Good morning, everyone. Thanks for joining us for our 2026 half-year results webcast and conference call.

I'm Ian McLaughlin, the Chief Executive Officer of Vanquis, and I'm joined, as usual, by our Chief Financial Officer, Dave Watts. Dave, good morning and welcome.

Good morning, Ian.

I'll start with an overview of our performance and the updates to our outlook that we've announced this morning. Dave will then take you through some more detail on our numbers and guidance, and I'll come back to summarize, and then, of course, we'll be happy to take your questions.

If I can take you straight to slide four. The first half of 2026 represented another period of significant progress for Vanquis.

We continued to lay the foundations for sustainable, profitable growth, and attractive returns over the medium term. Let me draw out a couple of key points here.

Firstly, we delivered a further two quarters of profitable growth. Statutory profit before tax increased by 44% year-on-year to £8.9 million, exceeding the profit that we delivered for the whole of 2025.

Secondly, gross customer interest-earning balances increased by 24% year-on-year to more than 3 billion, principally reflecting growth in second charge mortgages and in credit cards, and this supported an 8% increase in income. Importantly, that growth was delivered while maintaining stable credit quality, reflecting our disciplined underwriting and the continued financial resilience of our customers.

We also continue to improve our operational efficiency while still investing in the capabilities needed to support the future scalability of this business. Now, Dave will take you through the key financial metrics on our capital position in more detail shortly, but at the bottom of the slide, you can see that our progress in transforming Vanquis and serving customers who are underserved by mainstream banks was recognized through two Euromoney Awards for Excellence: the best bank transformation in Europe and best for consumer lending in the UK.

On behalf of all our colleagues, we were very pleased with that recognition. We know we have more to do, but we are growing with discipline, improving efficiency, and building a stronger foundation for sustainable profitability.

Let me now turn to some of the specifics that we delivered during the first half to support the medium-term success of the business, and we've made significant progress operationally, delivering tangible improvements across all three pillars of our strategy: to serve more, serve responsibly, and scale profitably. Now, I won't cover every initiative on the slide, but I will talk to four areas that we believe are particularly important.

Firstly, under serve more, we are broadening our proposition by developing an installment lending solution to reflect customer demand and the introduction of regulation in the buy-now-pay-later market. We're also delivering an enhanced prime upgrade credit card proposition for customers whose financial resilience that we've helped to improve over time and who may otherwise be in a position to move away from us to a prime lender.

These initiatives will allow us to build deeper and longer-lasting customer relationships. Secondly, under serve responsibly, we continue to see strong evidence that the improvements we're making are translating into better customer experiences.

Our Customer Satisfaction Index score increased to 83.2, extending our outperformance against the industry benchmark, which stands now at 82. For the first time, we achieved ServiceMark accreditation from the Institute of Customer Service.

This external recognition, again, is particularly important because it reflects not only the service that customers receive today, which has been through a period of significant change, but also shows that the standards, culture, and processes that we are embedding across the organization are working. Thirdly, and perhaps the most significant operational milestone in the first half, we successfully migrated all our existing credit card customers to our new mobile banking app, which was built in-house and led by our Snoop engineering team as part of our Gateway technology transformation program.

This was a large and complex build and migration, completed while not just maintaining, but improving our customer service experience, as I've just described. The app has also received external recognition as the market's best mobile app redesign, as you can see from the logo on the slide.

Now, the importance of this goes well beyond completing just a technology build and migration. This new app is one of the most important deliverables in Gateway.

It gives us a single, modern tech platform through which we can deepen customer engagement, increase self-service, launch new functionality more quickly, and therefore reduce our cost to serve. This will help us build the operating leverage needed to reduce our cost-income ratio over time.

Finally, we continue to evolve and scale our use of AI across customer service, analytics, decisioning, and colleague productivity. Another milestone was when our first customer-facing agent went live in June, helping us to improve customer outcomes, make faster and more consistent decisions, and operate more efficiently.

Taking together, everything on this slide demonstrates that we are translating our strategic goals into tangible operational delivery: broadening our propositions, improving our customer experience, and leveraging technology to build the modern, scalable infrastructure needed to support sustainable growth and stronger returns. Now, everything I've described so far provides an important foundation for the future success of this business.

We are continuing to make progress. However, we have had to adapt to two emerging headwinds as we begin to see the impact of increasing economic uncertainty emerge, particularly during the second quarter.

