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(Sharecast News) - Vanquis Banking Group warned on full-year profits on Monday as it continues to be redevelop its customer proposition and reset pricing, and due to costs associated with reviewing complaints mostly related to credit cards.
In an update ahead of its 2023 results on 27 March, the company - formerly Provident Financial - said that income for 2024 is expected to be "materially lower" than consensus expectations of £538.3m. This is due in part to the redevelopments of its customer proposition, which is expected to allow the group to return to modest lending growth from the start of the second quarter.
In addition, Vanquis said that although it is not a subject the Financial Conduct Authority's review of historical motor finance commission arrangements and sales, it has been experiencing "significant" levels of third party complaint submissions, mainly related to credit cards.
A spokesperson for the company said: "The majority of the claims are being generated by a single Claims Management Company. They are spread right across our business but are predominantly linked to credit cards.
"Most of them are completely unwarranted (e.g. not even a Vanquis customer), but sadly we have to investigate every single one, and each investigation has a cost associated with it."
As a result, it now expects adjusted pre-tax profit for 2024 to be "substantially" lower than market consensus of £75.1m, resulting in a low single digit adjusted return on equity.
Chief executive Ian McLaughlin 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."
At 1030 GMT, the shares were down 39% at 76.34p.
