETS – INFRASTRUCTURE Our infrastructure is new, scalable and without legacy London Bradford – data centre 300+ Staff London – Chatham – 150 Staff 450 +Staff
Slide 124: Growth targets – funding
Provident Investor &Financial PLC Analyst Event Presentation Title 124 GROWTH TARGETS – FUNDING Funding is increasingly from deposit taking, backed by a strong group position and funding strategy Funding sources Retail deposits mix 800 500 700 400 600 300 500 £m £m 400 200 300 100 200 0 100 May-14 M
Slide 125: Growth targets – funding
Provident Investor &Financial PLC Analyst Event Presentation Title 125 GROWTH TARGETS – FUNDING Our retail deposits products are simple fixed-term retail bonds between 1 and 5 years • Maximum deposit of £250,000 • Average balance of around £37,000 • 95% <£85,000 insured FSCS limit • 66% annual/34% m
Slide 126: Capital generation
Provident Investor &Financial PLC Analyst Event Presentation Title 126 CAPITAL GENERATION Increasingly strong capital generation to fund growth in the UK and overseas and fund the group’s progressive dividend policy 12-month rolling capital generated* 45 40 35 30 25 £m 20 15 10 5 - 2010 2011 2012 20
Slide 127: Consistently strong UK performance – conclusion
Provident Investor &Financial PLC Analyst Event Presentation Title 127 CONSISTENTLY STRONG UK PERFORMANCE Conclusion • Strong profit and volume growth since demerger • Stable impairment performance • Improving cohort returns • Growth targets achievable • Infrastructure and funding well-placed • Incr
Slide 128: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 128 AGENDA 1. A unique business model Michael Lenora 2. Consistently strong UK performance Bob van Breda 3. Poland – Our next growth opportunity Michael Hutko 4. Concluding comments and Q&A Michael Lenora
Slide 129: Market overview – demographic indicators
Provident Investor &Financial PLC Analyst Event Presentation Title 129 MARKET OVERVIEW – DEMOGRAPHIC INDICATORS A relatively new EU entrant (2004) with 38 million people making a great sized non-standard market opportunity Background statistics Poland UK Population (m) 38.2 63.7 Currency Zloty (PLN)
Slide 130: Market overview – macroeconomic indicators
Provident Investor &Financial PLC Analyst Event Presentation Title 130 MARKET OVERVIEW – MACROECONOMIC INDICATORS A stable economy with modest growth rates • GDP growth remains positive • Unemployment rose in 2010 but has been relatively stable since • Government deficit under control GDP growth Une
Slide 131: Market overview – credit card presence
Provident Investor &Financial PLC Analyst Event Presentation Title 131 MARKET OVERVIEW – CREDIT CARD PRESENCE Active credit card market present in Poland Number of credit cards in Poland Number of credit cards in main Polish banks Q1 2012 versus Q1 2013 (million) 1.2 11 1.0 10 9 0.8 8 7 0.6 m 6 5 0.
Slide 132: Market overview – summary
Provident Investor &Financial PLC Analyst Event Presentation Title 132 MARKET OVERVIEW – SUMMARY Some economic pressures but excellent opportunity Macroeconomic landscape: • GDP growth steady with 0.8% annualised growth at the end of Q2 2013 • Domestic demand stimulated by reduced Central Bank base
Slide 133: Entry decision
Provident Investor &Financial PLC Analyst Event Presentation Title 133 ENTRY DECISION Poland – the country of choice Country economics – European growth story • Strong GDP growth • Insulated from volatile Eurozone Market size • 5m to 10m Vanquis Bank profile population Card and bank activity • Estab
Slide 134: Credit market overview
Provident Investor &Financial PLC Analyst Event Presentation Title 134 CREDIT MARKET OVERVIEW Vanquis Bank product offers a unique benefit of cash availability alongside those of a traditional credit card • Reliance on simplistic credit vehicles with strong demand: – Basic current accounts (with ove
Slide 135: Internet usage
Provident Investor &Financial PLC Analyst Event Presentation Title 135 INTERNET USAGE Poland is the fastest growing e-commerce market in the EU – simplicity and protection of a credit card could be a compelling proposition • Mobile and tablet usage continues to grow, Level of Internet access - house
Slide 136: Relationship of Polish branch to Vanquis Bank (UK)