The first of these was lower than expected utilization by existing credit card customers, and secondly, an increased IFRS 9 impairment provision related to forecast UK unemployment. Taking each in turn, macro uncertainty has led to more cautious customer behavior, with spending lower than we had anticipated.

Customers are still increasing spending, just not by as much as we had originally planned. To illustrate this, our spend per active customer has increased by 10% year-on-year, but the initiatives we had launched to support this carried an expectation of more than a 15% uplift.

We do know, though, that on the same basis, spending among relevant competitors actually declined by 1% over the same period. Our customers are spending more on our cards, and we are outperforming the market, just not by as much as we had originally planned for.

This resulted in credit card income in the first half being around £7 million lower than we had expected. We are taking actions to address that, as you would expect.

The second headwind I referenced was the additional impairment provision taken to reflect a forecast increase in UK unemployment. As you all know, IFRS 9 requires us to recognize potential impairment using forward-looking assumptions.

We therefore have increased our provisioning by £8.5 million. The provision was based on the latest forecast, published at the end of June, which assumed that UK unemployment would rise to a peak of 5.7% from a forecast peak of 5.1% at the start of the year.

Together, these two factors reduced our first-half profitability by approximately £15 million relative to our expectations. However, credit card balances did increase by 2% during the half to 1.55 billion, but this growth was driven more by new customers, including through 0% balance transfers and other promotional products, where balances are initially lower yielding than those of existing customers.

This change in mix shows in the reduction in asset yield from 26.5% in the second half of last year to 25.5% in the first half of this year. In total, new customer balances added £127 million, but partially offset by a £98 million or 6% reduction in balances held by our existing customers.

The benefits from our back-book stimulation initiatives, including prize draws and Vanquis Rewards cashback, helped to mitigate, but did not fully offset, the lower utilization by existing customers. Then, when we look at our other product lines, vehicle finance balances were in line with our expectations, and second charge mortgages continued to deliver strong growth, as you can see on the slide.

I will provide some more product detail in a moment, 'cause this is important, but our overall message is that balance growth has remained resilient across the group, though mix is moving. The two headwinds were therefore clear: lower than expected balances amongst higher-yielding existing credit card customers, and the additional macroeconomic impairment provision for unemployment.

We are obviously keeping these under very close review and will update on any further changes. Let me now take you through that further product detail that I mentioned to show why we remain confident in our outlook, and you can see the credit card detail on slide seven.

The point at which new lending begins to contribute to earnings is central to understanding our medium-term outlook for cards. Back in 2024, credit card balances reduced by 10% as we restructured the business, meaning there are fewer balances reaching maturity and then contributing to profitability in 2026 and beyond than would ordinarily be the case.

In contrast, in 2025, we grew credit card balances by 19%, and the income contribution from that 2025 growth builds over time. As balance transfers mature and promotional periods end, customers move onto representative APRs, driving our interest-earning balances, and this is all progressing in line with our expectations.

As a result, the '25 front book is expected to make a meaningful contribution to profitability from 2027. We intend to grow balances through the second half of this year at a similar rate to the second half of 2025, primarily through new customer acquisition.

We then plan to deliver a similar full-year rate of balance growth through 2027. We continue to price appropriately for risk and in line with consumer duty.

You can see on this slide how these balances translate into profitability through the cumulative profit before tax generated by a typical credit builder customer and a typical balance transfer customer. A new credit builder customer typically become profitable after around 3.5 years, whereas balance transfer customers become profitable in under two years once the promotional period has ended.

In both cases, profitability then continues to build as the relationship develops. The chart on the right demonstrates the same effect across the portfolio.

Newer vintages initially have lower asset yields, but those yields then improve progressively. We're planning on the basis that the more cautious spending behavior that we've seen in the second quarter of this year continues.

We will therefore focus on acquiring more new customers and building sustainable returns as those balances become interest-earning over time, and this gives us confidence that the customer growth delivered since 2025 will make a more meaningful contribution to our profitability from 2027. If I move to slide eight and vehicle finance, this profit was profitable in the first half and performed in line with our expectations.

Our priority during 2026, as I've said before, is to complete the build of the new onboarding and servicing technology platform for vehicle finance. We will maintain profitable lending in the meantime, and balances remained broadly stable, as planned, at £707 million as of at the end of June.

