Profit warning for banking group despite recovery strategy
Bradford-headquartered Vanquis Banking Group, formerly Provident Financial, has today warned that its adjusted pre-tax profits for 2024 are expected to be “substantially lower” than market consensus.
And Vanquis says its income is expected to be materially lower than market consensus expectations for 2024.
The group, which revealed last October that it would be cutting about 350 jobs during 2024 as it fights to cut costs, also notes its expectations for its 2023 results have not changed since its trading update on 1 February 2024, with adjusted profit before tax for FY 2023 expected to be £25m.
Vanquis says it is continuing to take significant steps in the first quarter of 2024 to redevelop its customer proposition and reset pricing, so expects to return to modest lending growth from the start of the second quarter.
The group notes that is not a subject of the Financial Conduct Authority’s (FCA) review of historical motor finance commission arrangements and sales.
However, it has still been experiencing significant levels of third party complaint submissions, which have inflicted increased administration costs.
Vanquis explains: “While the vast majority of these complaints are not upheld, the associated costs are likely to materially impact the group’s profitability in 2024. The group is exploring proactive legal steps to address this situation.”
Ian McLaughlin, chief executive officer 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.”
For 2025, the group adds it intends to deliver accelerated but disciplined growth across its full range of products.
But it notes the near-term adverse impact of IFRS9 accounting requirements linked to receivables growth means its adjusted return on tangible equity is expected to remain in the low single digits.
