Vanquis proposes dividend as profits exceed expectations
Vanquis Banking Group reported a strong performance in its preliminary results on Friday, with solid loan book growth in each of its businesses, despite a challenging macroeconomic backdrop.
The FTSE 250 company’s net interest margin increased 0.5 percentage points to 21.0%, reflecting a higher asset yield.
Asset quality across the group's loan books remained high, the board said, while delinquency trends were stable, reflecting its focus on lower risk customers.
However, group central costs increased during the period due to the rollout of the shared services model and investment in the growth and scalability of the businesses.
Group statutory profit before tax from continuing operations was £110.1m, down from £142.2m, which the board put down to the increase in central costs.
Meanwhile, group adjusted profit before tax from continuing operations slid to £126.6m from £167.8m, reflecting better divisional profits year-on-year offset by increased losses from the nascent personal loans business and higher central costs due to the centralisation of group functions.
At the end of December, the firm’s capital and liquidity positions remained robust, with regulatory capital of £679m, down from £707m year-on-year, equating to a CET1 ratio of 26.4%, falling from 29.1%, and a total capital ratio of 37.5%, down from 40.6%.
The group said it held high-quality liquid assets in the Bank of England reserve account of £421m at the end of December, up from £415m a year earlier, equating to significant levels of excess above its liquidity coverage ratio requirement.
Vanquis proposed a final dividend for 2022 of 10.3p per share, reflecting its strong capital position and the board's confidence in the group's outlook.
That would equate to a total dividend payable of 15.3p per share for the year, and a pay-out ratio of adjusted continuing earnings of 40%.
“I am pleased to report that the Group's adjusted profit before tax for FY'22 is marginally ahead of market expectations,” said chief executive officer Malcolm Le May.
“This excellent result reflects another year of important strategic change and progress for the group and is the culmination of the hard work and dedication of colleagues across Vanquis Banking Group to whom the board and I are extremely grateful.
“The group remains well positioned in growing addressable markets to deliver attractive and sustainable returns to shareholders over the medium-term whilst supporting our customers in this challenging macroeconomic environment.”
At 1115 BST, shares in Vanquis Banking Group were up 2.19% at 237.5p.
Reporting by Josh White for Sharecast.com.