Results for the year ended 31 December 2025

Vanquis Banking Group results for the year ended 31 December 2025

Returned to profitable growth

London - 26 February 2026 - Vanquis Banking Group plc ('the Group' or 'Vanquis') today published its results for the twelve months to the end of December 2025.

Ian McLaughlin, Chief Executive Officer, commented: "In 2025 we accelerated growth in interest earning balances, maintained strong credit performance, carefully controlled our margins and costs and returned the Group to statutory profitability.

This performance demonstrates the progress we are making to build a scalable, efficient and resilient bank. Credit quality remained strong as the portfolio grew, reflecting our responsible approach to risk management and customer affordability. Cost discipline was maintained throughout the year with transformation savings ahead of plan, improved operational efficiency and a meaningful reduction in complaint costs.

We also made significant progress on our technology transformation, Gateway, which is substantively delivered and will complete in 2026. Gateway is already improving decisioning, speed and consistency, and will be a key enabler of scale, efficiency and enhanced customer experience in the years ahead.

Our focus remains on supporting customers who are underserved by the mainstream lenders, helping them borrow responsibly, manage their money confidently and build financial resilience. As our transformation progresses and Gateway delivers increasing benefits, we see a clear opportunity for sustainable and profitable growth, underpinned by deeper customer engagement and a more efficient operating model.

Although there is more to do, the momentum we achieved in 2025, combined with our strategy to Serve More, Serve Responsibly and Scale Profitably, gives us confidence to deliver a double digit return on tangible equity in 2026 and a mid-teens return in 2027."

Executive Summary

· Delivered a return to profitability: The Group returned to profitability in 2025, reporting statutory profit before tax from continuing operations of £8.3m (FY24: loss of £138.0m) and a statutory ROTE of 2.3%, in line with guidance for a low single-digit return.

· Strengthened our capital position: The Group optimised its capital structure through a successful Additional Tier 1 (AT1) issuance, which enabled greater capital deployment to support accelerated growth. The Common Equity Tier 1 (CET1) ratio ended the year at 16.5% (December 2024: 18.8%) and provides the necessary headroom to support the Group's strategy and growth plans.

· Accelerated balance growth: Gross customer interest-earning balances increased 22% to £2,824m, which is ahead of prior guidance. Strong performance in Second Charge Mortgages and renewed growth in Credit Cards supported the increase. Vehicle Finance balances reduced as planned ahead of the new IT platform launch in 2026.

· Improved risk adjusted performance: Cost of risk reduced to 7.3% (FY24: 8.4%), supporting 5% growth in risk adjusted income to £273.8m and a risk adjusted margin of 11.0% (FY24: 11.8%). The improvement reflected continued enhancements in underwriting and model performance, movements in the macro-economic outlook, and the changing portfolio mix. Customers demonstrated financial resilience, including improved payment behaviour.

· Reduced operating costs: Statutory operating costs fell to £265.5m (FY24: £399.1m), driven by transformation savings of £28.8m, £20.8m lower complaint costs and the non-repeat of prior year notable items. The cost: income ratio improved to 58.4% (FY24: 89.4%), consistent with guidance.

· Lowered complaint volumes and FOS fees: Complaint costs within operating costs decreased 44% to £26.6m. This was supported by a significant reduction in unmerited Claims Management Company (CMC) claims following the revised Financial Ombudsman Service (FOS) fee structure introduced in 2Q25.

· Limited exposure to the Financial Conduct Authority (FCA) motor finance compensation scheme: The Group's lending practices did not involve discretionary commission arrangements (DCAs) or tied arrangements, resulting in only a small number of agreements potentially within scope of the proposed scheme. While the final scope of the scheme remains subject to change, the Group has recognised a £3.0m (FY24: £nil) provision based on probability-weighted scenarios.

· Maintained robust liquidity and funding: Liquidity remained strong, with a Liquidity Coverage Ratio (LCR) of 306% (December 2024: 359%). A core strength of the Group is our retail deposits franchise, which continued to underpin the Group's stable funding base, representing 89.7% of total funding (December 2024: 85.6%).

· Established the strategic direction for 2026 and beyond: During the year, the Group defined a clear strategic framework aligned with the priorities of Serve More, Serve Responsibly and Scale Profitably. This framework guides sustainable growth, capital allocation, risk management and operational efficiency to deliver attractive returns.

Group financial results

FY25 Financial Highlights

Income Statement

All commentary relates to year-on-year performance unless otherwise stated.

