Vanquis Banking Group PLC · LSE:VANQ
Vanquis Banking — Provident Financial — FY2018 Earnings Presentation
28 slides from Vanquis Banking's earnings presentation, Mar 13, 2019
Slide 1: 2018 final results
Provident Financial Provident Financial plc plc 2018 final results 2018 final results 13 March 2019 1
Slide 2: Today's presentation
Provident Financial plc 2018 final results Today’s presentation • Highlights and operational progress Malcolm Le May • Financial review Simon Thomas • Strategy and outlook Malcolm Le May • Questions 2
Slide 3: Response to NSF offer
Provident Financial plc 2018 final results Response to NSF offer The nil premium offer presents significant value risk to PFG shareholders • NSF’s unsolicited offer for PFG has significant flaws and would have long-lasting detrimental consequences for the Group’s shareholders and customers: ‒ The Bo
Slide 4: Highlights and operational progress
Provident Financial Provident Financial plc plc 2018 final results Highlights and operational progress Malcolm Le May – Chief Executive Officer 4
Slide 5: A year of good progress
Provident Financial plc 2018 final results Highlights A year of good progress • Group adjusted profit before tax up 82.3% to £153.5m (2017: £84.2m1) • Adjusted EPS up 26.6% to 46.6p (2017: 36.8p1,2) • Excellent progress made against 2018 operational objectives • Stable Vanquis Bank profits of £184.3
Slide 6: 1. Deliver the home credit recovery plan and obtain FCA authorisation
Provident Financial plc 2018 final results 2018 objectives 1. Deliver the home credit recovery plan and obtain FCA authorisation • CCD was fully authorised by the FCA in November 2018 • Voice recording and a new field structure have been implemented and fully embedded during 2018 • Collections perfo
Slide 7: 2. Complete the ROP refund programme and adapt to regulation in Vanquis Bank
Provident Financial plc 2018 final results 2018 objectives 2. Complete the ROP refund programme and adapt to regulation in Vanquis Bank • 99% of the refund programme has now been completed with over 1.3m customers refunded • No material change in the level of ROP complaints following the announcemen
Slide 8: 3. Progress the Moneybarn FCA investigation
Provident Financial plc 2018 final results 2018 objectives 3. Progress the Moneybarn FCA investigation • Very good progress has been made with the FCA into their investigation into affordability, forbearance and termination options • Agreement in March 2019 with the FCA of the redress to be paid in
Slide 9: 4. Strengthen the Board, governance and culture
Provident Financial plc 2018 final results 2018 objectives 4. Strengthen the Board, governance and culture • The group Executive Committee, reconstituted in early 2018, is now driving delivery of the group’s vision through greater collaboration • Agreement reached for the appointment of a new Vanqui
Slide 10: 5. Re-access debt markets
Provident Financial plc 2018 final results 2018 objectives 5. Re-access debt markets • Completion of the £300m rights issue re-capitalised the group • Re-financing of £250m senior bonds in June • CET 1 ratio of 29.7% provides headroom of c.£95m against a fully loaded regulatory capital requirement o
Slide 11: Financial review
Provident Financial Provident Financial plc plc 2018 final results Financial review Simon Thomas – Chief Financial Officer 11
Slide 12: Group results
Provident Financial plc 2018 final results Financial review Group results Year ended 31 December 2018 20171 Change £m £m % Vanquis Bank 184.3 181.4 1.6 CCD (38.7) (106.3) 63.6 Moneybarn 28.1 21.9 28.3 Central costs (20.2) (12.8) (57.8) Adjusted profit before tax 153.5 84.2 82.3 Adjusted basic earnin
Slide 13: Vanquis Bank results
Provident Financial plc 2018 final results Financial review Vanquis Bank results Year ended 31 December 2018 20171 Change £m £m % Customer numbers (‘000) 1,773 1,720 3.1 Year-end receivables prior to balance reduction2 1,477.5 1,480.6 (0.2) Reported year-end receivables 1,473.8 1,405.2 4.9 Average r
Slide 14: CCD results
