Vanquis Banking Group Plc · LSE:VANQ
Vanquis Banking — FY2024 Earnings Presentation
49 slides from Vanquis Banking's earnings presentation, Mar 14, 2025
Slide 1: Full Year 2024 Results
FULL YEAR 2024 RESULTS 14 MARCH 2025 9am
Slide 2: Agenda
Agenda Summary of 2024 for Vanquis Banking Group Ian McLaughlin FY 2024 Performance Dave Watts Updated Financial Guidance for 2025 & 2026 Dave Watts Strategic Agenda for 2025 & 2026 Ian McLaughlin Q&A Ian McLaughlin & Dave Watts 2
Slide 3: Summary of 2024 for Vanquis Banking Group
SUMMARY OF 2024 FOR VANQUIS BANKING GROUP IAN MCLAUGHLIN Chief Executive Officer
Slide 4: Strategic transformation of the bank on track
Strategic transformation of the bank on track 2024 – a pivotal year for the bank, despite headwinds We have: 1. Implemented changes required for sustainable performance. 2. Refreshed our strategy, enhanced our customer proposition and simplified the organisation. 3. Managed new business growth. 4. D
Slide 5: 2024 Performance vs. Commitments
2024 Performance vs. Commitments Financial performance impacted by challenges, but achieved guidance from 1H24 results Guidance and Commitments Performance Net Interest Margin (NIM)16 >18% 18.4% (Including Second Charge Mortgages (2CM)) (18.9% excluding 2CM) 62-65% 65.9% Adjusted cost: income ratio2
Slide 6: 2024 Highlights
2024 Highlights Increased diversification of customer proposition with enhancements to risk management Initiatives What we have delivered Key metrics Gross customer interest earning • Measured approach to Credit Cards growth. balances2 £2,308m (FY23: £2,401m1) • Cleaned up the Vehicle Finance (VF) b
Slide 7: 2024 Highlights
2024 Highlights Focused on technology transformation and operational efficiency with a strong team Initiatives What we have delivered Key metrics • “Gateway” technology transformation programme on track. Technology transformation Technology and operations • AI used to improve complaints logging effi
Slide 8: Update on external factors
Update on external factors Welcome FOS charging CMCs Complaint costs New FOS fee charging structure Regulatory engagement and legal proceedings • FY24 complaint costs £47m - 66% • Welcome revised FOS fees • Continue to engage with higher YoY (16% of Group adjusted charging proposals, expected to reg
Slide 9: Update on external factors
Update on external factors Awaiting clarity on VF commissions matter Update on Court of Appeal Judgment on VF commission disclosures • Did not participate in discretionary commission arrangements (DCAs) - subject of the current FCA Motor Commissions Review. • The future application of the Judgment r
Slide 10: FY 2024 Performance
FY 2024 Performance DAVE WATTS Chief Financial Officer
Slide 11: 2024 key messages
2024 key messages Deliberate actions taken in 2024 position the Group for sustainable, profitable growth in 2025 1. Results impacted by substantial balance sheet clean-up in 1H24, completed in 2H24. 2. Prior year benefited from impairment releases. Underlying credit quality improved and greater clar
Slide 12: FY24 Group performance
FY24 Group performance Performance reflects the operational turnaround of the business DEC24 DEC231 Change Receivables £m £m % • Gross customer interest earning balances reduction reflected Gross customer interest earning balances2 2,308 2,401 (4)% volume management in unsecured products partially o
Slide 13: FY24 Group key performance metrics
FY24 Group key performance metrics Profitability metrics impacted by the operational turnaround, with strong balance sheet metrics FY24 FY231 Change £m % • Asset yield increased from Credit Cards and VF repricing to improve £m profitability of certain customer cohorts. Selected key metrics Asset yie
