Vanquis on track after first quarter profit

(Sharecast News) - Vanquis Banking Group said on Wednesday that it remained on track to deliver a low double-digit statutory return on tangible equity for 2026 after reporting statutory profit in the first quarter and further growth in customer balances.

The London-listed specialist lender said gross customer interest-earning balances rose 4% in the three months to 31 March to £2.93bn, and were up 27% year-on-year.

Net receivables also increased 4% in the quarter to £2.80bn, 29% higher than a year earlier.

Chief executive Ian McLaughlin said Vanquis had continued to build scale in the first quarter.

"Margins remained resilient, with the trajectory in line with our expectations, and the Group delivered a statutory profit, demonstrating sustained momentum," he said.

"We remain on track to deliver a low double-digit statutory Return on Tangible Equity (ROTE) for the full year."

Credit card balances increased for the fourth consecutive quarter, driven by higher utilisation, strong retention and new customer growth, although growth was lower than in 2025, as expected.

Credit card customers increased to 1.37m.

Vehicle finance balances were in line with expectations and are forecast to reduce in the first half, reflecting disciplined portfolio management ahead of the launch of a new onboarding and servicing platform under the Gateway transformation programme.

Second charge mortgage balances continued to grow steadily, reaching about £680m at the end of March.

Net interest margin fell 50 basis points quarter-on-quarter and 220 basis points year-on-year to 15.6%.

Vanquis said the decline reflected a portfolio mix shift towards lower-yielding, lower-risk second charge mortgages and continued growth in 0% balance transfer and promotional credit card products, partly offset by improved vehicle finance yields and lower funding costs.

The group said the proportion of 0% credit card products was expected to increase in the near term before moderating later in the year, supporting its full-year net interest margin guidance of about 15.5%.

Risk-adjusted margin was stable at 9.4%, supported by disciplined portfolio mix and a lower cost of risk from growth in lower-risk second charge mortgages.

Vanquis expects the measure to increase slightly over the rest of the year, in line with guidance.

The common equity tier one capital ratio fell 60 basis points in the quarter to 15.9%, reflecting continued capital deployment for growth, partly offset by profits generated during the period.

McLaughlin said the benefits of the group's transformation were "increasingly evident" in performance, efficiency and the customer proposition.

"We continue to maintain strong cost discipline, while Gateway, our technology modernisation programme, remains on course for completion in 2026," he said.

Vanquis said credit quality remained strong, supported by disciplined underwriting and risk management, while customers continued to show resilience.

It said it remained alert to the potential impact of geopolitical developments and higher fuel, energy and household costs on consumer confidence and affordability.

The group said active users of Snoop rose 7% year-on-year to 344,000, including 44,000 Vanquis customers.

More than 800,000 customers have migrated to the new Vanquis mobile app, which the company said had improved customer experience and efficiency.

Gateway-driven transformation savings of £23m to £28m are expected across 2026 and 2027, supported by funding optimisation, operational efficiencies and AI-enabled servicing improvements.

Vanquis said it was not in scope for elements of the FCA motor finance compensation schemes covering discretionary commission arrangements or tied selling, as it did not participate in or operate those arrangements.

It said it was only exposed to potential redress under the second scheme, covering agreements entered into between 1 April 2014 and 1 November 2024.

The group said it had 4,338 credit agreements where commissions paid were above 39% of the total charge for credit and 10% of the total amount of credit. Its previously recognised £3.0m provision for the matter remains unchanged.

All financial guidance was unchanged.

Vanquis continued to target gross customer interest-earning balances of more than £3.3bn in 2026, net interest margin of about 15.5%, risk-adjusted margin above 9.5%, a high-40s cost-income ratio, low double-digit return on tangible equity and a CET1 ratio above 14.5%.

At 1024 BST, shares in Vanquis Banking Group were down 5.73% at 111.8p.

Reporting by Josh White for Sharecast.com.

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