Investment accounts
Adult accounts
Child accounts
Choosing Fidelity
Choosing Fidelity
Why invest with us Current offers Fees and charges Open an account Transfer investments
Financial advice & support
Fidelity’s Services
Fidelity’s Services
Financial advice Retirement Wealth Management Investor Centre (London) Bereavement
Guidance and tools
Guidance and tools
Choosing investments Choosing accounts ISA calculator Retirement calculators
Share dealing
Choose your shares
Tools and information
Tools and information
Share prices and markets Chart and compare shares Stock market news Shareholder perks
Pensions & retirement
Pensions, tax & tools
Saving for retirement
Approaching / In retirement
Approaching / In retirement
Speak to a specialist Creating a retirement plan Taking tax-free cash Pension drawdown Annuities Investing in retirement Investment Pathways
Vanquis returns to profitability in second half
(Sharecast News) - Vanquis Banking Group reported a significant second-half turnaround on Wednesday, as after recording a loss in the first half, its new management team implemented swift changes, resulting in an adjusted profit before tax of £30.4m in the second six months of 2023. The London-listed firm said that contrasted sharply with an adjusted loss before tax of £5.5m in the first half.
Its statutory figures mirrored that recovery, with a loss before tax of £14.5m in the first six months turning into a profit after tax of £10.1m in the latter half.
Vanquis said key to its recovery were strategic volume management, upward re-pricing in vehicle finance and cards, non-repeatable provision releases amounting to £74.5m, and the execution of a streamlined operating model that led to approximately 350 job cuts, achieving significant cost savings.
The group reported a stable net interest margin of 19.0% in the second half and maintained a robust capital position, with a CET1 ratio of 20.5%.
However, impairments saw a year-on-year increase due to several factors, including the impact of new originations and lower debt sale profits.
Looking ahead, Vanquis Banking Group outlined a strategy for growth and increased profitability, targeting an adjusted return on tangible equity (ROTE) in the mid-teens by 2026.
The plan was focussed on serving a core market of 23 million consumers facing financial pressures, diversifying customer propositions, expanding distribution channels, leveraging technology, and enhancing risk management capabilities.
Despite ongoing challenges, including significant levels of third-party complaints and the impact of IFRS 9 accounting requirements, the group said it was optimistic about its future.
It said it expected to return to modest lending growth in the second quarter of 2024, and aimed for a low single-digit adjusted ROTE in 2024, with ambitions for accelerated growth in the following years.
The board proposed a final dividend of 1p per share for 2023.
"Today's results and strategy seminar highlight the considerable challenges we are managing as we reset our business," said chief executive officer Ian McLaughlin.
"We also describe our opportunity to grow, to deliver benefit to our customers and increase adjusted return on tangible equity (ROTE) from 3.2% in 2023 to the mid-teens by 2026.
"After a first half loss in 2023, we generated adjusted profit before tax of £30.4m in the second half, reflecting cost management actions and impairment provision releases."
McLaughlin said the company assembled "the right leadership team" and took some "important" first steps, creating a healthier mix of price and volume driven growth, simplifying its operating model and taking out costs.
"We have established solid foundations for the transformation of our business.
"We have a strong sense of social purpose and a unique market position.
"We have a better understanding than ever before of how to serve our large and growing customer base."
Vanquis would build its position as it clients' chosen banking partner, deploying assets like Snoop, improving operational effectiveness and managing its capital to support its growth ambitions, Ian McLaughlin added.
"We do have a period of hard work and change ahead of us.
"It is still early days, but we are making progress."
At 0945 GMT, shares in Vanquis Banking Group were up 8.93% at 55.99p.
Reporting by Josh White for Sharecast.com.
Share this article
Related Sharecast Articles
Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.
Award-winning online share dealing
Search, compare and select from thousands of shares.
Expert insights into investing your money
Our team of experts explore the world of share dealing.
Policies and important information
Accessibility | Conflicts of interest statement | Consumer Duty Target Market | Consumer Duty Value Assessment Statement | Cookie policy | Diversity, Equity & Inclusion | Doing Business with Fidelity | Diversity, Equity & Inclusion Reports | Investing in Fidelity funds | Legal information | Modern slavery | Mutual respect policy | Privacy statement | Remuneration policy | Staying secure | Statutory and Regulatory disclosures | Whistleblowing policy
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.