Slide 14: Net Interest Margin
Net Interest Margin NIM of 18.4% for FY24 vs. guidance of >18% NIM drivers (%)16 Net interest income trend (£m) 18.8% 18.9% (20bps) 18.7% 18.6% 18.8% 18.0% (0.6%) 0.8% (4%) 1.2% (1.6%) 18.6% 18.4% 214.5 228.1 214.5 FY23 Asset yield Lending Liquidity Funding FY24 205.5 balances & product mix 1H23 2H2
Slide 15: Gross customer interest earning balances
Gross customer interest earning balances Volume management in unsecured products, with growth in 2CM Gross customer interest earning balances movement (£m)2 • Gross customer interest earning balances (4)% YoY, but grew 2% in 2H24, driven by stabilising Credit Card balances and strong 2CM £(93)m / (4
Slide 16: Gross receivables
Gross receivables Cleaned up and lower risk balance sheet Gross receivables movement (£m)7 Receivables by stage (£m)7, 8 (12%) Gross Net 2,739 2,739 (93) 2,416 650 24% 8% 2,159 2,155 338 182 81 12% (230) 4% 223 9% 266 12% 157 2,416 7% 17 (6) (12) 392 14% 305 1 14% 108 4% 2,401 2,011 1,917 88% VF rec
Slide 17: Impairment charges
Impairment charges Underlying credit quality improvements, with prior years benefiting from provision releases Impairment charge movement (£m) • Non-repeat of provision releases following profitable tailwinds from 15% IFRS9 model enhancements and PMA releases in 2023 (£74.5m) and (29.0) earlier year
Slide 18: Expected Credit Losses (ECL)
Expected Credit Losses (ECL) Lower ECL required following the VF receivables review ECL movement (£m) Gross receivables and coverage ratios by stage £(318)m / (55%) Gross receivables7 Coverage ratio23 580 26 DEC24 DEC231 Change DEC24 DEC231 Change 18% 108 £m £m % % % % 15% 87 (331) Credit Cards 1,31
Slide 19: Adjusted operating costs
Adjusted operating costs Below £305-320m guided range, delivering >£60m of transformation savings by end 2024 Adjusted operating costs movement (£m)3 Costs by type (£m) & Full-time equivalent headcount (FTE) (#) (1%) FY24 FY231 Change 306.0 £m £m % Of which: 302.3 297.8 8.2 0.5 Cost by type (£m) FOS
Slide 20: Complaint costs
Complaint costs Up 66% YoY driven by elevated FOS fees, which trebled in 2024 Complaint costs (£m)37 Total complaints volumes* FOS referral volumes P&L charge Balance Sheet position 26% 245% 66% 87% 87,561 34,393 47.4 15.5 69,609 24.8 +207% 55,791 28.5 +43% 10.9 +127% 8.3 38,972 30,970 +322% 8.1 4.8
Slide 21: Credit Cards
Credit Cards Proactive volume management. Positioned for profitable growth in 2025 FY24 FY231 Change Portfolio mix (APR %)38 £m £m % 37.4% Interest income27 406.3 371.0 10% 36.4% Interest expense (79.6) (51.6) 54% 8% 8% Net interest income 326.7 319.4 2% 32% 33% Non-interest income 35.3 43.8 (19)% T
Slide 22: Vehicle Finance (VF)
Vehicle Finance (VF) FY24 impacted by Stage 3 receivables review, enabling future optimisation of the portfolio FY24 FY231 Change Portfolio mix (APR %)38 £m £m FY vs FY% 29.5% 28.4% Interest income27 133.1 150.3 (11)% 2% 0% 12% Interest expense (38.5) (28.7) 34% 15% Net interest income 94.6 121.6 (2
Slide 23: Second Charge Mortgages (2CM)
Second Charge Mortgages (2CM) Strong growth in a growing market, following successful expanded launch in MAY24 FY24 FY23 Loan to value (LTV) (%) £m £m 70.9% Interest income27 4.8 0.4 13% Interest expense (2.9) (0.2) Net interest income 1.9 0.2 Non-interest income - - 67% Total income 1.9 0.2 Impairm
Slide 24: Liquidity & Funding
Liquidity & Funding Increased deposit funding, creating improved liquidity profile and customer engagement Liquidity (£m) Group cost of funds15 vs benchmark interest rates (%)26 5.4 5.25% 5.25% DEC24 DEC23 Change 5.10% 5.2 £m £m % 5.0 HQLA11 947 682 39% 4.75% 4.8 LCR39 359% 1,263% 4.41% 4.92% 4.6 Ex
