3rd Quarter Trading Statement

Vanquis Banking Group PLC

29 October 2026

 

 

Vanquis Banking Group third quarter 2026 trading statement

This announcement contains inside information.

London - 29 October 2026 - Vanquis Banking Group plc ('the Group' or 'Vanquis'), today published its third quarter trading statement for the three months to 30 September 2026.

·    Gross customer interest-earning balances increased by 5% in 3Q26 to over £3.2bn.

·    Year-to-date net interest margin (NIM) remained strong at 14.8%.

·    Cost of living pressures on household finances emerged towards the end of the quarter in parts of the Credit Card portfolio.

·    The Group is responding through a measured approach to growth, through tighter underwriting, and additional cost actions.

·    The Group expects to deliver improved profitability in both 2027 and 2028. However, assuming the weaker credit performance observed towards the end of the third quarter is sustained, the Group would expect to moderate its statutory return on tangible equity (ROTE) guidance.

Financial highlights

Period ending (£m)	30 Sep 26	30 Jun 26	QoQ  Change	30 Sep 25	YoY  Change
Gross customer interest-earning balances1	3,208	3,054	5%	2,652	21%
Net receivables2	3,085	2,933	5%	2,511	23%
Year-to-date NIM3	14.8%	15.0%	(0.2)	17.0%	(2.2)
Year-to-date risk adjusted margin (RAM)4	8.5%	9.3%	(0.8)	11.6%	(3.1)
Common Equity Tier 1 (CET1) ratio5	14.8%	15.6%	(0.8)	17.4%	(2.6)

·    Gross customer interest-earning balances grew 5% in the quarter and 21% year-on-year to £3,208m.

o  Credit Card balances increased modestly, reflecting disciplined underwriting against an uncertain macroeconomic backdrop. Growth was driven by new customers, while existing customer spending remained cautious and maturing balance transfers continued to convert to interest-earning balances in line with expectations.

o  Vehicle Finance balances were broadly stable, reflecting a measured approach to new business growth ahead of the launch of the new onboarding and servicing platform.

o  Second Charge Mortgage balances continued to grow steadily through forward-flow origination agreements with partners, reaching more than £900m at 30 September 2026.

·    Net receivables increased 5% in the quarter and 23% year-on-year to £3,085m, consistent with growth in interest-earning balances.

·    NIM remained strong at 14.8% year-to-date, with the 20bps reduction in 3Q26 reflecting the deliberate portfolio mix shift towards lower-risk, lower-margin Second Charge Mortgages and continued growth in promotional Credit Card balances, which initially generate a lower yield.

·    RAM reduced by 80bps quarter-on-quarter to 8.5% year-to-date, reflecting lower NIM and higher year-to date cost of risk, which increased 60bps quarter-on-quarter to 7.6%.

·    The CET1 ratio reduced 80bps to 14.8%, as the Group continued to deploy capital for growth.

o  Following the call of £41.5m of surplus Tier 2 capital in October 2026, the Group has completed its planned capital optimisation initiatives.

Taking proactive action in a more uncertain macroeconomic environment

Customers have generally remained resilient, but towards the end of the third quarter, signs of affordability pressure emerged in some Credit Card customer cohorts amid continued cost of living pressures on household finances. This was reflected in a rise in Credit Card charge-offs, driven by an industry trend of increased individual insolvencies, where customer's credit balances are immediately charged-off, rather than a notable deterioration in delinquencies. This has also meant the Group has recognised increased IFRS 9 expected credit loss provisions, reflecting the modelled risk of continued elevated charge-offs, particularly from individual insolvencies. Together, these factors resulted in the Group recognising a small loss in the quarter.

The business is deploying a range of levers to respond to continued near-term uncertainty. Management is prudently assuming that this pressure on household finances persists into 2027 and have therefore deliberately moderated its near-term balance growth ambition.

Further organisational changes have been made to support a simpler, more efficient operating model, resulting in modest severance costs. In addition, the Gateway technology platform build is nearing completion, resulting in cumulative transformation cost savings of £30m to £35m across 2026 to 2028, supported by greater operational efficiency, automation and the responsible use of AI.

Outlook and Guidance

Given the ongoing macroeconomic uncertainty, the Group is taking a measured approach to growth, while executing on the delivery of cost savings. Consequently:

·    Gross customer interest-earning balances are expected to grow in the fourth quarter but are now expected to be c.£3.3bn at the end of this year and grow more modestly to c.£3.4bn by the end of 2027.

