Vanquis Banking to miss FY ROTE target

Vanquis Banking Group warned on Tuesday that it does not expect to meet its FY24 guidance of low single digit return on tangible equity due to additional write-downs.

In an update ahead of its results for the six months to 30 June, the company said it has been carrying out a comprehensive review of its balance sheet which has led to the revaluation of some historic balances.

At its full-year results on 27 March, Vanquis committed to address its growing Vehicle Finance Stage 3 receivables. The review has resulted in a circa £29m downward revaluation of Stage 3 balances and charged off assets in the Vehicle Finance portfolio.

Of the £29m, around £16m represents a restatement of the group's prior years' results. The balance has been recognised in the six months period to 30 June 2024, it said.

Following a full review of the balance sheet, Vanquis has identified a further circa £11m of one-off items related to the write-down of development costs for a now redundant mobile app, property dilapidations and other sundry balances.

"While finding these one-off items is disappointing, it does mean that our financial position is now clearer and more stable," said chief executive Ian McLaughlin.

"Our trading performance towards the end of the first half of 2024 was encouraging, with year-to-date growth in customer numbers, at better margins, and a return to growth in receivables in June."

Vanquis said that while it will remain "well above" its regulatory capital requirement, it expects to end the year below the target Tier 1 ratio range of 19.5% - 20.5% it set on 27 March.