Vanquis shares plunge as complaints costs soar
Specialist lender Vanquis Banking Group said its “turnaround” was “on track” in its annual results despite suffering a loss in 2024.
The Bradford-based lender reported a £34.8m loss, a drastic drop from its pre-tax profit of £17.3m in 2023.
The cost of dealing with complaints related to the company’s historic lending practices soared and took a chunk out of the company’s bottom line.
Vanquis said the cost of complaints rose 66 per cent to £47.4m, with Financial Ombudsman Service (FOS) fees increasing to £24.8m from £8.1m.
Meanwhile, net interest income fell five per cent to £420m and total income dropped six per cent to £458.5m. The cited a higher cost of funds as the reason for the drop.
Its net interest margin fell by two basis points over the year to 18.4 per cent.
Losses improved to £8m in the second half of the year, compared to £26.8m in the first six months, driven by the Vehicle Finance Stage 3 receivables review.
Despite impacting losses, the lender said the costs had helped create “a cleaner and lower risk balance sheet, giving greater clarity to the cost of risk across portfolios.”
Vanquis reiterated it was not subject to the ongoing motor finance review as it had not participated in the use of discretionary commission arrangements (DCAs).
The company said it believed its position “differentiated on a number of grounds versus the three cases subject to the judgment and all customers signed a pre-contractual document that confirmed a commission ‘will’ be paid.”
The firm said it had delivered £64.3m of transformation cost savings by the end of the year and was in line to commit an additional £15m in savings by the end of 2025.
Ian McLaughlin, chief executive officer, said: “2024 was a pivotal year in the turnaround of Vanquis.
“We have made good progress implementing the changes required to position the business for sustainable future growth, despite substantial headwinds.
“We addressed underlying structural issues, simplified our operating model, refreshed our strategy, expanded our product range, and are on track to deliver our technology enhancements.
McLaughlin added: “Our technology transformation programme, Gateway, is due to complete by mid-2026, providing us with a scalable, digital-first platform to support growth and delivering an additional £23m-28m in cost efficiencies.”