Vanquis Bank reports surprise balance sheet hit after investigation
After an internal review, specialist lender Vanquis Bank has reported a further hit to its balance sheet.
In an unscheduled trading update, published ahead of its interim results for the six months to 30 June 2024, the bank said that, following a “comprehensive review of our balance sheet,” it had been forced to reevaluate some historical balances.
The firm said following its full year results on 27 March, it had committed to ” address its growing Vehicle Finance Stage 3 receivables.”
Following the review, the lender has revised Stage 3 balances down by £29m and said it would book the charge against the value of the vehicle finance portfolio.
Further, Vanquis said £16m of the charge would represent a restatement of the prior year’s results.
In addition to the charge against receivables, management said the bank had also identified “a further £11m of one-off items related to the write-down of development costs for a now redundant mobile app, property dilapidations and other sundry balances.”
In a footnote in the trading update, the group added that as part of the balance sheet review, it had identified gross customer interest earning balances were understated by £51.6m.
As a result of these write-offs, the lender said it would no longer hit its return on tangible equity and profit targets for the year. Vanquis also said it Tier 1 capital ratio would fall below the 19.5 per cent to 20.5 per cent range set by the board.
Ian Mclaughlin, chief executive officer, commented: “We have been carrying out a comprehensive review of our balance sheet and this has led to the revaluation of some historic balances. While finding these one-off items is disappointing, it does mean that our financial position is now clearer and more stable.
Mclaughlin added: “Our trading performance towards the end of the first half of 2024 was encouraging, with year-to-date growth in customer numbers, at better margins, and a return to growth in receivables in June.”
Vanquis said it remained on track to deliver £60m of cost savings by the end of 2024, and “complaint costs remain within previously guided levels and industry-wide initiatives to act against spurious complaints continue.”