Slide 25: Tier 1 capital
Tier 1 capital DEC24 ratio of 18.8%, which increased from 18.7% as at SEP24 Tier 1 ratio (%)10 19.9 (0.2) 19.8 (0.1) (0.7) (1.4) 1.6 6.5 6.4 (0.2) 18.8 (0.4) 0.3 5.4 13.4 13.4 Investment 13.4 (60)bps DEC23 Statutory RWA Intangible Other JUN24 Statutory RWA Increase Intangible Other DEC24 loss after
Slide 26: Updated financial guidance for 2025 & 2026
Updated financial guidance for 2025 & 2026 DAVE WATTS Chief Financial Officer
Slide 27: Capital deployment and Tier 1 ratio outlook
Capital deployment and Tier 1 ratio outlook Guidance of >17.5% in 2025, as capital is deployed for sustainable profitable growth Gross customer interest earning balances composition (£m)2 Tier 1 ratio trend (%)10 18.8 >17.5 FY24: £2.3bn 5.4 >4.1 2CM Loans 9% 2% 13.4 13.4 Vehicle Finance 33% 55% Card
Slide 28: Statutory ROTE and cost: income ratio outlook
Statutory ROTE and cost: income ratio outlook ROTE and cost: income ratio improvement driven by income growth and further cost savings Statutory ROTE trend (%)9 Statutory ROTE outlook FY24-26 (%)9 Balance growth, Mid-teens FY24 repricing and lower Low double digits (Adjusted) (7.0%) cost of funds of
Slide 29: Guidance summary
Guidance summary All guidance will be on a statutory reported basis going forward* FY24 Performance Statutory Reported Guidance Adjusted Statutory FY25 FY26 Gross customer interest earning balances2 £2.3bn c.£2.6bn c.£3.0bn Low single Low double ROTE9** (7.0)% (31.7)% digits digits NIM (incl. Second
Slide 30: Strategic Agenda for 2025 & 2026
Strategic Agenda for 2025 & 2026 IAN MCLAUGHLIN Chief Executive Officer
Slide 31: Our purpose, proposition and initiatives is unchanged
Our purpose, proposition and initiatives is unchanged Our Purpose ‘To deliver caring banking so our customer can make the most of life’s opportunities’ Our customers’ core needs Help me build a financial safety Help me feel in control of my Help me borrow healthily net everyday spending Our Proposit
Slide 32: Product proposition
Product proposition We have developed a core product suite and marketplace partnerships to serve customers Core existing product proposition Credit Savings Money mgmt. 2nd Charge Snoop Credit Cards Vehicle Finance Savings Mortgages Channels of origination • Direct • Direct • Independent • Price • Pr
Slide 33: Technology transformation & Operational efficiency
Technology transformation & Operational efficiency Remain on track to complete ‘Gateway’ programme by mid-2026, enabling long term growth What we have delivered What we still need to Benefits being realised to date deliver Transformation cost savings: £23-£28m Genesys telephony system New mobile app
Slide 34: Proposition of the future powered by Gateway
Proposition of the future powered by Gateway Gateway - enabler of improved customer proposition, operations & marketplace solutions Our Gateway platform provides: Better customer insights & retention Technology & operational improvements Customer Data Customer Experience Systems Integration Data & A
Slide 35: Group well positioned for growth
Group well positioned for growth Focused on creating long-term shareholder value Three key priorities: 1. Sustainably grow balances and optimise mix to maximise return on capital deployed. 2. Deliver Gateway technology transformation programme. 3. Further develop our products, ensuring customers rem
Slide 36: Our customers – why Vanquis matters
Our customers – why Vanquis matters “excellent Vanquis Credit Card is an choice for rebuilding “ Second time I’ve had finance with Moneybarn, on both occasions “Fantastic app! Brilliant company! Thanks so much for helping me or improving your credit score. With a simple application they have been br