As previously guided, we will increase balance growth in vehicle finance from 2027, supported by the new tech platform, and that platform will provide better connectivity with our broker network, enhanced underwriting and pricing, and faster service for brokers and customers. These improvements will support higher profitability from 2027.

As the slide shows, vehicle finance customers become profitable relatively quickly, meaning that the growth we expect to originate from 2027 will begin contributing to earnings within the first year. If I turn to second charge mortgages in slide nine, this business continued to deliver strong growth.

Balances increased by 34% during the first half, reaching £800 million, and this growth contributed to increased profitability. We expect balances here to continue growing at a similar rate, approximately £30 million per month.

While competitive pressures are resulting in some yield compression, new lending continues to exceed our ROTE hurdle and will support our further profit growth. As the chart shows, second charge mortgages contribute to profitability from the outset, making them an important driver of the group's medium-term earnings as balances continue to build.

Okay. As a result of the second-quarter headwinds I've described, we have updated our financial guidance through to 2027, and you can see this on slide 10.

The guidance assumes that the more cautious spending behavior seen in the second quarter continues at those current levels and that balance growth is therefore increasingly driven by new customer acquisition. Doing this does moderate our returns in the near term, as I've just shown on the previous slides, but it strengthens the future earnings base as those new balances begin to contribute more income.

We continue to expect gross customer interest-earning balances to exceed 3.3 billion by the end of 2026 and exceed 3.7 billion by the end of 2027. Reflecting that lower than expected credit card utilization by existing customers and the greater proportion of newly originated balances, we now expect net interest margin to be approximately 14.5% in 2026 and more than 13% in 2027.

Risk-adjusted margin is also expected to exceed 8.5% in '26 and 8% in 2027. It's important to note that our revised margin guidance principally reflects the product and customer mix of our growth rather than any change in underlying credit quality.

The lower near-term income outlook also affects our operating leverage. We therefore expect the cost-income ratio to be in the low 50s in 2026 and the mid to high 40s in 2027 as those recently originated balances mature and contribute more income and further transformation savings are delivered.

Taken together, these factors mean that we now expect statutory return on tangible equity to be in single digits in 2026 compared with our previous expectation of low double digits. It's worth noting that the additional IFRS 9 impairment provision alone accounts for approximately 2.4 percentage points of this change in our ROTE guidance.

This change also reflects the lower near-term income contribution from existing credit card customers and our increased lending to new customers to build future earnings. We did consider all of the options available to us as these headwinds emerged.

Constraining new lending volumes could protect short-term profitability, but it would just weaken the future earnings base and limit our ability to deliver sustainable returns over the medium and longer term. We therefore rejected that option.

We now expect the growing earnings contribution from the 2025 and 2026 credit card vintages, continued balance growth, and further operating efficiencies to support low double-digit return on tangible equity in 2027, with mid-teens return on tangible equity now expected in 2028. On capital, our position remains strong and supports our growth plans.

Dave will cover this in more detail shortly. The board's confidence in our medium-term outlook, together with the strength of our capital position, supports our intention to re-establish a modest dividend with our full-year 2026 results alongside the outline of our wider capital allocation framework and distribution policy.

We will therefore continue to grow this business while delivering the transformation benefits and operating efficiencies needed to materially improve returns in 2027 and achieve mid-teens ROTE in 2028. That approach is designed to create stronger, more sustainable profitability and long-term shareholder value.

While the timing of profitability improvement has changed as a result of the headwinds I've described, the fundamentals of our medium-term investment case remain intact, and this confidence is underpinned by the points that you can see on slide 11. We continue to see significant growth potential in the large, underserved UK retail market.

Our plans are supported by the completion of our technology transformation, lower operating costs, increased capital capacity from 2027, and through continued delivery against our balance growth ambitions. These strengths reinforce our confidence in this strategy and in our ability to build a higher-quality, more profitable business.

Our objective remains clear: to deliver better outcomes for the customers we serve and stronger, more sustainable returns for our shareholders. With that, I'll now pause and hand you over to Dave to run you through the detail of the financials.

Dave?

Thank you, Ian. Let me start with a summary of the group's financial headlines for the first half of 2026, as set out on slide 12.

As Ian highlighted, we generated a profit before tax of £8.9 million, up 44% year-on-year. Balances grew 8% in the six months to June and 24% year-on-year.

