Vanquis Banking Group, a U.K. consumer-finance company, has stated that it anticipates a decrease in its adjusted pretax profit and dividend for the year 2023. As part of its efforts to return to growth, the company will be implementing cost-saving measures such as price increases and staff layoffs.
Adjusted Pretax Profit Projection
Vanquis Banking Group expects its adjusted pretax profit for 2023 to fall within the range of £25 million to £30 million ($30.5 million-$36.7 million). This comes after the company reported an adjusted pretax profit of £126.6 million in 2022.
Given its profitability forecast for the year, Vanquis Banking Group has announced that its second-half dividend payment will not exceed 1 pence per share. This is in contrast to the 5.0 pence per share payout in the first half. For the year 2022, the company paid out a dividend of 15.3 pence.
Measures for Profitable Growth
Vanquis states that it is implementing various changes in order to achieve profitable growth. One of these measures involves implementing price increases, which will contribute to the company’s projected net interest margin of 17% to 18% for 2023.
Streamlined Operating Model and Cost Reductions
To further enhance profitability, Vanquis Banking Group is streamlining its operating model by eliminating approximately 350 roles. This move is expected to result in cost reductions totaling around £60 million by 2024. Additionally, the company is conducting a strategy review in the fourth quarter. The costs associated with these savings are estimated at approximately £6.0 million and will be incurred in 2023.
Return to Growth in Q3 2023
For the three months ending on September 30, 2023, Vanquis reported a 5.7% increase in net receivables, which amounted to £2.24 billion.
Vanquis Banking Group’s shares rose by 7.4 pence, or 6.4%, to reach 123.4 pence at 0735 GMT.