Income

· Total income increased 2% to £454.9m and net interest income increased 3% to £418.4m, reflecting balance growth and a disciplined approach to pricing.

o  Interest income rose 3% to £567.2m, driven by a 13% increase in average gross customer interest- earning balances to £2,495m. This was partly offset by the mix effect of higher growth in lower-risk, lower-margin Second Charge Mortgages.

§ Asset yield decreased 1.8% to 21.0%, reflecting the lower yield on Second Charge Mortgages. Credit Cards yield reduced marginally due to growth in 0% balance transfer and promotional products, while Vehicle Finance yield improved.

o  Interest expense increased 5% to £148.8m, reflecting increased funding requirements for balance growth, partially offset by the lower Bank of England (BoE) base rate, reduced rate outlook and maturing fixed-term deposits being refinanced with lower interest rate savings products.

o  NIM reduced to 16.8% (FY24: 18.5%). Excluding Second Charge Mortgages, NIM increased 0.5% to 19.4%, evidencing continued pricing discipline.

o  Non-interest income decreased 5% to £36.5m, reflecting lower late-fee income on Credit Cards.

Impairment

· Impairment charges decreased 2% to £181.1m, driven by the non-repeat of the prior-year £15.1m Vehicle Finance receivables review, partially offset by increased impairment due to the 22% increase in gross customer interest-earning balances. Credit quality remained strong, with gross charge-offs reducing 5% to £253.2m.

o  Net charge-offs post recoveries decreased 5% to £203.2m.

o  Net risk movements11 resulted in a net impairment increase of £171.4m, compared with £200.0m in FY24. The improvement reflected continued enhancements in underwriting and model performance, movements in the macro-economic outlook and the changing portfolio mix. Releases from write-offs and debt sales reduced impairment by £183.5m (FY24: £224.2m).

o  Cost of risk reduced 1.1% to 7.3%.

· Risk-adjusted income increased 5% to £273.8m, with risk-adjusted margin reducing 0.8% to 11.0%.

Operating costs

· Operating costs decreased 33% to £265.5m.

o  The reduction reflected the non-repeat of £111.7m of prior-year notable items, including a £71.2m goodwill write-off, £24.1m of transformation and other exceptional costs, and £10.2m relating largely to the legacy mobile app write-off. The only notable item in 2025 was the £3.0m provision for motor finance compensation.

o  Operating costs excluding notable items reduced 9% to £262.5m, driven by transformation savings of £28.8m and £20.8m lower complaint costs. These efficiencies more than offset growth- and inflation-related cost increases and higher discretionary staff costs, having not paid bonuses to staff in 2023 or 2024.

o  The cost-to-income ratio improved to 58.4% (FY24: 89.4%).

Profits

· Profit before tax from continuing operations was £8.3m (FY24: loss of £138.0m).

· Tax charge was £(0.3)m (FY24: credit of £17.4m).

· Profit after tax from continuing operations was £8.0m (FY24: loss of £120.6m).

· Profit after tax from discontinued operations was £0.7m (FY24: £1.3m), reflecting the performance of the Personal Loans portfolio in 1Q25 and a small gain on sale. The sale completed at the end of 1Q25.

· Statutory profit after tax was £8.7m (FY24: loss of £119.3m).

· Statutory profit after tax attributable to shareholders was £8.2m (FY24: loss of £119.3m), after £0.5m of AT1 distributions (FY24: nil), resulting in a statutory ROTE of 2.3% (FY24: (32.1)%).

Balance Sheet

All commentary is relative to the December 2024 balance sheet, unless otherwise stated.

· Total assets increased 17% to £3,942m, reflecting the 25% increase in net receivables.

o  Cash and cash equivalents decreased 20% to £805m, reflecting the reduction in BoE deposits and replacement with purchases of UK Government securities within the Liquid Asset Buffer, as part of the strategy to diversify High Quality Liquid Assets (HQLA). This drove the increase in investment securities to £255m (2024: £nil).

o  Net receivables increased 25% to £2,692m, driven by growth in gross customer interest-earning balances and a 7% reduction in expected credit losses (ECL) to £244m.

§ Gross customer interest-earning balances increased 22% to £2,824m, comprising:

- Credit Cards: Balances increased 19% to £1,518m, reflecting credit line increases for existing customers and new customer growth supported through the launch of new product variants.

- Vehicle Finance: Balances declined 8% to £706m, reflecting the proactive management of new business growth ahead of the 2026 launch of the new onboarding and servicing platform under the Gateway transformation.

- Second Charge Mortgages: Balances grew to £599m (December 2024: £217m), driven by forward-flow origination agreements with partners.