Average balances grew at a similar rate, up 25% year-on-year. However, the mix of this balance growth in credit cards and in lower-risk, lower-margin second charge mortgages has reduced net interest margin to 15%.

Impairment charges increased 35% year-on-year, driven by the growth in balances and the £8.5 million increase in the IFRS 9 provision for macroeconomic uncertainty. Despite this, impairment charges reduced 2% when compared to the second half of last year, reflecting the stable credit quality of our portfolio.

Operating costs decreased 8% year-on-year, generating 16% positive cost-to-income jaws and reducing the cost-income ratio by 9.4 percentage points to 53.1%. This delivered a ROTE of 2.5%.

Slide 14 summarizes the drivers of our growth in gross customer interest-earning balances, which reached over £3 billion at the end of June. Ian went through the drivers of the balance movements by product earlier, I will not cover this again.

Our pricing discipline ensures that all new lending hurdles our mid-teens ROTE target. However, the mix of growth has been a meaningful impact on NIM, as can be seen on slide 15.

1.4% of the group NIM reduction was driven by product mix. Second charge mortgages grew from 13% of average balances in H1 '25 to 24% of average balances in H1 '26, contributing a lower asset yield of 6.8%.

At the same time, the proportion of credit card and vehicle finance average balances reduced 3% and 8% respectively. This has a dilutive effect on NIM, given their asset yields of 25.5% and 17.4% respectively in H1 '26.

1.2% of the group NIM reduction was driven by asset yield. Credit card asset yield reduced 2.3% to 25.5%, as growth was skewed towards initially lower yielding new business, coupled with a reduction in higher-yielding existing customer balances for the reasons described earlier.

Second charge mortgages yield reduced 0.8% to 6.8%, reflecting pricing pressure from increased competition. Conversely, vehicle finance asset yield increased 0.5% to 17.4%, driven by repricing initiatives.

The combined credit card and vehicle finance NIM remained strong at 18.9%. Slide 16 summarizes the impairment charge, which increased 35% year-on-year.

However, the charge reduced 2% half-on-half, despite an 8% growth in balances. Group gross charge-offs increased 12%, and within this, credit card gross charge-offs increased 17%.

This was in line with expectations, given the increase in average balances year-on-year and the maturity of new customer business written in 2025. Importantly, the credit card gross charge-off rate remained stable at 13.7%.

This is a key performance indicator which we monitor in our credit cards business. This increase in gross charge-offs was partially offset by a small reduction in IFRS 9 modeled impairment.

In summary, the underlying credit quality of our portfolio remained stable, with a group cost of risk of 7%. As shown on slide 17, total operating costs reduced 8% year-on-year, driven by the £11.5 million reduction in complaint costs.

This reduction reflects the positive impact of the FOS commencing charging CMC's to submit claims from the 1st of April 2025. Transformation cost savings of £7.8 million has facilitated additional investment for growth in the business and has helped to offset inflation.

This investment includes the expanded use of AI across the business. This will be a key part of continuous IT improvement once the Gateway program concludes later this year.

This investment will pay back in increased transformation savings, which we now expect to be £30 to £35 million out to 2028, compared to the previous guidance of £23 to £28 million out to 2027. Investment in credit card and credit risk expertise drove the 2% increase in headcount.

Slide 18 summarizes the segmental performance of the group by product. The key message here is that all three lending products were profitable in the first half, with improving operational efficiency.

Let me now touch upon the performance of each of the lending products in turn, starting with credit cards on slide 19. The business delivered a profit before tax of £12.8 million, marginally up year-on-year.

This was driven by the 18% increase in average gross customer interest-earning balances, which more than offset the decrease in asset yield and NIM that we've already talked about. A further increase in 0% balance transfer and promotional products to 17% of the portfolio, driven by the new customer growth, reduced the weighted average APR from 35.5% in June 2025 to 32.8% in June 2026.

The cost of risk was 11% in the first half at the lower end of the guided range, despite the majority of the increased macroeconomic impairment provision being attributed to credit cards. Slide 20 covers vehicle finance.

While balances remained stable, repricing initiatives improved the weighted average APR by 20 basis points to 29.3%. The 5.1% cost of risk was at the lower end of the guided range.

The cost-income ratio improved 12 percentage points to 59%. However, the operational efficiency of the business still needs to improve.

