Vanquis Banking Group (VANQ) investor relations material

Executive summary

• Statutory profit before tax rose 44% year-over-year to £8.9m, surpassing full-year 2025 profit, driven by 24% balance growth and 8% income growth, despite an £8.5m increase in macroeconomic impairment provision.

• Gross customer interest-earning balances grew 24% year-on-year to £3,054m, led by Second Charge Mortgages and Credit Cards, while Vehicle Finance balances remained stable.

• Operational efficiency improved, with cost-to-income ratio down 9.4 percentage points to 53.1%, aided by transformation savings and lower complaint costs.

• Technology transformation advanced, including full migration of Credit Card customers to a new mobile app and Gateway programme on track for 2026 completion.

• Recognized for transformation and consumer lending excellence with two Euromoney Awards and industry-wide recognition.

Financial highlights

• Net interest income increased 8% year-over-year to £218.1m, with net interest margin at 15.0% (down from 17.4%) due to product mix shift toward lower-yielding Second Charge Mortgages.

• Impairment charges increased 35% year-over-year to £102.4m, mainly from an £8.5m IFRS 9 macroeconomic provision.

• Operating costs fell 8% year-over-year to £126.2m, driven by lower complaint costs and transformation savings.

• ROTE was 2.5% for the half, with EPS at 1.8p (down 18% YoY).

• All three lending products—Credit Cards, Vehicle Finance, and Second Charge Mortgages—were profitable.

Outlook and guidance

• Net interest margin expected at ~14.5% in 2026 and >13% in 2027, reflecting mix shift; RAM forecast to exceed 8.5% in 2026 and 8% in 2027.

• Cost-to-income ratio projected in low 50s for 2026, mid-to-high 40s for 2027.

• Statutory ROTE expected in single digits for 2026, low double digits in 2027, and mid-teens in 2028.

• Gross customer interest-earning balances expected to exceed £3.3bn by end-2026 and £3.7bn by end-2027.

• Dividend to be reestablished with full-year 2026 results, subject to economic conditions.