- Personal Loans: Balances reduced to £nil (December 2024: £49m) following the sale of the portfolio at the end of 1Q25.

o  The pension asset reduced to £6m (December 2024: £28m), reflecting the results of the latest scheme valuation and updated market assumptions.

· Liabilities increased 18% to £3,454m, driven by a 24% increase in retail deposits (inclusive of accrued interest) to £3,020m, supported by continued optimisation of the retail funding mix, broader product range including Individual Savings Accounts (ISAs), and increased distribution through the Snoop brand.

o  Bank and other borrowings decreased 15% to £348m following the redemption of £58.5m of Tier 2 capital securities.

Capital, Liquidity and Funding

All commentary is relative to the December 2024 capital liquidity and funding positions, unless otherwise stated.

Capital

· The CET1 capital ratio decreased 2.3% to 16.5%, reflecting capital deployed to support accelerated balance growth following the optimisation of the Group's capital structure through the successful issuance of £60m of AT1 securities. Capital accretion from statutory profit attributable to shareholders, together with a 40bps benefit from the sale of the Personal Loans portfolio, was more than offset by a 13% increase in RWAs to £2,073m.

· The Tier 1 capital ratio increased 0.5% to 19.3%, reflecting the £60m AT1 issuance, partially offset by the movement in the CET1 ratio.

· The total capital ratio decreased 3.6% to 26.1%, mainly due to the reduction in the CET1 ratio, as the AT1 issuance was largely offset by the redemption of £58.5m of Tier 2 capital.

· The Group's leverage ratio was 12.1% (December 2024: 13.9%), remaining comfortably above the minimum requirement.

Liquidity

· The liquidity buffer totalled £998m (December 2024: £947m), including approximately £250m invested in UK gilts, with the remainder held in the BoE reserve account. This resulted in excess liquidity of £653m above the 100% LCR minimum (December 2024: £667m) and an LCR of 306% (December 2024: 359%).

Funding

· Retail deposits increased 24% to £2,984m, providing a stable source of funding at an attractive cost relative to wholesale alternatives, supported by a broader product range designed to optimise the cost of funds.

· The Group remains primarily funded by retail deposits, representing 89.7% of total funding including Tier 2 capital (December 2024: 85.6%).

· Funding diversification continues to be supported by Tier 2 capital, modest levels of private securitisation secured by Vehicle Finance assets, and access to Central Bank facilities collateralised by Credit Card receivables.

Outlook and Guidance

· As announced with FY24 results, the Group has transitioned to reporting solely on a statutory basis. Accordingly, the guidance outlined below is on a statutory basis. 

· Gross customer interest-earning balances for 2026 are now expected to exceed £3.3bn, compared with the previous expectation of approximately £3.0bn, reflecting accelerated balance growth within risk appetite delivered in 2025. Going forward, the Group intends to balance growth with profitability improvement, driving increased returns in 2026 and 2027.

· The higher balance base in 2026 and the deliberate change in mix of balances by product, including a greater proportion of lower-margin, lower-risk Second Charge Mortgages, resulted in a reduction to NIM guidance to c.15.5%, from >16% previously.

· Given the Group now has greater clarity on the cost of risk across products, RAM guidance has been introduced. Both NIM and RAM are expected to reduce in 2026 and 2027, driven by continued growth in Second Charge Mortgages, which carry lower RWAs and therefore remain accretive to the Group's ROTE guidance.

· The cost: income ratio guidance has reduced from "low 50s" in 2026 and "49% or lower" in 2027 to high-40s and mid-40s, respectively. This improvement is expected to be delivered by both income growth and cost reductions. Cost reductions will be driven by ongoing transformation savings, including £23 - 28m from the completion of Gateway, as well as a continued focus on driving operational efficiencies across the Group.

· The ROTE guidance of low double-digits for 2026 and mid-teens for 2027 remains unchanged. However, profitability in 2H26 is expected to be higher than 1H26, as balances mature and interest income builds.

· Following the Group's capital optimisation actions in 2025 and its reduced regulatory requirements, capital guidance of >14.5% is now set on a CET1 ratio basis, compared with the previous >17.5% Tier 1 ratio guidance. This guidance remains subject to regulatory change, including from the finalisation of the Basel 3.1 rule set and the Small Domestic Deposit Takers (SDDT) regime, as it applies to Vanquis. Implementation is expected on 1 January 2027.

Capital Management and Dividend

· With the priority in 2025 being capital deployment to support balance growth, the Board has decided not to declare a dividend for FY25 (FY24: no dividend), as previously guided.

