Vanquis Banking Group Plc · LSE:VANQ
Vanquis Banking — Provident Financial — H1 2018 Earnings Presentation
35 slides from Vanquis Banking's earnings presentation, Jul 31, 2018
Slide 1: 2018 interim results
Provident Financial Provident Financial plc plc 2018 interim results 2018 interim results 31 July 2018 1
Slide 2: Today's presentation
Provident Financial plc 2018 interim results Today’s presentation • Progress against 2018 objectives Malcolm Le May • Financial review Andrew Fisher • Strategy and outlook Malcolm Le May • Questions • Appendix 2
Slide 3: 2018 objectives
Provident Financial Provident Financial plc plc 2018 interim results 2018 objectives Malcolm Le May – Group Chief Executive 3
Slide 4: Our 2018 objectives
Provident Financial plc 2018 interim results 2018 objectives Our 2018 objectives 1. Deliver the home credit recovery plan 2. Complete the ROP refund programme and adopt new regulation in Vanquis Bank 3. Strengthen the Board, governance and culture 4. Progress the Moneybarn FCA investigation 5. Re-ac
Slide 5: Progress to date
Provident Financial plc 2018 interim results 2018 objectives Progress to date • Good progress in implementing the operational recovery plan • Constructive relationship with the FCA with regular dialogue both at a group and divisional level • A number of significant actions have been implemented duri
Slide 6: Progress to date (continued)
Provident Financial plc 2018 interim results 2018 objectives Progress to date (continued) • Systems and capability required to deliver the ROP refund programme to some 1.2 million customers has largely been built • Pilot was successfully completed in early June and the roll-out of the full refund pr
Slide 7: Progress to date (continued)
Provident Financial plc 2018 interim results 2018 objectives Progress to date (continued) • Patrick Snowball to join the Board as Chairman on 21 September 2018 and Stuart Sinclair, current Interim Chairman, will retire from the Board • Angela Knight, Elizabeth G Chambers and Paul Hewitt join the Boa
Slide 8: Progress to date (continued)
Provident Financial plc 2018 interim results 2018 objectives Progress to date (continued) • The group is continuing to work with the FCA into their investigation into affordability, forbearance and termination options Progress the • Scope of the investigation is well understood and the estimated cos
Slide 9: Financial review
Provident Financial Provident Financial plc plc 208 interim results Financial review Andrew Fisher – Group Finance Director 9
Slide 10: IFRS 9
Provident Financial plc 2018 interim results Financial review IFRS 9 • IFRS 9 implemented from 1 January 2018 • Provisions made for expected losses are made on inception of a loan based on the PD and LGD • Differs to IAS 39 which adopted an incurred loss model whereby impairment provisions where ref
Slide 11: Group IFRS results summary
Provident Financial plc 2018 interim results Financial review Group IFRS 9 results summary Six months ended 30 June 2018 20171 Change £m £m % Vanquis Bank 97.2 91.6 6.1 CCD (23.2) 4.7 (593.6) Moneybarn 10.6 10.3 2.9 Central costs (9.7) (8.0) (21.3) Adjusted profit before tax 74.9 98.6 (24.0) Adjuste
Slide 12: Vanquis Bank IFRS results
Provident Financial plc 2018 interim results Financial review Vanquis Bank IFRS 9 results Six months ended 30 June 2018 20171 Change £m £m % Customer numbers (‘000) 1,764 1,645 7.2 Period-end receivables prior to balance reduction 2 1,501.7 1,345.5 11.6 Reported period-end receivables 1,432.4 1,345.
Slide 13: CCD IFRS results
Provident Financial plc 2018 interim results Financial review CCD IFRS 9 results Six months ended 30 June 2018 20171 Change £m £m % Customer numbers (‘000) 765 801 (4.5) Reported period-end receivables 293.7 444.2 (33.9) Average receivables 309.7 467.0 (33.7) Revenue 179.4 265.3 (32.4) Impairment (7
Slide 14: CCD customer numbers
Provident Financial plc 2018 interim results Financial review CCD Customer numbers June December June 2018 2017 2017 000’s 000’s 000’s Active 464 527 708 Non-payers 199 170 23 Home credit 663 697 731 Satsuma 99 79 66 glo 3 4 4 Total CCD 765 780 801 • Significant reduction of 34% in home credit activ
Slide 15: CCD underlying collections performance
Provident Financial plc 2018 interim results Financial review CCD Underlying collections performance • Underlying collections performance excludes customers with more Underlying collections performance (%) than 12 consecutive misses and collections made as part of a re-serve 80 of an existing custom
Slide 16: Moneybarn IFRS results
Provident Financial plc 2018 interim results Financial review Moneybarn IFRS 9 results Six months ended 30 June 2018 20171 Change £m £m % Customer numbers (‘000) 57 46 23.9 Period-end receivables prior to balance reduction 2 372.1 303.2 22.7 Reported period-end receivables 360.0 303.2 18.7 Average r
Slide 17: Group capital
Provident Financial plc 2018 interim results Financial review Group Capital • The £300m rights issue in April recapitalised the group: ‒ Covered the estimated cost of the ROP refund programme (£172m) and the Moneybarn FCA investigation (£20m) ‒ Accommodated the increase in regulatory capital require
Slide 18: Regulatory capital
