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(Sharecast News) - Sub-prime lender Vanquis said on Thursday that its recovery remained firmly on track, with improved credit quality, lower complaint costs, and disciplined cost control all helping it return to profitability.
Vanquis posted a statutory pre-tax profit of 6.2m for the six month ended 30 June, bouncing back from the prior year's 46.1m loss, with a 24% drop in operating costs to 137.4m, driven by transformation savings and reduced Financial Ombudsman Service fees and a 36% year-on-year reduction in complaint costs to 16.1m.
Gross customer interest-earning balances rose 7% to 2.46bn, with expectations now set above 2.6bn by year-end, while risk-adjusted income increased 7% to 143.6m, supported by a drop in cost of risk from 8.5% to 6.6%. Statutory return on tangible equity improved to 3.1%, up from -18.9% last year.
On the other hand, net interest income dipped 2% to 202.2m, while total income fell 3% to 219.7m, reflecting higher funding costs.
Vanquis also highlighted that it was not exposed to discretionary commission arrangements, distancing itself from potential liabilities tied to the FCA's proposed motor finance redress scheme.
As of 0955 BST, Vanquis shares had surged 12.13% to 115.50p.
Reporting by Iain Gilbert at Sharecast.com
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