Provident Financial plc 2018 final results Financial review CCD results Year ended 31 December 2018 20171 Change £m £m % Customer numbers (‘000) 560 780 (28.2) Reported year-end receivables 292.5 347.4 (15.8) Average receivables 296.2 406.0 (27.0) Revenue 342.2 481.2 (28.9) Impairment (120.8) (311.0
Slide 15: Moneybarn results
Provident Financial plc 2018 final results Financial review Moneybarn results Year ended 31 December 2018 20171 Change £m £m % Customer numbers (‘000) 62 50 24.0 Year-end receivables prior to balance reduction2 398.4 330.8 20.4 Reported year-end receivables 396.6 318.7 24.4 Average receivables 377.4
Slide 16: Regulatory capital
Provident Financial plc 2018 final results Financial review Regulatory capital At 31 December 2018 CET 1 ratio £m Transitional impact of IFRS 9 £m IFRS 9 net assets 696.1 1 January 2018 9 Regulatory capital adjustments1 (213.7) 1 January 2019 18 IFRS 9 transitional adjustment (95%)2 174.8 1 January
Slide 17: Diversified funding base
Provident Financial plc 2018 final results Financial review Diversified funding base At 31 December 2018 £m Vanquis Bank: Retail deposits 1,431.7 Non-bank group: Bank facility 450 Bonds and other borrowings: - Senior 8.0% public bond maturing in 2019 27 - Senior 7.0% public bond maturing in 2023 250
Slide 18: Target financial model
Provident Financial plc 2018 final results Financial review Target financial model Invest in businesses with attractive ROAs of c.10% Growth Dividend Deliver receivables growth of CET 1 between 5% and 10% per ≥ 25.5% policy annum through the cycle Cover ≥ 1.4x Alignment of growth, capital requiremen
Slide 19: Strategy and outlook
Provident Financial Provident Financial plc plc 2018 final results Strategy and outlook Malcolm Le May – Chief Executive Officer 19
Slide 20: PFG aims to operate at highest regulatory standards
Provident Financial plc 2018 final results Strategy and outlook PFG aims to operate at highest regulatory standards Progress in • All material regulatory issues resolved with FCA regulatory relationships • Continued constructive relationship with PRA Adapted to • FCA high cost credit review proposal
Slide 21: Our purpose
Provident Financial plc 2018 final results Strategy and outlook Our purpose “We help people on the path to a better everyday life” Our purpose is underpinned by a number of strategic drivers: Customer progression Human experiences Head and heart decisions Fighting Fit We will build products, We will
Slide 22: Investment case
Provident Financial plc 2018 final results Strategy and outlook Investment case Sustainable business and returns based on a customer-centric proposition and a constructive relationship with regulators Addressable market of 10-12 million adults Market-leading businesses serving 2.4m customers Strong
Slide 23: Clear strategy underpinned by a number of growth and efficiency initiatives
Provident Financial plc 2018 final results Strategy and outlook Clear strategy underpinned by a number of growth and efficiency initiatives ✓ Enhancements to “low and grow” credit ✓ Planned introduction in Q2-19 of ✓ Expansion of asset classes that resonate line increase strategy Provident Direct, l
Slide 24: Long-term vision
Provident Financial plc 2018 final results Strategy and outlook Long-term vision ▪ Credit cards ▪ Motor finance market ▪ Bank, serving majority of our customers Customer ▪ >100k customers ▪ >2m customers overlap ▪ Strong growth ▪ Core group profit engine ▪ No.2 group profit engine Customer overlap ▪
Slide 25: Outlook
Provident Financial plc 2018 final results Strategy and outlook Outlook • 2018 was a successful year of recovery • 2019 priorities: ‒ Grow customer numbers in Vanquis Bank and Moneybarn ‒ Stabilise the customer base and reduce the cost base in CCD to return the business to run rate profitability in
Slide 26: Questions
Provident Financial Provident Financial plc plc 2018 final results Questions Malcolm Le May – Chief Executive Officer Simon Thomas – Chief Financial Officer 26
Slide 27: Glossary of terms/definitions
Provident Financial plc 2018 final 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 – Profi
Slide 28: Contact details
Provident Financial plc 2018 final results Contacts Contact details 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: +44 (0)127