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 tax1 (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
equity2
(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
expectations3 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
0207 4045959
Ends