Vanquis posts Q3 profit as credit card growth offsets margin pressure

(Sharecast News) - Sub-prime lender Vanquis said on Wednesday that both gross customer interest earning balances and net receivables had grown in the three months ended 30 September.

Vanquis said gross customer interest earning balances had grown 8% in the third quarter and 18% year-on-year to £2.65bn, with credit card balances increasing for the second consecutive quarter, reflecting further card utilisation by existing customers and growth in customer numbers to over 1.3m, offsetting a decline in vehicle finance balances, in line with expectations. Second charge mortgage balances continued to grow "at a steady monthly rate", reaching roughly £480m at the end of September.

The London-listed firm stated net receivables increased 8% in the quarter and 21% year-on-year to £2.51bn, reflecting growth in interest-earning balances, lower impairment coverage required on lower-risk second charge mortgages, and "robust credit performance" in credit cards and vehicle finance.

Year-to-date net interest margins reduced 40 basis points quarter-on-quarter and 170bps year-on-year to 17.0%, reflecting a lower yield on second charge mortgages and growth in 0% balance transfer and promotional credit card products, partially offset by improved yield in vehicle finance and a lower cost of funds.

Vanquis added that its CET1 capital ratio reduced by 110bps in the quarter to 17.4%, reflecting the deployment of capital to support growth.

Looking ahead, Vanquis continued to guide to a "low single-digit" statutory return on tangible quity for FY25, while FY25 gross customer interest-earning balances were now expected to be more than £2.7bn, up from previous guidance of no less than £2.6bn, reflecting "deliberate additional volume growth" in lower-risk, but lower-margin second charge mortgages.

Chief executive Ian McLaughlin said: "In the third quarter of 2025, we continued to build scale, with gross customer interest-earning balances up 8% in the quarter and 18% year-on-year. Product margins remained resilient and profitable.

"The group therefore delivered a statutory profit in the third quarter and across the nine months to 30 September, reflecting sustained operational momentum. We remain on track to achieve a low single-digit statutory Return on Tangible Equity for the full year, consistent with previous guidance."

As of 0840 GMT, Vanquis shares were down 0.77% at 112.33p.

Reporting by Iain Gilbert at Sharecast.com