Vanquis trades lower after update highlights fragile backdrop despite return to profit

(Sharecast News) - Subprime lender Vanquis Banking pointed to a still‑fragile market backdrop on Thursday, with its turnaround reliant on tighter cost control, improved credit performance and better customer behaviour rather than top‑line momentum.

Vanquis reported pre‑tax profits of £8.3m for the year to 31 December, swinging back into the black from a £138m loss in FY24.

The London-listed firm's recovery was supported by a 22% rise in gross customer interest‑earning balances to £2.82bn, a 33% reduction in operating costs to £265.5m, and a lower cost of risk at 7.3%. It also ended the year with a Common Equity Tier 1 ratio of 16.5% and said it expects to deliver a double‑digit return on tangible equity in FY26.

Vanquis highlighted a marked improvement in customer behaviour and credit performance, with delinquency rates falling across the portfolio. Stricter underwriting and enhanced collections processes also contributed to the lower cost of risk, while retail deposits continued to provide stable funding and reduced reliance on wholesale markets.

Vanquis also invested in technology and digital platforms during 2025, improving customer experience and streamlining operations, as well as supporting cost control and being expected to underpin future growth by enabling faster decision‑making and more targeted lending.

Chief executive Ian McLaughlin said: "The foundations laid this year through our targeted strategies for efficiency and our commitment to long-term, profitable growth mean we remain on track to deliver double-digit ROTE in 2026.

"I am proud of the hard work put in by all our colleagues over this challenging period. While the transformation continues, I am confident that 2025 will be remembered as the year we repositioned Vanquis for success."

As of 1105 GMT, Vanquis Banking shares were down 3.96% at 121.20p.

Reporting by Iain Gilbert at Sharecast.com