· The Board expects to continue deploying capital for growth in the near term and intends to reset the capital allocation framework and distribution policy following full delivery of the strategy in 2026.

FY25 Operational Highlights

Customer Proposition and Insightful Risk Management

· Credit Cards: Launched new product variants, including credit builder, balance transfers and other promotional products such as travel cards, to meet customers' diverse financial needs.

· Vehicle Finance: Enhanced credit decisioning, improving the speed, accuracy and consistency of lending decisions.

· Second Charge Mortgages: Delivered strong growth supported by forward-flow arrangements with Interbridge Mortgages and Selina Finance.

· Savings: Expanded the retail product suite, including ISAs and the Snoop-branded easy-access account, strengthening cost-efficient funding.

· Snoop: Increased active users by 12% to 328k, including 43k Vanquis customers, further establishing Snoop as a money-management and engagement platform.

· Fair Finance: Supported 20k people to identify £34m in entitlements and access £307k in affordable loans through the "Not Yet" referral programme.

· Vanquis Benefits Checker: Launched ahead of the Government's Financial Inclusion Strategy, helping customers maximise income and reduce reliance on borrowing.

· Customer experience: Introduced a new service platform, enabling faster, more personalised support and improving overall customer satisfaction.

· Brand: Launched the refreshed brand - Vanquis: the bank that's got your back - reinforcing our purpose and customer focus.

· Credit decisioning: Developed a new credit decisioning platform in Vehicle Finance, and enhanced credit risk scorecards and affordability assessments in Credit Cards.

Technology Transformation, Operational Efficiency and People

· Gateway on track for 2026 completion: Most development has now been delivered, enabling a digital-led operating model, faster feature deployment and a structurally lower cost base.

· Integrated IT platform delivered: c.30 billion rows of customer, product and decisioning data were migrated into a unified platform, significantly enhancing analytics and decisioning capability.

· New digital customer journeys launched: A new mobile app went live, deepening engagement, improving conversion and supporting retention.

· Vehicle Finance platform modernisation: A transformed onboarding and servicing platform is on track to go live in 2026, expanding market access, and improving broker integration, operational efficiency and customer experience.

· Operational efficiency gains: Enhanced fraud controls, more efficient debt sales processes and improved complaints handling, supported by expanded use of digital tools, AI and self-service, alongside continued property footprint rationalisation.

· Future cost savings: On track to deliver an additional £23-28m of cost savings from Gateway across Operations and Technology.

· Strengthened colleague engagement: 73% trust score (2024: 60%), reflecting progress on culture and engagement, and meaning Vanquis has been certified as a Great Place to Work.

Update on External Factors

Complaints update

· Complaint costs reduced to £26.6m (FY24: £47.4m), of which FOS fees were £6.4m (FY24: £24.8m), with a lower run rate from 2Q25 following the implementation of the revised FOS fee structure.

· Since the revised FOS fee structure was implemented on 1 April 2025, Vanquis related CMC complaints referred to the FOS have been negligible.

o  CMCs are charged an upfront fee of £250 for each claim submitted, reducing to £75 for upheld cases.

o  Lender fees have reduced from £650 per case to £475 for each case not upheld.

· Vanquis continues to engage with regulators to address complaints issues on an industry-wide basis.

· The Group supports the Government's planned changes to reform the FOS.

· Following the successful strike out hearing outcome in the court case against The Money Solicitor (TMS Legal Ltd.), the CMC responsible for the most unmerited claims in recent years, legal proceedings are now progressing to trial.

· 2025 complaint costs include a £3.0m provision for the FCA motor finance compensation scheme.

FCA motor finance compensation scheme

· Vanquis did not participate in discretionary commission arrangements (DCAs) and did not operate tied arrangements.

· The Group has a limited number of credit agreements potentially subject to the FCA motor finance compensation scheme. The vast majority (c.98%) of commissions paid were not above 35% of the total cost of credit and 10% of the loan amount.

· The FCA comments in the consultation that non-prime lenders, which include Moneybarn (Vanquis' Vehicle Finance business), may rebut the presumption of customer loss by demonstrating that the customer would not have secured a better deal elsewhere. In such cases, no redress would be due. The Group believes a significant number of its agreements may meet this test and is collating the required supporting evidence.

· While the final scope of the scheme remains subject to change, the Group has recognised a £3.0m provision based on a number of probability weighted scenarios. If the scheme proposals and assumptions included in the consultation are to be fully implemented, an additional liability of £4.0m may arise, primarily due to increased operating costs associated with customer outreach.

