Vanquis Banking Group delivers strong loan book growth despite 'challenging' economic backdrop

Malcolm Le May, the chief executive, said: “I am pleased to report that the group’s adjusted profit before tax for FY’22 (full year 2022) is marginally ahead of market expectations. This excellent result reflects another year of important strategic change and progress for the group and is the culmination of the hard work and dedication of colleagues across Vanquis Banking Group to whom the board and I are extremely grateful.

“We have delivered a substantial amount of progress since I took over as CEO in February 2018 and 2022 was another important year of strategic development for the group. We reinforced our repositioning as a leading specialist banking group in the mid-cost and near-prime parts of the credit market with a focus on lower risk customers, which has resulted in credit risk across the group reducing materially since 2019.

"The process of rebuilding the group’s loan books back to pre-pandemic levels is underway, as demonstrated by the excellent growth and momentum we delivered in the fourth quarter of 2022.

"Reflecting this strong performance, and the group’s strong financial foundations, the board is proposing a final dividend of 10.3p per share. “This equates to a total dividend of 15.3p and a pay-out ratio of 40 per cent consistent with our dividend policy.

"The group remains well positioned in growing addressable markets to deliver attractive and sustainable returns to shareholders over the medium-term whilst supporting our customers in this challenging macroeconomic environment.”

Vanquis, which has its head office in Bradford, said the positive momentum seen in the fourth quarter of 2022 had continued in early 2023, especially in the vehicle finance and personal loans businesses.

The statement added: “The group continues to see no discernible deterioration in asset quality in any of its loan books but will continue

to monitor portfolios closely for any signs of customer distress.”

Analysts from Shore Capital said in a note: “The outlook statement is confident, with the strong lending momentum witnessed during Q4 (the fourth quarter) having continued through January and February, notably so in vehicle and personal finance.

The statement added: "Lending growth is expected to accelerate through the year as the group takes advantage of its balance sheet strength and competitive position with an improving product range to lean into the market.”