This will be delivered by both income growth and cost efficiency once we are using the new platform across our broker network in 2027. This will enable us to build both scale and to automate processes.

As you can see on slide 21, and as Ian has mentioned, second charge mortgages continued their strong growth, with profit before tax increasing to £7.1 million. The cost of risk remained low at 0.2%, with only one customer having defaulted the last two years.

Our portfolio has a weighted average loan-to-value of the combined first and second charge mortgages in the low 70s. This underpins our confidence in guiding to a cost of risk below 1%.

In addition, as the product is secured, the growth is capital efficient as it attracts a lower risk weighting than credit cards and vehicle finance. Liquidity and funding remain a core strength, as shown on slide 22.

High-quality liquid assets increased 22% in the first half to over £1.2 billion. This was driven by our first credit card asset-backed security public issuance in June.

We've also been more proactive in the investment of our HQLA, with 34% now invested in higher-returning assets, including UK gilts, T-bills, and other sovereign-equivalent instruments. The liquidity coverage ratio reduced to 221%, well above the 100% regulatory minimum.

This reduction was driven by upcoming fixed-term savings maturities and increased ISA balances. Total funding increased 32% year-on-year and 13% in the first half, reflecting the increased funding requirement for higher lending balances.

The increase in retail deposits, which represents circa 84% of the group's funding, was driven by the growth in ISAs as we broadened the product range. ISAs are generally sticky balances, which now account for over £1 billion of the nearly £3.2 billion of retail deposits that we now hold.

Average deposit rates reduced year-on-year. However, given the increase in swap rates in recent months, we would expect industry deposit pricing to increase, creating a potential headwind for our future funding costs.

We have factored this into our updated guidance. We continue to deploy capital for growth, as set out on slide 23.

As expected, the group's CET1 capital ratio reduced by 90 basis points to 15.6% in the first half. A 9% growth in net receivables translated into £108 million of RWA growth, accounted for 80 basis points of the ratio's reduction.

Continued investment in the technology transformation of the business via Gateway drove increased intangible spend, which also consumes capital. This was partially offset by the £4.4 million of statutory profit.

The group continues to maintain significant surplus CET1 capital, currently £93 million above the 11.3% disclosed regulatory minimum. We further optimized our capital stack in 2Q 2026, as set out on slide 24.

We tendered £100 million of outstanding Tier 2 capital while concurrently issuing equivalent amount for our new issuance at tighter spreads. This transaction had no impact on the total capital ratio.

However, we have an additional £41.5 million of the original Tier 2 instrument, which is not effective for capital purposes based on our current business plans. This is subject for call in October of this year, which, if called, will reduce the total capital ratio by 1.9%.

Importantly, we have surplus capital at each of the CET1, Tier 1, and total capital levels to deliver our growth plans. As you will be aware, the group will be subject to a new regulatory capital framework from the start of next year, when the Basel 3.1 rules come into effect and the group adopts the Small and Domestic Deposit Takers, or SDDT, regime.

The impacts of this regulatory change are set out on slide 25. Under Basel 3.1, we expect RWAs to increase by around 15%.

This is driven by a 10% risk weighting on undrawn credit card balances and an increased risk weighting on higher loan-to-value second charge mortgages. There's also a new calculation method for operational risk that drives RWA inflation.

Importantly, these regulatory changes also drive lower CET1 ratio requirements, with the disclosed requirement reducing from 11.3% to 9.9% on a pro forma basis. These are transitional capital requirements.

A formal SREP review of our final capital requirements is expected in 2027. However, given the clarity now provided by the PRA, the board are confident to reduce the target CET1 ratio from greater than 14.5% to greater than 12% from the start of 2027.

This effectively creates £50 million of additional CET1 capital to support our balance growth plans. Slide 26 provides further detail on the updated financial guidance that Ian summarized earlier.

We remain confident in our balance growth guidance, and all our products are expected to grow by the end of next year, with the proportion of second charge mortgages continue to increase. As previously guided, the continued mix shift towards these lower-risk, lower-margin products is a key driver of our reducing net interest margin guidance.

However, the main reason for the revision downwards from the previous NIM guidance is the source of growth in credit cards. We're now assuming that this growth continues to be driven by the initially lower yielding new customer business rather than higher-yielding back-book growth.

This dynamic also drives the reduction in our risk-adjusted margin expectations. Note that our cost of risk guidance for all three lending products, which underpins our risk-adjusted margin guidance, remains unchanged.

