REG - Vanquis Banking Grp - Update ahead of strategy seminar

Vanquis BankingAnnouncement

11/03/2024 07:00

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RNS Number : 2508G  Vanquis Banking Group PLC  11 March 2024

 

 

Update ahead of strategy seminar

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

London - 11 March 2024 - Vanquis Banking Group ('the Group') makes the
following market update ahead of its 2023 results announcement and strategy
seminar on Wednesday 27 March 2024.

 

2023 outturn

The Group's expectations for its 2023 results have not changed since its
trading update on 1 February 2024, with adjusted profit before tax(1) (PBT)
for FY 2023 expected to be £25m.

 

Strategy seminar

On 27 March 2024, the Group will set out its strategy to deliver an adjusted
return on tangible equity(2) (ROTE) in the mid-teens from 2026. This
significant improvement will be driven by a return to sustainable income
growth, together with the benefits of greater efficiency. At its strategy
seminar, the Group will describe in detail the initiatives already under way
to serve a broader, carefully targeted addressable market with a more
extensive customer proposition.  It will also present a detailed route map to
achieve significant payback across the business in 2026 from its technology
infrastructure investment.

 

2024

The Group is continuing to take significant steps in the first quarter of 2024
to redevelop its customer proposition and reset pricing. With the
implementation of these changes, the Group expects to return to modest lending
growth from the start of the second quarter. However, income is expected to be
materially lower than market consensus expectations(3) for 2024.

 

The Group is not a subject of the FCA's review of historical motor finance
commission arrangements and sales.

 

Nevertheless, the Group has been experiencing significant levels of third
party complaint submissions. Reviewing them is causing an increase in
administration costs. While the vast majority of these complaints are not
upheld, the associated costs are likely to materially impact the Group's
profitability in 2024. The Group is exploring proactive legal steps to address
this situation.

 

The Group remains on track to deliver the benefits of its previously announced
cost saving commitments.

 

Allowing for the factors described above, the Group expects to deliver
adjusted PBT for 2024 which will be substantially lower than market consensus,
resulting in a low single digit adjusted ROTE.

 

2025

In 2025, the Group intends to deliver accelerated but disciplined growth
across its full range of products. However, the near-term adverse impact of
IFRS9 accounting requirements linked to receivables growth means that the
Group's adjusted ROTE is expected to remain in the low single digits, as it
continues its repositioning and transformation.

 

 

Dividends

The Group intends to propose a final dividend of 1.0p per share for 2023,
subject to final Board and regulatory approvals. The Group also signals its
intention to pay a dividend of up to 1.0p per share for 2024, subject to Board
and regulatory approvals, with measured progression in 2025. From 2026,
following full implementation of the new strategy, the Board will revisit the
capital allocation policy and reset the level of dividend from which to
maintain a progressive policy thereafter.

 

Ian McLaughlin, Chief Executive Officer said: "We have short term challenges
to address but remain confident that the Group's new strategy will deliver
good outcomes for our customers and attractive and sustainable returns for our
shareholders over the medium and longer term. I look forward to setting out
our detailed plans at our strategy seminar."

 

 

(1) Adjusted profit before tax is stated before amortisation of acquisition
intangibles, discontinued operations and exceptional items.

 

(2) Adjusted return on tangible equity is defined as adjusted profit after tax
net of fair value gains for the 12 months ended 31 December as a percentage of
average adjusted tangible equity for the 13 months ended 31 December. Adjusted
tangible equity is stated as equity after deducting the Group's pension asset,
net of deferred tax, and the fair value of derivative financial instruments,
net of deferred tax less intangible assets and goodwill.

 

(3) Company-compiled consensus for 2024 based on a simple average of six sets
of analyst estimates is as follows:

 

Total income                      £538.3m

Impairment                        £(181.1)m

Costs
£(282.1)m

Adj. PBT                               £75.1m

 

 

Enquiries

 

Analysts and shareholders

Miriam McKay, Interim Head of Investor Relations

miriam.mckay@vanquisbankinggroup.com

07577 390666

 

Media

Richard King, Head of Corporate Affairs

Richard.king@vanquisbankinggroup.com

07919 866876

 

Simone Selzer, Nick Cosgrove - Brunswick

vanquisbankinggroup@brunswickgroup.com
(mailto:vanquisbankinggroup@brunswickgroup.com)

0207 4045959

 

Ends

 

 

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