Provident Investor &Financial PLC Analyst Event Presentation Title 136 RELATIONSHIP OF POLISH BRANCH TO VANQUIS BANK (UK) • Vanquis Bank Poland operates as a branch of Vanquis Bank (UK) • Operating as a branch allowed the UK banking licence to be passported to Poland, rather than applying for a loca
Slide 137: Regulatory landscape
Provident Investor &Financial PLC Analyst Event Presentation Title 137 REGULATORY LANDSCAPE Regulatory environment not prohibitive Environment : rules based and very particular on detail Komisja Nadzoru Finansowego • Contract clauses, Data Protection rights, Anti-Money (KNF) is the Laundering financ
Slide 138: Timeline
Provident Investor &Financial PLC Analyst Event Presentation Title 138 TIMELINE Q1 2013 First October 2013 generation in- May 2012 house Second generation First card issued in-house scorecard scorecard through regional implemented implemented broker 2012 2013 Q3/Q4 2012 Marketing extended to Interne
Slide 139: Core product
Provident Investor &Financial PLC Analyst Event Presentation Title 139 CORE PRODUCT • Polish consumers more familiar with loans than credit cards Credit card from Vanquis Bank Credit line • Interest rate capped, revenue enhanced 1,100 PLN - 10,000 PLN by surround services and fees Interest rate 4x L
Slide 140: Market positioning
Provident Investor &Financial PLC Analyst Event Presentation Title 140 MARKET POSITIONING Our product is specifically positioned between high street retail banks and high rate lenders • We challenge high street banks : leading on acceptance • We challenge high rate lenders : leading on value and int
Slide 141: Target demographic
Provident Investor &Financial PLC Analyst Event Presentation Title 141 TARGET DEMOGRAPHIC Core target market = 5m – 10m people • Employed or self employed • Have bank accounts and use debit cards Mass • Low/medium income with ‘grey’ money top up <5m affluent • Live in urban areas, internet aware Mul
Slide 142: Sales channels – broker networks
Provident Investor &Financial PLC Analyst Event Presentation Title 142 SALES CHANNELS – BROKER NETWORKS Brokers are a traditional and important sales channel in Poland • Operate out of small offices: – <10 large national brokers (~300 - 1,000 sales outlets each) – 10 - 15 regional brokers (~50 - 100
Slide 143: Sales channels – broker networks
Provident Investor &Financial PLC Analyst Event Presentation Title 143 SALES CHANNELS – BROKER NETWORKS
Slide 144: Sales channels – internet
Provident Investor &Financial PLC Analyst Event Presentation Title 144 SALES CHANNELS – INTERNET Internet sourcing is a growing market in Poland • Channel operates similar to UK • Internet penetration is growing in Poland • Paid search click-through brings applicant to Vanquis Bank website landing p
Slide 145: Internet visual
Provident Investor &Financial PLC Analyst Event Presentation Title 145 INTERNET VISUAL We’ve helped 1.8m people in UK already ‘Card for all’ Credit Limit of 1,100 to 5,000 PLN Accepted worldwide No formal income certificate required Short app form with welcome call-back
Slide 146: Sales channels – face to face
Provident Investor &Financial PLC Analyst Event Presentation Title 146 SALES CHANNELS – FACE TO FACE Face to face proposition based on UK success • High footfall shopping centres in mid-market locations • Testing multiple geographic locations and three separate agencies • ‘Prime Bank’ branding appro
Slide 147: Sales channels – face to face
Provident Investor &Financial PLC Analyst Event Presentation Title 147 SALES CHANNELS – FACE TO FACE
Slide 148: Additional channel initiatives
Provident Investor &Financial PLC Analyst Event Presentation Title 148 ADDITIONAL CHANNEL INITIATIVES Intensive effort to deliver new channels to supplement existing activity • Telesales • Door drops • Direct mail • Bank declines • Above-the-line (TV, radio, billboards) in a very limited geographic
Slide 149: Channel mix
Provident Investor &Financial PLC Analyst Event Presentation Title 149 CHANNEL MIX Majority of portfolio sourced through the broker network but the internet is growing and the face to face channel is starting to emerge Aggregate portfolio – Booked Recent booking mix – Booked account volumes by chann
Slide 150: Portfolio management – risk and value principles