As a result of the reduced income expectation from the lower NIM, we have marginally increased our cost-income ratio guidance. Note that this reducing trend will be driven by both higher income and lower costs, with the expectation that year-on-year costs will be lower in each of 2026 and 2027.

Finally, before I hand you back to Ian, slide 27 lays out an illustrative updated statutory ROTE bridge for 2026 and 2027. The reduced income expectation in both years is driven by the lower than expected credit card utilization by higher-yielding existing customers.

This drives some offsetting reduction in impairment on back-book credit card customers. However, in 2026, this is expected to be broadly offset by the increase in the IFRS 9 impairment provision.

The income growth next year, although lower than originally expected, will be driven by maturing new credit card customer balances alongside continued growth in second charge mortgages and vehicle finance, which has a faster profitability payback. With that, I'll hand you back to Ian.

Thanks, Dave. Look, to conclude: we demonstrated continued progress in the first half, though more cautious credit card spending than planned for and the additional IFRS 9 provision on unemployment has affected our near-term performance and outlook.

We're having to adapt to these headwinds, but must not lose sight of the progress being made. Our profitability is increasing, our first-half PBT exceeding the profit delivered for the whole of 2025.

We grew balances by 8% during the half. We maintained stable credit quality across the portfolio.

Our net interest margin and risk-adjusted margin reflect changing mix of growth in second charge mortgages and credit cards, and we maintained a clear focus on cost discipline, delivering transformation savings while continuing to invest in the business and to complete the Gateway technology transformation. As Dave has just said, our capital, funding, and liquidity position also remain strong, providing capacity to support growth.

The headwinds we've described today will slow returns in the near term, assuming that they persist, but we've made an active decision to drive more new credit card lending to compensate, and this will contribute more to income over time. Together with continued balance growth and further efficiency benefits, this gives us confidence in a material improvement in profitability from 2027.

That confidence, together with our strong capital position, supports the board's intention to re-establish a modest dividend with our full-year 2026 results, assuming no further significant changes in the UK economy. In the meantime, we remain focused on delivering our strategy: serving more customers and building a more efficient and sustainably profitable Vanquis.

Thank you. We'll now be happy to take your questions.

Morning, everyone. Thanks for taking my questions.

I've got three questions if I can, please. The first one is on card utilization.

It's down in the second quarter. Can you help me?

Can you separate how much is macro versus customer migrating into something else? What's the signal you're watching for a recovery in spend?

Or have I got that wrong? Do you not need that spend to come through, to meet your new guidance?

That's the first question. Then the second one is on the mid-teens 2028 ROTE.

What's the split between the new cards vintage seasoning, cost-income ratio improvement, and second charge mortgages scaling? Which of those has the widest range of outcomes, or I suppose, put it another way, where do you have the most control?

Then the final question is on Basel 3.1. It looks like to free up some £50 million of surplus.

Where does that get deployed first? Thank you.

Abid, morning. Thank you for those three.

I'll I'll take the first one, and then, Dave, we can, come to you, and then I'll take the seconds, and maybe you can comment on the third one about Basel 3.1, in in particular. But, so, look, there is there's a mix of factors at play here, Abid, as we've as we've just said in the presentation.

We we are definitely seeing while the card spend of existing customers is increasing, it's not increasing as much as we'd originally planned, right? I said that, a couple of minutes ago.

It is increasing, and it is increasing more than our competitors. We are watching that very carefully, which kind of links to your second question about, what are the the triggers.

What we can't do is, rely on that miraculously bouncing back. That wouldn't be a a sensible way to plan.

What what you've seen us do, which, these things happen in in in any business, it doesn't always go the way you exactly plan it at outset, we are reacting. We are we've worked out what we think the best way to drive growth that we can control, which is based on our confidence of the 19% cards growth that we delivered in 2025.

We're going back to that now we have the capital clarity, for the rest of this year and into 2027, and we firmly believe that is within our control, as I said. We've we did it last year.

There's no reason we shouldn't be able to do it this year. I think that that is really important.

Do you Dave, do you want to add anything on that?

No, I'm

okay, Ian. Okay.

Then to your second question on the mid-teens ROTE, 2028: look, there are three asset lines at play here, and we've always said we try to resist locking ourselves into we expect X on this, Y on that, and Z on that. We deploy our capital where we see the best opportunity for return, and we'll continue to do that.