· This provision will be reviewed and refined once the FCA publishes the final scheme rules.

· Vanquis remains committed to ensuring customers receive appropriate redress where loss has occurred. Based on our current understanding, we believe the proposed scheme may not reflect the actual financial impact on customers or align with the principle of proportionate and reasonable compensation where harm is demonstrated. The Group also note that the scheme's approach to assessing unfairness differs from the fact-specific methodology outlined in the Supreme Court's Johnson judgment, which considered a range of factors. The Group engaged constructively with the FCA during the consultation to share its perspective.

Results webcast

Ian McLaughlin, CEO, and Dave Watts, CFO, will host a results webcast at 09:00 today. To register your attendance, please use this link: https://webcast.openbriefing.com/vanquis-fy25/

Materials for the results presentation have been published at: https://www.vanquis.com/investors/results-reports-presentations/

Enquiries

Investors and analysts

James Cranstoun, Head of Investor Relations

[email protected]

+44 (0) 7766 937 406

Media

Scott Mowbray, Head of External Communications

[email protected]

+44 (0) 7834 843 384

Victoria Ainsworth, Senior Director (Hawthorn Advisors)

[email protected]

+44 (0) 7894 995 886

Footnotes

1. The presentation of the income statement and selected key metrics in this report is consistent with that in the Annual Report and Accounts for 31 December 2024, with the exception of the impact of the sale of the Personal Loans portfolio, which is now recognised as a discontinued operation and the re-segmentation of interest income, interest expense and operating costs by product. Further details are included in the 2024 re-presentation document at the following link: Vanquis-Banking-Group-2024-Re-presentation-Document.pdf.

2. Asset yield is calculated as interest income received from customers for the period as a percentage of average gross customer interest-earning balances for the 12 months ended 31 December using a 13 point month end average.

3. Net interest margin is calculated as interest income less interest expense for the period as a percentage of average gross customer interest-earning balances for the 12 months ended 31 December using a 13 point month end average.

4. Total income margin is calculated as total income for the period as a percentage of average gross customer interest- earning balances for the 12 months ended 31 December using a 13 point month end average.

5. Cost of risk is calculated as impairment charges for the period as a percentage of average gross customer interest- earning balances for the 12 months ended 31 December using a 13 point month end average.

6. Risk-adjusted margin is calculated as risk-adjusted income for the period as a percentage of average gross customer interest-earning balances for the 12 months ended 31 December using a 13 point month end average.

7. Cost: income ratio is calculated as operating costs as a percentage of total income for the 12 months ended 31 December.

8. ROTE is calculated as annualised statutory profit after tax for the 12 months ended 31 December as a percentage of average tangible equity for the 12 months ended 31 December. Tangible equity is stated as equity after deducting average AT1 notes and the Group's pension asset, net of deferred tax, less intangible assets and goodwill.

9. Basic earnings per share is calculated as statutory profit after tax for the 12 months ended 31 December, divided by the weighted average number of shares in issue.

10. TNAV per share is calculated as closing tangible net asset value, divided by the period end number of shares in issue. Tangible net asset value is stated as equity after deducting AT1 notes and the Group's pension asset, net of deferred tax, less intangible assets and goodwill.

11. Net risk movements reflect stage migrations and changes in post model adjustments (PMAs).

12. Amounts receivable from customers are presented net of £0.2m (2024: £(0.9)m) fair value adjustment for portfolio hedged risk. Underlying net receivables were £2,691.3m (2024: £2,154.6m).

13. Bank and other borrowings in 2024 are presented net of £0.2m (2024: £2.5m) fair value adjustment for hedged risk. Underlying bank and other borrowings were £347.7m (2024: £412.5m).

14. The CET1 ratio is calculated as the ratio of the Group's CET1 capital as a percentage of the Group's risk-weighted assets measured in accordance with the CRR.

15. Retail funding as a percentage of all funding has been restated to include Tier 2 capital within the total on-balance sheet funding of the Group.

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.

Operating review

Segmental product performance

1. The presentation of the income statement and selected key metrics in this report is consistent with that in the Annual Report and Accounts for 31 December 2024, with the exception of the impact of the sale of the Personal Loans portfolio, which is now recognised as a discontinued operation and the re-segmentation of interest income, interest expense and operating costs by product. Further details are included in the 2024 re-presentation document at the following link: Vanquis-Banking-Group-2024-Re-presentation-Document.pdf.

Credit Cards - Balances returned to above 2023 levels, having improved the quality of the portfolio

2. Average of gross customer interest-earning balances for the 12 months ended 31 December using a 13 point month end average.

