Helping everyday people

Vanquis Banking Group plc

Annual Report and Financial Statements 2022

Our Purpose is to help put people on a path to a better everyday life.

We do this by providing customers with opportunities to borrow in a transparent, responsible and sustainable way, so they can live their lives with access to finance.

The Group has been providing financial inclusion, which supports social mobility, to consumers whose needs are not well met by traditional lenders for over 140 years. We lend responsibly and provide tailored products and service propositions to 1.7 million customers throughout the UK.

We want to be the best and most trusted provider of finance to customers not well served by traditional lenders. Our customers who are in the mid cost and near prime markets access our broad range of credit cards, unsecured personal loans and vehicle finance products through the Vanquis and Moneybarn brands, across multiple distribution channels.

Our aim is to put our customers at the centre of everything we do, and we do this by using our strategic drivers of 'People & Culture', 'Growth & Sustainability' and 'Customer & Community' to deliver for them, our colleagues, shareholders and the wider UK community.

Our strategic roadmap

Our Purpose

We're here…

To help put people on the path to a better everyday life

Read more on pages 20 to 21

Our Vision

When we succeed, we imagine a world where…

Everyday people are able to access the financial services they need from us,

no matter where they are on their journey

Read more on pages 20 to 21

Our Mission

To make this happen, we need to become…

The first-choice bank for the UK population who are excluded from

accessing financial services from traditional lenders

Read more on pages 20 to 21

Our Strategy

To achieve this, our strategic focus area are…

People and Culture

Growth and Sustainability

Read more on pages 22 to 23

Customer and Community

Our ESG Priorities

And our ESG priorities are…

Delivering financial inclusion

Putting the customer at

the heart of everything we do, whether we're growing our range of products, reaching new audiences or interacting with everyday people at every stage of their journey with us

Our people and culture

Creating a positive, inclusive and rewarding culture where everyone feels empowered and supported to learn, grow and succeed

Supporting social mobility

Working with our community

partners to improve the

lives of children and young people by providing them with access to education, social and financial inclusion, and economic development opportunities

Meeting our climate

responsibilities

Playing our part in tackling

climate change and

supporting the UK's transition to a low carbon economy by understanding the risks and opportunities that climate change presents to our business and key stakeholders

Read more on pages 36 to 49

Highlights

Customer numbers

1.7m

0.1m

(2021: 1.6m)

Regulatory capital

£678.8m

£27.7m

(2021: £706.5m)

Adjusted profit before tax - continuing operations

£126.6m

£41.2m

(2021: £167.8m)

Operational carbon footprint offset1

100%

(2021: 100%)

Amounts receivable from customers

£1.9bn

£0.2bn

(2021: £1.7bn)

Liquidity

£478.2m

£228.7m

(2021: £706.9m)

Statutory profit before tax - continuing operations

£110.1m

£32.1m

(2021: £142.2m)

Certain alternative performance measures (APMs) have been used in this report (see pages 229 to 234)

1 Not including scope 3 emissions associated with suppliers' and financed vehicle emissions.

Strategic report

  1. Highlights
  2. Vanquis Banking Group at a glance
  1. Investment case
  2. Chairman's statement
  1. Chief Executive Officer's review
  1. Chief Finance Officer's review
  1. Sustainability overview
  1. Market overview
  1. Business model
  1. Strategy
  1. Key performance indicators
  1. Credit Card Division
  1. Vehicle Finance Division
  1. Personal Loans Division
  1. Sustainability
  1. Section 172(1) statement
  1. Non-financialinformation statement
  1. Risk management and principal risks
  1. Relations with regulators
  2. Viability statement

Governance

69 Board leadership and Company Purpose 69 Chairman's introduction

to governance

71 Our Board

74 Setting our strategy

76 Promoting long-term sustainable success: Board focus areas during 2022

79 The Board: our culture

82 Stakeholders

82 Stakeholder engagement and decision making

87 Effective engagement with shareholders and stakeholders: investor relations

88 Division of responsibilities

91 Composition, succession and evaluation 91 Board composition

92 Director induction and training

93 Assessing Board performance

  • annual Board evaluation
  1. Nomination Committee Report 100 Customer, Culture and Ethics
    Committee Report
    103 Audit, risk and internal control
  1. Audit Committee Report
  1. Risk Committee Report 112 Directors' Report

Directors' Remuneration Report

119 Annual Statement by the Chair of the Remuneration Committee

123 Remuneration at a glance

127 Annual Report on Remuneration

Visit: vanquisbankinggroup.com

View: Sustainability Report at www.vanquisbankinggroup.com/ sustainability/sustainability-report-2022

Financial statements

  1. Consolidated income statement
  1. Consolidated statement of comprehensive income
  1. Earnings/(loss) per share
  2. Dividends per share
  1. Balance sheets
  2. Statements of changes in shareholders' equity
  1. Statements of cash flows
  2. Statement of accounting policies
  1. Financial and capital risk management
  1. Notes to the financial statements
  1. Independent auditor's report
  1. Alternative performance measures