·    NIM guidance of c.14.5% for FY26 and >13% for FY27 is unchanged, although RAM is now expected to be c.8.0% for FY26 and c.7.5% for FY27, reflecting recent credit performance.

·    Cost: income ratio guidance of low 50s in 2026 and mid to high 40s in 2027 is unchanged.

·    Given the higher impairment charges and modest severance costs in the third quarter, statutory ROTE is now expected to be negligible in 2026.

·    The Group expects to deliver improved profitability in both 2027 and 2028. However, assuming the weaker credit performance observed towards the end of the third quarter is sustained, the Group would expect to deliver a low single-digit statutory ROTE in 2027 and low-double digits in 2028.

With the implementation of Basel 3.1 and the SDDT regime from 1 January 2027, as communicated at 1H26 results, the Group expects an increase in surplus capital of c.£15m.

·    Under the new regulatory capital treatment, the CET1 ratio as at September 2026 was 12.8%, 80bps above the Group's >12.0% guidance for 2027.

·    Therefore, in anticipation of the transition to the new capital regime, management and the Board are comfortable reducing the CET1 ratio guidance for 2026, under the existing capital regime, to >14.0%, from >14.5% previously.

	2026 Statutory Guidance	2027 Statutory Guidance
Gross customer interest-earning balances	c.£3.3bn (>£3.3bn previously)	c.£3.4bn (>£3.7bn previously)
NIM	c.14.5%	>13.0%
RAM	c.8.0% (>8.5% previously)	c.7.5% (>8.0% previously)
Cost: income ratio	Low 50s	Mid to high 40s
ROTE	Negligible (low single-digit previously)	Low single-digit* (low double-digits previously)
CET1 ratio	>14.0% (>14.5% previously)	>12.0%**

* ROTE guidance of low double-digits (previously mid-teens) in 2028, assuming the weaker credit performance observed towards the end of the third quarter is sustained.

** Post Basel 3.1 and SDDT regime implementation from 1 January 2027.

Other matters

·    Following the announcement of Ian McLaughlin's intention to step down as CEO of Vanquis on 11 September 2026, the Board aims to make an announcement with respect to Ian's succession in November 2026.

·    The legal proceedings between Vanquis Bank Limited as Claimant and the Claims Management Company, TMS Legal Limited, as Defendant have been concluded on confidential mutually acceptable terms.

Footnotes

1.      Gross customer interest earning balances exclude post charge off assets and deferred acquisition costs, which are included in gross and net receivables.

2.      Net receivables exclude the fair value adjustment for portfolio hedge risk.

3.      NIM is calculated as interest income less interest expense for the nine-month periods to 30 September and six-month period to 30 June respectively, as a percentage of average gross customer interest earning balances for the nine and six months to the period end, using 10- and 7-point month end averages.

4.      RAM is calculated as total income less impairment charges for the nine-month periods to 30 September and six-month period to 30 June respectively, as a percentage of average gross customer interest earning balances for the nine and six months to the period end, using 10- and 7-point month end averages.

5.      The CET1 capital ratio is calculated as the ratio of the Group's CET1 capital as a percentage of the Group's risk-weighted assets (RWAs) measured in accordance with the UK Capital Requirements Regulation.

Enquiries

Investors and analysts

James Cranstoun, Head of Investor Relations

[e-mail]

[phone]

Media

Scott Mowbray, Head of Group External Communications

[e-mail]

[phone]

Victoria Ainsworth, Senior Director (Hawthorn Advisors)

[e-mail]

[phone]

Forward looking statements

This report may contain certain "forward looking statements" regarding the financial position, business strategy or plans for future operations of Vanquis Banking Group. All statements other than statements of historical fact included in this document may be forward looking statements. Forward looking statements also often use words such as "believe", "expect", "estimate", "intend", "anticipate" and words of a similar meaning. By their nature, forward looking statements involve risk and uncertainty that could cause actual results to differ from those suggested by them. Much of the risk and uncertainty relates to factors that are beyond Vanquis Banking Group's ability to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this report. Vanquis Banking Group does not assume any obligation to, and does not intend to, revise or update these forward-looking statements, except as required pursuant to applicable law or regulation. No statement in this announcement is intended as a profit forecast or estimate for any period. No statement in this announcement should be interpreted to indicate a particular level of profit and, as a consequence, it should not be possible to derive a profit figure for any future period from this report.

 

END