3. Interest income from customer receivables for the 12 months ended 31 December as a percentage of average gross customer interest-earning balances.

4. Net interest income for the 12 months ended 31 December as a percentage of average gross customer interest-earning balances.

5. Total income for the 12 months ended 31 December as a percentage of average gross customer interest-earning balances.

6. Impairment charges for the 12 months ended 31 December as a percentage of average gross customer interest-earning balances.

7. Total income less impairment charges for the 12 months ended 31 December as a percentage of average gross customer interest- earning balances.

8. Operating costs as a percentage of total income for the 12 months ended 31 December.

All commentary relates to year-on-year performance unless otherwise stated.

Total customer numbers increased 6% to 1,339k, reflecting a return to growth from 2Q25 following a comprehensive review of customer cohorts by risk profile, vintage and acquisition channel to ensure the future sustainable profitability of the portfolio.

Gross customer interest-earning balances increased 19% to £1,518m, reflecting both credit line increases of existing customers, and new customer growth following the release of new product variants.

Net receivables increased 20% to £1,384m, reflecting the growth in gross customer interest-earning balances and a smaller 6% increase in ECL to £170m, driven by a better quality portfolio, with increased balances in Stage 1 and 2 and a reduction in Stage 3 balances.

Total income increased 1% to £352.5m. Net interest income rose 2% to £319.2m, with non-interest income decreasing 5% to £33.3m. Net interest margin decreased 0.5% to 23.3% and total income margin decreased 0.7% to 25.8%.

Interest income increased 1% to £370.8m, relative to a 4% rise in average gross customer interest-earning balances to £1,367m. Asset yield reduced 0.8% to 27.1%, driven by growth in 0% balance transfers (BTs) and promotional products, partially offset by risk-based repricing initiatives.

Interest expense decreased 3% to £51.6m, driven by lower cost of funds as the reduced rate outlook and maturing fixed-term deposits were refinanced with lower interest rate savings products.

Non-interest income decreased 5% to £33.3m, reflecting lower late-fee income.

Impairment charges increased 13% to £139.6m, driven by the 19% growth in gross customer interest-earning balances. Gross charge-offs reduced 19% to £174.2m and net charge-offs post recoveries reduced 20% to £132.3m, reflecting the better quality of the portfolio. Cost of risk increased 0.8% to 10.2%.

Risk adjusted income decreased 5% to £212.9m and risk adjusted margin reduced 1.4% to 15.6%.

Operating costs decreased 10% to £174.7m, driven by transformation cost savings and lower complaint costs, more than offsetting growth and inflation driven cost increases and an accrual for discretionary staff costs.

Profit before tax contribution increased 27% to £38.2m.

Vehicle Finance - Proactively managed new business growth in 2025 while we build the new onboarding and serving platform

All commentary relates to year-on-year performance unless otherwise stated.

Total customer numbers decreased 6% to 103k, reflecting proactively managed new business growth in the near-term in advance of the new onboarding and servicing platform being delivered in 2026 as part of the Gateway technology transformation programme. A new lending decision engine was introduced in 2025, enabling a more granular level of portfolio segmentation and delivered a stronger platform to optimise higher-margin customer segments.

Gross customer interest-earning balances decreased 8% to £706m, driven by the proactive management of new business growth. 

Net receivables decreased 6% to £689m, reflecting the reduction in interest earning balances and a 25% reduction in ECL to £73m. ECL reduced across stages given the reduction in balances.

Total income decreased 6% to £95.7m, which represented all net interest income. Net interest margin and total income margin increased 0.7% respectively to 13.0%. 

Interest income decreased 7% to £123.9m, consistent with an 11% reduction in average gross customer interest-earning balances to £737m. The asset yield increased 0.7% to 16.8%, driven by repricing initiatives.

Interest expense reduced 10% to £28.2m, driven by the lower funding need and lower cost of funds, as the reduced rate outlook and maturing fixed-term deposits were refinanced with lower interest rate savings products.

Impairment charges decreased 31% to £41.5m, reflecting the non-repeat of the £15.1m prior year impact of the Vehicle Finance receivables review and reduced impairment from the 8% reduction in gross customer interest-earning balances. Cost of risk reduced 1.7% to 5.6%.

Risk adjusted income increased 31% to £54.2m and risk adjusted margin improved 2.4% to 7.4%.

Operating costs decreased 17% to £66.9m, driven by transformation cost savings, more than offsetting growth and inflation driven cost increases and an accrual for discretionary staff costs.

Loss before tax contribution was £12.7m (FY24: £38.8m).