Provident Financial plc 2018 interim results Financial review Group Regulatory capital At 30 June 2018 £m IFRS 9 net assets 677.9 Regulatory capital adjustments1 (218.6) IFRS 9 transitional adjustment (95%)2 174.8 Total regulatory capital3 634.1 Risk weighted assets 2,110.5 CET 13 30.0% Capital requ
Slide 19: Funding and liquidity
Provident Financial plc 2018 interim results Financial review Group Funding and liquidity • Group’s funding strategy remains broadly unchanged following the rights issue: ‒ Security of funding through maintaining facilities to meet contractual maturities and growth over at least the next 12 months ‒
Slide 20: Diversified funding base
Provident Financial plc 2018 interim results Financial review Group Diversified funding base At 30 June 2018 £m Banks 450 Bonds and private placements: - Senior 8.0% public bond maturing in 2019 27 - Senior 7.0% public bond maturing in 2023 250 - M&G term loan 65 - Retail bonds 150 Total bonds and p
Slide 21: Retail deposits
Provident Financial plc 2018 interim results Financial review Vanquis Bank Retail deposits Retail deposits maturity profile 1,600 1,400 Retail deposits outstanding (£m) 1,200 1,000 800 600 400 200 - Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 • Vanquis Bank substantially funded by retail deposits ‒ PFG inter
Slide 22: Group balance sheet
Provident Financial plc 2018 interim results Financial review Group Balance sheet At 30 June 2018 At 31 December 2017 IFRS 9 IFRS 9 Adjustment IAS 39 £m £m £m £m Goodwill 71.2 71.2 - 71.2 Acquisition intangibles 46.3 50.0 - 50.0 Receivables: - Vanquis Bank 1,432.4 1,405.2 (149.5) 1,554.7 - CCD 293.7
Slide 23: Target financial model
Provident Financial plc 2018 interim results Financial review Target financial model Group Invest in businesses with attractive ROAs of 10% Growth Dividend Deliver receivables growth of CET 1 between 5% and 10% per ≥ 25.5% policy annum Cover ≥ 1.4x Alignment of growth, capital requirements and divid
Slide 24: Strategy and outlook
Provident Financial Provident Financial plc plc 2018 interim results Strategy and outlook Malcolm Le May – Group Chief Executive 24
Slide 25: Group strategy
Provident Financial plc 2018 interim results Strategy and outlook Group strategy Enabling customers to build brighter financial futures by providing them with access to the credit they need and then helping them develop their credit record through offering them clearly differentiated products which
Slide 26: Regulation
Provident Financial plc 2018 interim results Strategy and outlook Regulation Group • Significant improvement in the dialogue and relationship with the FCA: ‒ Regular meetings both at a divisional and group level ‒ Seeking to obtain full authorisation for CCD in the second half of the year ‒ The grou
Slide 27: Outlook
Provident Financial plc 2018 interim results Strategy and outlook Outlook Group • The group has made good progress in the first half of the year on its five key objectives for 2018: ‒ Implementing the home credit recovery plan and obtaining FCA authorisation in CCD ‒ Delivering the ROP refund progra
Slide 28: Questions
Provident Financial Provident Financial plc plc 2018 interim results Questions Malcolm Le May – Group Chief Executive Andrew Fisher – Group Finance Director 28
Slide 29: Appendix
Provident Financial Provident Financial plc plc 2018 interim results Appendix 29
Slide 30: Appendix – IFRS: 2017 IFRS PBT comparatives
Provident Financial plc 2018 interim results Appendix – IFRS 9 Group 2017 IFRS 9 PBT comparatives Six months ended 30 June 2017 Year ended 31 December 2017 IAS 39 Adjustment IFRS 91 IAS 39 Adjustment IFRS 91 £m £m £m £m £m £m Vanquis Bank 100.1 (8.5) 91.6 206.6 (25.2) 181.4 CCD 6.3 (1.6) 4.7 (118.8)
Slide 31: Vanquis Bank 2017 IFRS comparatives
Provident Financial plc 2018 interim results Appendix – IFRS 9 Vanquis Bank 2017 IFRS 9 comparatives Six months ended 30 June 2017 Year ended 31 December 2017 IAS 39 Adjustment IFRS 91 IAS 39 Adjustment IFRS 91 £m £m £m £m £m £m Customer numbers (‘000) 1,645 - 1,645 1,720 - 1,720 Period-end receivab
Slide 32: CCD 2017 IFRS comparatives
Provident Financial plc 2018 interim results Appendix – IFRS 9 CCD 2017 IFRS 9 comparatives Six months ended 30 June 2017 Year ended 31 December 2017 IAS 39 Adjustment IFRS 91 IAS 39 Adjustment IFRS 91 £m £m £m £m £m £m Customer numbers (‘000) 801 - 801 780 - 780 Period-end receivables 501.4 (57.2)
Slide 33: Moneybarn 2017 IFRS comparatives
Provident Financial plc 2018 interim results Appendix – IFRS 9 Moneybarn 2017 IFRS 9 comparatives Six months ended 30 June 2017 Year ended 31 December 2017 IAS 39 Adjustment IFRS 91 IAS 39 Adjustment IFRS 91 £m £m £m £m £m £m Customer numbers (‘000) 46 - 46 50 - 50 Period-end receivables prior to ba
Slide 34: Glossary of terms/definitions
Provident Financial plc 2018 interim results Glossary of terms/definitions Group • Adjusted basic earnings per share – Profit before the amortisation of acquisition intangibles and exceptional items after tax divided by the weighted average number of share in issue • Adjusted profit before tax – Pro
Slide 35: Contact details
Provident Financial plc 2018 interim results Contacts Contact details Group Provident Financial plc No.1 Godwin Street Bradford BD1 2SU Contacts: Gary Thompson – Group Financial Controller and Head of Investor Relations Vicki Turner – Senior Group Finance and Investor Relations Manager Telephone: +4