Slide 37: Q&A
VONQUIS Q&A Banking with heart
Slide 38: Appendix
VONQUIS APPENDIX Banking with heart
Slide 39: Financial Performance Reporting
Financial Performance Reporting Exceptional items excluded from adjusted (loss)/profit before tax 2H24 1H24 2H231 1H231 • Our financial performance in 2024 and prior years was measured £m £m £m £m and managed on an adjusted PBT basis, and ultimately on a ROTE Adjusted (loss)/profit before tax (8.0)
Slide 40: Product Contribution
Product Contribution Corporate Centre Cards Vehicle Finance 2CM Personal Loans Total incl. Snoop Asset driven products FY24 FY231 FY24 FY231 FY24 FY23 FY24 FY231 FY24 FY23 FY24 FY231 £m £m £m £m £m £m £m £m £m £m £m £m Interest income27 406.3 371.0 133.1 150.3 4.8 0.4 15.4 25.9 5.8 8.4 565.4 556.0 I
Slide 41: Receivables Reconciliation
Receivables Reconciliation (see slides 15 and 16) Cards Vehicle Finance 2CM Personal Loans Total Asset driven products DEC24 DEC23 DEC24 DEC231 DEC24 DEC23 DEC24 DEC23 DEC24 DEC231 £m £m £m £m £m £m £m £m £m £m Gross customer interest earning balances 2 1,278 1,424 765 859 217 3 49 116 2,308 2,401 A
Slide 42: ROTE, EPS, TNAV Calculation
ROTE, EPS, TNAV Calculation FY24 FY231 £m £m • Returns are based on adjusted results for the 12 months ended 31 Adjusted (loss) / profit before tax (34.8) 17.3 December. Adjusted tax credit / (charge) 10.0 (5.9) • Balance sheet item averages are based on average month end Adjusted (loss) / profit af
Slide 43: Summary Balance Sheet
Summary Balance Sheet DEC24 DEC231 Change • Cash includes the Liquid Asset Buffer held at the Bank of England. £m £m % Assets • Amounts receivables from customers represent net receivables Cash and balances at central banks 1,004 743 35% (see slide 16). Amounts receivables from customers45 2,154 2,1
Slide 44: Capital Composition
Capital Composition DEC24 JUN24 DEC231 • Tier 1 requirement is 13.4% of RWAs, being 75% of the Group's Total £m £m £m Capital Requirement (TCR) plus combined buffers of 4.5%, but Total equity 441 530 569 excluding any confidential or management buffers, if applicable Retirement benefit asset (28) (3
Slide 45: Glossary
Glossary AI Artificial Intelligence LAB Liquid Asset Buffer APR Annual Percentage Rate LBT Loss Before Tax AT1 Additional Tier 1 LCR Liquidity Coverage Ratio AVE / Ave. Average Mgmt. Management BoE Bank of England NIM Net Interest Margin CAGR Compound Annual Growth Rate P&L Profit & Loss Account CCD
Slide 46: Footnotes
Footnotes 2023 restatements Net receivables are gross receivables less allowance account (ECL) provision. 8 As part of the review of the Vehicle Finance Stage 3 portfolio, it was identified that: • Cash flows expected to be received from contracts identified for debt sale were being included ROTE is
Slide 47: Footnotes
Footnotes Adjusted basic earnings per share is calculated as adjusted profit after tax for the 12 months ended 38 Distribution of balance on book by banded APR. 21 31 December, divided by the weighted average number of shares in issue. The liquidity coverage ratio (LCR) refers to the proportion of h
Slide 48: Disclaimers
Disclaimers Important notice The information in this presentation may include forward-looking statements. Forward looking statements, by their nature involve risk and uncertainty as they relate to future events and circumstances. Forward looking statements can be identified from the fact that they d
Slide 49: Investor Relations contact
Investor Relations contact James Cranstoun Phone: +44 7766 937 406 Email: james.cranstoun@vanquis.com Website: www.vanquisbankinggroup.com