VANQUIS BANKING GROUP PLC

Recommendation history

• FY 2025HoldHold: Vanquis completed a credible turnaround, returning to £8.3m profit before tax in FY2025 while customer interest-earning balances grew 22% to £2.8bn, but ROTE was only 2.3%. Management targets low-double-digit ROTE in 2026 and mid-teens in 2027, yet the plan depends on continued cost reductions and balance growth while group NIM falls from 16.8% to around 15.5% in 2026 and 14.5% in 2027; Vehicle Finance also remains loss-making.
• H1 2025HoldHold: Vanquis has returned to profitability, with £5.6m H1 profit after tax, 7% growth in customer balances to £2.46bn, 17.4% NIM and all lending products profitable. The recovery is credible but not yet investable as a clean buy: statutory ROE was only 3.1%, Vehicle Finance generated just £1.4m profit with a 71% cost-income ratio, and Gateway execution plus motor-finance liability remain material risks.
• FY 2020HoldHold: FY20 adjusted loss before tax was £47.1m, despite Vanquis (£38m profit) and Moneybarn (£10.9m profit) remaining profitable; the turnaround depends on rebuilding receivables while exiting CCD, which carries up to £100m of closure costs. The £15bn target market and Moneybarn’s 16% receivables growth are attractive, but the FCA investigation, July CCD scheme vote, post-furlough credit losses and unproven personal-loans expansion leave the risk/reward insufficient for a buy.
• Q3 2025HoldHold: Vanquis has started a credible but unproven turnaround—Q3 returned to profit, net receivables growth moderated to 5.7% (£2.2bn), the cost-income ratio improved to 62.4%, and CET1 held at 20%. The £60m 2024 cost-saving plan, against roughly £330m of costs and only £6m implementation expense, is attractive, but FY23 adjusted PBT is still guided to just £25m-£30m and the earnings recovery depends on execution, repricing and sustained low impairments.
• FY 2024HoldHold: Vanquis is emerging from a costly cleanup, but the investment case still depends on execution rather than demonstrated earnings. 2024 produced a £34.8m adjusted loss before tax and -7% adjusted ROTE; management targets low-single-digit ROTE in 2025, low-double-digit ROTE in 2026 and mid-teens ROTE only by 2027, while 2025 balances are expected to reach roughly £2.6bn and NIM to remain above 17%. The £47.4m complaint burden, unprovided motor-finance litigation exposure and lower capital guidance above 17.5% keep the risk/reward from being a clean buy.
• H1 2025HoldHold: Vanquis reported a £35.8m statutory H1 loss, £26.8m adjusted loss before tax and negative 11.5% ROTE after a £28.9m Vehicle Finance review loss and £11.5m of legacy charges. The underlying trajectory is improving—June receivables returned to growth, NIM was 18.8%, Tier 1 capital remained 19.8% and £60m of 2024 savings are on track—but management now expects a full-year 2024 loss, provided no quantitative profitability bridge for the 2025–26 ROTE targets, and still faces elevated complaints and execution risk.
• H1 2025HoldHold. Vanquis outlined an attractive 2026 recovery case—£570m-£600m total income, 19% NIM including second-charge mortgages, cost/income of 49% or lower and £23m-£28m annual Gateway savings—but 2024-25 remain transition years. The core tension is execution and credit risk: management targets a 12%-13% risk-adjusted margin, expects complaint costs to rise about 50% in 2024, and did not quantify Snoop-to-Vanquis referrals or through-cycle impairments despite direct analyst pressure.