Second charge mortgages is performing very consistently and steadily. As I said on the slides, it pays back very quickly, but at a lower rate.

We'd expect that to be a bit of an underpin for the business going forward. The vehicle finance you didn't ask about, but I'll add in anyway.

From 2027, we believe we can much more efficiently grow that as we get the new operating platform in place that I've talked about at length. We're feeling good about that.

Then on the cards bit, again, where it contributes is that 2025 increased book growth seasons and matures from 2027 onwards in terms of delivering profitability. All three products actually come into play 2027 onwards, which gives us the confidence for 2028 and beyond.

I'll maybe pause there. Dave, anything you want to add to those first two?

Just on the ROTE point, as we've already set out in the presentation, we can control costs more than anything else. We said that costs will be lower in 2026 and '25, and then '27 will be lower than '26.

We should expect a degree of trajectory along the same lines on that one, which will help the ROTE out in 2028. Moving on to the Basel 3.1, look, first of all, it's positive we've got clarity on what our requirements are going to be from the 1st of January 2027, and it's also positive to see that we have about £50 million more capital to deploy into assets for growth in the future.

Where would we deploy that? Exactly as Ian said, for where the best returning product is from a capital perspective.

We're very comfortable that we can deploy that in new customer growth in credit cards.

Great. Thank you, Abid.

Thank you.

Morning, Gary.

Hi, can you hear me okay?

We can, thank you.

Yeah. Hi, yeah.

I've got three questions if I can. The first was, I recall you saying that all of your new lending achieves your 15% return on tangible equity target, but obviously your credit cards, certainly through new customers, take two or three years before they turn profitable.

When you're talking about that 15% new lending, is that more like an IRR or a return at maturity? Because presumably then return negative, sort of on day one.

That was the first question. Second, just on vehicle finance, I think previously indicated the balances would start growing again in the second half of this year.

I think you're now signaling that will be 2027, a slight delay to expectation there. Then lastly, I think in your pretty much your opening remarks, you talked about potential to start an installment credit offering.

If you could just talk a little bit about what you're thinking about doing there, given that other them they've sort of upgraded business installment credit's not been a great hunting ground, so, to the group in the past.

Super. Thank you, Gary.

Let me take the first one then. In fact, Dave, I might just come to you on this.

The new lending and ROTE, on Gary's question. you were slightly muffled, Gary, was, just for everyone, is the ROTE hurdling at outset or when the product matures post-two years?

Thanks for the question, Gary. It's based over the lifetime of the product.

That's one of Dave's succinct answers.

Hope that's quite clear. Literally, you look at the marginal capital deployment, what's your return on that one there for that product lifetime.

We know the average life of a vehicle finance transaction is between 30 months and 36 months, and we do that return on that basis. That clears the hurdle.

Yeah. Hope that's clear.

Understood. On And,

Gary, then on your vehicle finance question, this is one to watch at the minute. We are, we are really focused on getting the new platform out because this product has still got a roughly a 70% cost-income ratio on it, which is too high.

We are thoughtful and careful about not putting too much new business through that because it is inefficient compared to where we know we can get it to. We'd rather hold back on the growth till the new platforms in place.

That said, we do see opportunity in that market. We are in discussions with the teams right now as to, well, what does that look like for the second half of the year, and how do we best calibrate that for not writing lots of volume, but at, expensive underlying costs to do so versus there is opportunity.

You've seen, we've squeezed our pricing up a little bit in that product line. I think that's very indicative of the way we're thinking about it: if we can get the top line to move up a little bit, then that kind of covers the higher cost to serve or cost to implement that we're currently sort of stuck with on the current platform.

I think one to watch. Again, Dave, anything you want to add on that?

Just a couple of points to raise on that one, Ian. Last year you saw the volume, receivables come down in vehicle finance.

What you've seen the first half of this year to maintain the same level, and the operating efficiency associated with that has improved. We are doing the best we can to deliver vehicle finance lending, with improved efficiency.

Yep. Okay.

Then, Gary, to your third question, and look, you've got as much history with this business as anyone and more than I do. Installment lending, I mentioned in my remarks a couple of minutes ago, we do see an opportunity and a demand in our customer base for this kind of thing.