Shareholder information

  1. Glossary
  2. Information for shareholders

Vanquis Banking Group plc Annual Report and Financial Statements 2022

1

Vanquis Banking Group at a glance

Our market-leading

products

Vanquis Banking Group meets the needs of its customers through three products: credit cards, vehicle finance and unsecured personal loans. The credit card business offers credit cards over a wide range of price points, and retail deposits. The vehicle finance business offers secured finance on a range of vehicle types, including cars, motorbikes and light commercial vehicles. The personal loans business offers unsecured loans of between £1k and £5k over one to four years. In January 2023, we announced that we have recently launched a pilot phase for second charge mortgages.

Our Mission is to become the first-choice bank for the UK population

who are excluded from accessing financial services from traditional lenders

Credit cards

1.54m

£150-

24.7%-

£4,000

39.9%

Customers*

Credit

Representative

card limits

APR

Read more on pages 26 to 28

Vehicle finance

100,000

£4,000-

£25,000

Customers*

Loan range

3-5

15.9%-

years

49.9%

Loan terms

Representative APR

Read more on pages 30 to 31

Personal loans

34,400

£1,000-

£5,000

Customers*

Loan range

1-4

18.0%-

years

39.3%

Loan terms

Representative APR

Read more on pages 33 to 34

Funded through:

Retail deposits (fixed term deposits)

Securitisation

* Customer numbers as at 2022 year end.

Product spectrum for the markets we operate in

Revolving credit

Prime/mainstream

Secured loans

Unsecured loans

We will continue to evolve our product offering through 2023, enabling us to support more

Salary

Advance

Salary

finance

consumers on their credit journey. In particular:

Decreasing APRs

APR >20%

APR >50%

APR >100%

Buy

now,

Credit card,

Over-

pay

store card

drafts

later

and retail

credit accounts

Lines

of credit

1st and

2nd

charge

Vehicle mort- finance gages

Pawnbroking

Personal loans

and retail point-of- sale finance

Guarantor

loans

  • We will continue to develop our unsecured loans product offering via Vanquis Bank to customers in the open market, including broadening the range of APRs offered and broadening our loan sizes and terms.
  • Within vehicle finance, we continue to review our product proposition, including loan sizes, terms,
    APRs and asset classes. For example, today we cover cars, motorbikes and LCVs, but we aspire to broaden this to enable us to support more customers' needs.

Decline/unable to lend

2

Vanquis Banking Group plc Annual Report and Financial Statements 2022

Supporting and understanding

our customers

The Group is a leading specialist banking group focused on the mid-cost and near-prime parts of the market in the UK. Our customers may not be well served by mainstream lenders for a multitude of reasons:

Strategic report

Managing on below-average incomes with limited savings, meaning unforeseen expenses

can be challenging

New to credit or new to the UK and therefore have little or no credit history

Have variable incomes

Experienced a

(e.g. self-employed, on a

significant life event

zero-hours contract, have

(e.g. job loss, ill

multiple part-time jobs)

health, divorce)

Looking to build or

Value a more tailored

rebuild their credit rating

product and service

A wider range of suitable and sustainable credit products is required than is typically provided by mainstream lenders.

In addition, our customers sit across a broad range of risk profiles. It is therefore important that a range of price points can be offered, increasing financial inclusion. Finally, our customers' needs and circumstances are often more fluid than those of consumers served by mainstream providers, requiring us to provide a more flexible approach.

Our customers' typical characteristics

Income

Credit cards

Vehicle finance

Personal loans

Full or part-time salaried (66%)

Full-time salaried (77%)

Full or part-time salaried (77%)

source

or self-employed (16%)

or self-employed (15%)

or self-employed (6%)

Income

Earning around the national average (£30k) with core spread between £20k and £50k

level

Housing

20% hold a mortgage1

10% hold a mortgage1

16% hold a mortgage1

Typical

46-65 years old

36-55 years old

26-45 years old

age

Credit

Mid-cost/near prime

Mid-cost/near prime

Mid-cost/near prime

score

Typical customer credit scores sit between 500 and 6002

Savings

Circa half have material savings

Limited savings

Circa half have material savings

(enough to cover emergencies or

(enough to cover emergencies or

anything unexpected)

anything unexpected)

Source: BoxClever survey of 3,510 non-prime consumers and 2,929 Vanquis Banking Group customers, December 2019.

  1. The mortgage holders' data was sourced from internal customer data.
  2. Customer credit scores based on TransUnion Gauge 2 score.

Read our market overview on pages 18 to 19

Vanquis Banking Group plc Annual Report and Financial Statements 2022

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Disclaimer

Vanquis Banking Group plc published this content on 12 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 April 2023 09:19:07 UTC.