Provident Investor &Financial PLC Analyst Event Presentation Title 150 PORTFOLIO MANAGEMENT – RISK AND VALUE PRINCIPLES Underwriting principles....at the heart of our strategy is ‘low and grow’ and marginal decision making based on first-class analytics • We consider projected returns over an accoun
Slide 151: Credit – data sources
Provident Investor &Financial PLC Analyst Event Presentation Title 151 CREDIT – DATA SOURCES Multiple data sources used in underwriting process – contributing to second generation scorecard • The biggest credit bureau (BIK) is the primary data source – black and white data from all banks • Supplemen
Slide 152: Credit – scorecard evolution to date
Provident Investor &Financial PLC Analyst Event Presentation Title 152 CREDIT – SCORECARD EVOLUTION TO DATE Steep and rapid credit policy learning curve; second generation scorecard already deployed Two underwriting segments: • Clean – Rich bureau data with a mostly good payment history • Blemished
Slide 153: Portfolio measures – current scale
Provident Investor &Financial PLC Analyst Event Presentation Title 153 PORTFOLIO MEASURES – CURRENT SCALE • 26,000 accounts booked since launch in 2012 • 22,000 accounts sourced to date in 2013 • £4.8m of net receivables at the end of October 2013 • Currently booking c.2,500 accounts per month
Slide 154: Customer profile
Provident Investor &Financial PLC Analyst Event Presentation Title 154 CUSTOMER PROFILE • Middle-aged, with regular source of income • Generally a home owner • Typically earning between the equivalent of £7,500 - £10,000 • Living in urban areas • Has a bank account and has had credit in the past • H
Slide 155: Operating model
Provident Investor &Financial PLC Analyst Event Presentation Title 155 OPERATING MODEL A full local operation will be established once sufficient scale is realised • Currently leveraging UK sites, supplemented by local branch head office – Management team in London – Operational team in Chatham, sta
Slide 156: The Poland team
Provident Investor &Financial PLC Analyst Event Presentation Title 156 THE POLAND TEAM
Slide 157: Funding
Provident Investor &Financial PLC Analyst Event Presentation Title 157 FUNDING • Branch fully funded through loans from Vanquis Bank and Provident Financial • Additional liquidity is held locally with Bank Zachodni to satisfy regulatory requirements • Current funding structure is expected to continu
Slide 158: Learnings to date
Provident Investor &Financial PLC Analyst Event Presentation Title 158 LEARNINGS TO DATE Market • Extensive demand for credit within our target market • The distribution network is not as sophisticated as in the UK Customers • Ongoing product education required • High customer service expectations R
Slide 159: Targets
Provident Investor &Financial PLC Analyst Event Presentation Title 159 TARGETS We always prioritise returns over volume • We are building an effective and scalable model that can be repeated: – Importing our UK experience • Our aim is to build a portfolio generating a steady state post-tax ROE of at
Slide 160: Agenda
Provident Investor &Financial PLC Analyst Event Presentation Title 160 AGENDA 1. A unique business model Michael Lenora 2. Consistently strong UK performance Bob van Breda 3. Poland – Our next growth opportunity Michael Hutko 4. Concluding comments and Q&A Michael Lenora
Slide 161: Regulatory environment
Provident Investor &Financial PLC Analyst Event Presentation Title 161 REGULATORY ENVIRONMENT Vanquis Bank is well placed to respond to regulatory environment and change • A significant number of regulatory initiatives have already been managed: ‒ Default fee capped at £12 ‒ BIS mitigations: Minim
Slide 162: Regulatory environment
Provident Investor &Financial PLC Analyst Event Presentation Title 162 REGULATORY ENVIRONMENT Vanquis Bank is well placed to respond to regulatory environment and change • Forthcoming potential interchange changes have limited impact: ‒ <3% of Vanquis Bank revenue, but significant on prime players •
Slide 163: Stability of returns – UK risk adjusted margin
Provident Investor &Financial PLC Analyst Event Presentation Title 163 STABILITY OF RETURNS – UK RISK ADJUSTED MARGIN Some continued moderation to 32-33% is expected partly as a result of ROP process and product feature changes 70% 60% 50% 40% 34.4% 30% 20% 10% -% Dec-07 Dec-08 Dec-09 Dec-10 Dec-11