Second Charge Mortgages - Continued strong growth in a growing market in 2025

All commentary relates to year-on-year performance unless otherwise stated.

Total customer numbers increased to 9.9k (December 2024: 3.7k) following the successful growth of the forward flow agreement with Interbridge Mortgages and expanded partnership with Selina Finance. 

Gross customer interest-earning balances increased to £599m (December 2024: £217m) and net receivables increased to £619m (December 2024: £225m), which includes deferred acquisition costs.

Total income increased to £11.6m (FY24: £1.4m). Net interest margin was 2.7% and total income margin was 3.0%.

Interest income increased to £28.4m (FY24: £4.8m) with an asset yield of 7.3%. Interest expense was £17.8m (FY24: £3.4m).

Risk adjusted income increased to £10.9m (FY24: £1.2m), including impairment charges of £0.7m (FY24: £0.2m). Cost of risk was 0.2% and risk adjusted margin was 2.8%.

Operating costs were £5.5m (FY24: £0.6m), reflecting the limited fixed costs associated with the business given the origination partnership arrangements in place.

Profit before tax contribution was £5.4m (FY24: £0.6m).

Corporate Centre

Corporate Centre includes the retail savings business, including related costs, unallocated Treasury result after product allocations, Snoop income and costs and other immaterial or central items.

All commentary relates to year-on-year performance unless otherwise stated.

Total income was a net expense of £(4.9)m (FY24: £(4.2)m), with net interest income being a net expense of £(7.1)m (FY24: £(7.7)m) and non-interest income decreasing to £2.2m (FY24: £3.5m).

Interest income of £44.1m (FY24: £46.3m) represented returns from the Liquid Asset Buffer (LAB), including UK gilts and interest on cash reserves in the BoE reserve account.

Interest expense of £51.2m (FY24: £54.0m) represented residual funding costs not allocated to the respective businesses, including unallocated Tier 2 capital.

Operating costs reduced to £18.4m (FY24: £124.9m), reflecting the non-repeat of £111.7m of prior year notable items. The only notable item in 2025 was the £3.0m provision for motor finance compensation.

Loss before tax contribution was £(22.6)m (FY24: £(129.9)m).

Notable items

Half-yearly financial results

Group

Credit Cards

Vehicle Finance

Second Charge Mortgages

Corporate Centre

Notable items

Principal Risks and Uncertainties

The Group's principal risks are those most critical to the alignment and delivery of its Strategy. Principal risk categories and associated risk appetite statements, metrics and thresholds are reviewed and approved by the Board on an annual basis, effectively defining the Group's overall risk appetite. The Risk Management and Internal Control Framework defines how risk is comprehensively and consistently identified, managed and reported across the Group, enabling effective aggregation, escalation and oversight by the Executive and Board.

Customer Risk

This is defined as the risk that failing to understand or address customer needs could lead to dissatisfaction, poor customer outcomes, reduced loyalty and reputational damage, impacting revenue and long-term business sustainability. The Group closely monitors customer outcomes to ensure the fair treatment of customers, particularly for customers requiring early intervention strategies or those with vulnerable characteristics, and address customer detriment. Complaints related to responsible lending have declined since the implementation of the FOS fee-charging structure. However, following the recent Supreme Court ruling, the Group continues to await the outcome of the FCA's consultation on a proposed compensation scheme for motor finance customers.

Regulatory Risk

This is defined as the risk that non-compliance with all regulatory and legal requirements and expectations could lead to financial penalties, legal action, operational disruptions and long-term damage to reputation. Strong and proactive regulatory relationships are in place with the FCA and PRA, who remain up to date with the Group's strategic initiatives, key risk management activities and responses to regulatory developments and consultations. The Senior Managers and Certification Regime framework creates a consistent approach to the allocation of Senior Management Functions and responsibilities, strengthening risk ownership and accountability.

Financial Crime Risk

This is defined as the risk that failure to detect and prevent financial crime and fraud could result in customer detriment, regulatory fines, reputational damage and financial loss. The Group has dedicated fraud and financial crime strategic and operational teams, which monitor, investigate and report suspicious activity to meet regulatory obligations, remain vigilant of evolving external emerging threats and protect the Group and our customers from financial crime and fraud. The Group continues to strengthen its financial and fraud control environment through the delivery of the new financial crime risk management system, as part of Gateway.

