16th Jul 2024 17:23
(Alliance News) - Vanquis Banking Group PLC on Tuesday cut its annual guidance, after conducting a "revaluation of some historic balances".
The firm hailed a "now clearer and more stable" financial footing, however, despite a "disappointing" hit from one-off items.
The lender, formerly called Provident Financial, warned of impairments ahead of its interim results for the six months to June 30.
It said a review found a GBP29 million downward revaluation of stage 3 balances and charged off assets in the Vehicle Finance portfolio. It reported a further GBP11 million related to the write-down of development costs for a "now redundant" mobile app, as well as property dilapidations.
It does not expect to meet full-year guidance of a low single digit return on tangible equity, nor its target tier 1 ratio range of 19.5% to 20.5% - though the firm says it will remain "well above" its regulatory capital requirement.
"The group's financial position is now clearer and more stable, with focus now on deploying capital for profitable receivables growth," Vanquis says.
Its net interest margin at June 30 was 18.8%, rising from a restated 18.6% at the end of December. The December NIM was initially reported at 19.0%.
The firm will update further on August 1 alongside its interim results.
Analysts at Liberum commented: "The writedowns are particularly frustrating as trading has been in line with our estimates: receivables started to grow in June; new customer volumes were head of company plans; second mortgages have started strongly; [net interest margin] was stable; credit quality was also stable. Had it not been for past accounting issues, the interims on 1 August would have been pointing in the right direction."
Shares in the company fell 8.9% at 48.30 pence each in London on Tuesday.
By Eric Cunha, Alliance News news editor
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