Slide 164: Stability of returns – low impairment volatility
Provident Investor &Financial PLC Analyst Event Presentation Title 164 STABILITY OF RETURNS – LOW IMPAIRMENT VOLATILITY Our bespoke underwriting, robust collections processes and approach of lending to customers with limited indebtedness results in low impairment volatility compared to prime/standar
Slide 165: Conclusion
Provident Investor &Financial PLC Analyst Event Presentation Title 165 CONCLUSION Delivering growth in the UK and Poland • Our business model and expertise gives us confidence for future growth and competitive advantage: – Marketing/targeting expertise – 10 years of underwriting expertise which prov
Slide 166: Vanquis Bank – Questions
Provident Investor &Financial PLC Analyst Event Presentation Title 166 VANQUIS BANK – QUESTIONS
Slide 167: Concluding remarks
Provident Investor &Financial PLC Analyst Event Presentation Title 167 Concluding remarks Investor & Analyst Event 27 November 2013
Slide 168: Our investment case
Provident Investor &Financial PLC Analyst Event Presentation Title 168 OUR INVESTMENT CASE • Winners in non-standard credit will be larger well funded specialist lenders with sustainable business models • We have an attractive business model: – Cash generative home-collected credit business with a f
Slide 169: Biographies
Provident Investor &Financial PLC Analyst Event Presentation Title 169 Biographies Investor & Analyst Event 27 November 2013
Slide 170: Biographies – CCD
Provident Investor &Financial PLC Analyst Event Presentation Title 170 BIOGRAPHIES – CCD Mark Stevens, Managing Director: Mark graduated with an MA in Economics from Cambridge and an MBA from Stanford University, CA. From 1990 and 2003, Mark worked in strategy consulting with SPA in London and San F
Slide 171: Biographies – CCD
Provident Investor &Financial PLC Analyst Event Presentation Title 171 BIOGRAPHIES – CCD Sarah Dickins, People Director: Sarah had an successful career in HR at Asda for 16 years. She was an operating board director for 5 of those years and her experience spans a broad range of HR roles as well as c
Slide 172: Biographies – CCD
Provident Investor &Financial PLC Analyst Event Presentation Title 172 BIOGRAPHIES – CCD Phillip McLelland, Finance Director: Phillip is a graduate of Loughborough University with a BSc in Economics. He worked from 1988 to 1996 at National & Provincial Building Society and during this period he qual
Slide 173: Biographies – CCD
Provident Investor &Financial PLC Analyst Event Presentation Title 173 BIOGRAPHIES – CCD Steve Shaw, Chief Risk Officer: Steve is a Member of the Chartered Institute of Personnel and Development and has a MBA from Sheffield University. Steve joined Provident Personal Credit in 1977. He held various
Slide 174: Biographies – Vanquis Bank
Provident Investor &Financial PLC Analyst Event Presentation Title 174 BIOGRAPHIES – VANQUIS BANK Michael Lenora, Managing Director: Michael graduated with a degree in Finance, MA in Applied Economics and an MBA in Economics. He held a number of senior positions from 1980 to 2004, including Vice Pre
Slide 175: Biographies – Vanquis Bank
Provident Investor &Financial PLC Analyst Event Presentation Title 175 BIOGRAPHIES – VANQUIS BANK Michael Hutko, Commercial Director: Michael graduated with a Mechanical Engineering degree from Cornell University. Between 1993 and 2001, Michael held a number of positions in the financial services in
Slide 176: Biographies – Vanquis Bank
Provident Investor &Financial PLC Analyst Event Presentation Title 176 BIOGRAPHIES – VANQUIS BANK David Underwood, IT and Operations Director: David originally qualified and worked for a number of years as a mechanical engineer before moving into Financial Services. David now has more than 30 years
Slide 177: Contact details
Provident Investor &Financial PLC Analyst Event Presentation Title 177 CONTACT DETAILS Provident Financial plc No. 1 Godwin Street Bradford BD1 2SU United Kingdom Contact: Gary Thompson – Group Financial Controller and Head of Investor Relations Telephone: +44 (0) 1274 351019 E-mail: gary.thompson@p