Capital Risk

This is defined as the risk that inadequate capital resources or poor capital planning could result in an inability to meet financial obligations, regulatory breaches and financial instability, potentially threatening the long-term viability of the Group. The Group and Bank operate within a defined capital risk appetite, with performance and capital position reported to and closely monitored by the Risk Committee and Board. Sufficient capital resources, both in terms of amount and quality, are maintained to support the business strategy and meet the stressed scenarios identified in the Internal Capital Adequacy Assessment Process (ICAAP). The Group and Bank have remained above regulatory buffer requirements throughout 2025.

Funding and Liquidity Risk

This is defined as the risk that the Group has insufficient financial resources to meet its obligations (cash or collateral requirements) as they fall due, resulting in the failure to meet regulatory liquidity requirements, or is only able to secure such resources at excessive cost. Funding and liquidity metrics are monitored through daily liquidity reporting and reported to the Risk Committee and Board. The Group's current funding strategy seeks to maintain a secure and diverse funding structure by maintaining access to the liquid retail deposits market and committed facilities to meet the Group's liquidity and funding requirements. Throughout 2025, the Group and Bank have maintained funding and liquidity ratios in excess of regulatory requirements.

Market Risk

This is defined as the risk that fluctuations in market prices, such as interest rates, could negatively impact the Group's financial performance, resulting in losses or disruptions. The Group and Bank are primarily exposed to Interest Rate Risk in the Banking Book (IRRBB) and do not take significant unmatched positions or operate trading books. The Group and Bank have remained within risk appetite throughout 2025. Market risk appetite metrics include the risk under different interest rate risk scenarios, as prescribed by regulation, which are reported to the Risk Committee and Board.

Credit Risk

This is defined as the risk that customers may default on their obligations, leading to financial losses, impaired asset quality and reputational damage. The credit risk programme, initiated during 2024 to optimise the Group's credit decisioning capability and enhance its credit and affordability strategies, is progressing to plan, ensuring credit risk is at the forefront of business decisioning and keeps pace with changing market and economic conditions. The Credit Risk Committee meets monthly to oversee the programme and monitor portfolio performance against key credit risk metrics.

People Risk

This is defined as the risk that poor recruitment practices, insufficient employee training or low engagement levels caused by poor culture and compliance could lead to operational inefficiencies and reputational damage. The Colleague Survey completed in October saw the engagement score rise to 73% from 60% in 2024, earning Great Place to Work® certification. The Group's operating model is regularly reviewed to ensure it has the appropriate capacity and capability to meet the Group's financial, customer and regulatory responsibilities. 

Technology, Information Security and Data Risk

This is defined as the risk that inadequate technological, security and data infrastructure and failure to upgrade systems could lead to operational inefficiencies, data breaches, service disruptions, a lack of scalability and reputational damage. Additional focus has been placed on technological advancements, such as artificial intelligence and machine learning, of which supporting governance structures are maturing. The Group's technology, information security and data risk is being significantly strengthened through the delivery of the Gateway technology, and data and analytics transformation programmes, which are progressing to plan.

Operational Risk

This is defined as the risk that failures in processes, systems or human error could result in business disruptions, financial loss, regulatory action, poor customer outcomes and reputational damage. Operational risk is inherent to our Group's activities and heightened as we deliver our activities, utilising in-house capability, and third-party and outsourced business support, and deliver transformation programmes. The application of the integrated assurance framework, inclusive of the Group's material controls and delivery of key strategic programmes, seeks to complement the assurance activities of each the three lines of defence.

Model Risk

This is defined as the risk that incorrect assumptions, poor design or outdated data within models used for decision making could lead to unintended outcomes, financial loss or operational inefficiencies. All models and covered tools are required to be added and managed through the model inventory, which is reviewed monthly for completeness and accuracy. The model risk policy is in place, reflecting the PRA's Model Risk Management Principles with clear delineation of responsibilities across the three lines of defence, inclusive of second line independent validation, and governance and oversight from the Model Risk Committee and supporting formal sub-working groups.

Business Performance Risk

This is defined as the risk that poor performance of key business processes, such as financial planning, operations or customer service, could lead to financial losses, reduced market share, threat to the Group's long-term viability and reputational damage. The Group continues to deliver against its strategic priorities, grow the business and maintain its existing commitments in a safe and controlled way, adopting an effective risk management framework, strong risk culture and awareness of emerging external threats.

Consolidated financial statements

Consolidated income statement for the year ended 31 December

Consolidated statement of comprehensive income for the year ended 31 December

Earnings per share

Dividends per share

The total cost of dividends paid in the year was £nil (2024: £2.5m).

1 Refer to material accounting policy information for details of representation

Consolidated balance sheet

Consolidated statement of changes in shareholders' equity