It's primarily being fulfilled by buy-now-pay-later. Obviously, the regulation is changing on that, and therefore, we are almost reacting to customer demand, but in cards, not as a standalone product.

We're looking at installment options in the cards, line rather than something, brand new as a product line that, as you said, may trigger some memories and some fears in people. Just to reassure on that.

Again, Dave, anything you want to add on that one?

Only to add that it's continue to meet the needs of our customer. Simple as that.

Yeah.

Would that be used more for customers that are sort of finding the environment a bit more challenging, and therefore an installment products may be a better option in terms of sort of managing their exposure, or is it just for would it be for all customers?

It's we need

Is it a risk management product or is it a growth product?

It's a reaction as we've said to the customer demand. If someone is in a store and has an option of the store credit or that we could offer the an a similar installment product in our cards, we'd rather them spend the money on the card, but we understand they like the idea of installment.

It's very much in that space, Gary, that we're looking at.

All right, okay. Understood.

Thanks very much.

Great. Thank you, Gary.

Thank you, Gary.

Morning, Harry.

Morning, Harry.

Morning. Morning.

Two for me if I may. The first one, just good to see the book growth in second charge mortgages in the half.

I was just wondering, could you elaborate on some of the competitive pressures that you're seeing in this division, and how you expect it to impact book growth, and yields going forward? Then on the second one, just wanted to ask, is there any danger that the length of maturity of two years per balance transfer customer or 3.5 years per credit builder customer is pushed out?

If so, is there any mitigating actions that you can take? Thank you.

Thank you, Harry. I'll take the first one, then maybe, Dave, if you want to take the second one about the maturity period.

Look, second charge growth, second charge mortgages has been a great growth story for us. We started this around two years ago, and we're over 800 million of a book now, with our two forward flow providers that are long-term agreements.

We really like this market. It fits very much to our purpose.

We are seeing somewhere between 80% and 85% of the customers that take out a second charge mortgages are using it for total or partial debt consolidation. This is people using a product that we support, to rearrange their finances and to give themselves some breathing room.

I think that's a really healthy thing. We are seeing that market grow considerably, and it's sort of growing, exponentially almost.

It's higher growth this year. I think about 27% up year-on-year.

We are growing in a growing market. We've got substantial market share now between our two forward flow providers, and the business is running at a steady beat, as I mentioned, of about £30 million a month.

That's all good, and we like that. I think the your question, though, was around there's a little bit of impact on yield that you can see coming through, and that's sort of natural.

I've said in presentations before that when we stand up and say, "Hey, look, you can grow 800 million in a relatively short period of time," of course, our competitors are going to react to that and go, "Well, that looks like a great idea. Maybe we should do that, too."

We are seeing a little bit more than that or more of that, but not substantially, and we're very confident that we can hold our share because what where we differentiate isn't actually on price and yield. It's on the service, and the proposition to the mortgage brokers that specialize in this market, and that's much harder to replicate if you're coming into a market reactively rather than in a very considered way as we did.

We're feeling pretty good about that. Of course, all our asset products, we watch carefully, but so far, good.

It's performing very well. Again, Dave, anything you want to add?

Just two points: from a returns perspective, it clears our mid-teens ROTE target; and secondly, as I mentioned earlier, we've only had one customer who's written off, and the cost of risk is very, very low.

Yeah. Okay.

If I turn to your second question then, Dave, do you want to pick that one up on the, could you see the return profile go out?

To clearly, we look for all our products, and we've given a nice synopsis of a balance transfer and a credit builder. Now, within the balance transfers, there's different balance transfer products there, this is an illustrative example in place there.

To date, we haven't seen any sort of pushing out on those return horizons from there. We're comfortable with what we've got at the moment, and that's the basis which we're pricing our products on.

Thank you, Harry.

Great. Thank you both.

Should we maybe go to any questions?

Yeah. There are a few questions on the website.

Or the webcast section, let me take those. There's two from Ross Luckman from Peel Hunt, related to the credit card business and really an extension from Harry's second question there.

First one being: what is the broad split of the front-book growth between balance transfers and the credit builder cards? Have you seen competition responding to the evolving environment?

Is there increased competition for new customers in these areas? Then secondly, again related to credit cards: how, if at all, does the change in customer behavior on the back book change the medium-term growth opportunity for and the earnings potential for the business?

I suppose that's a question around what we're assuming around the back book in our guidance.

Yeah. Okay.

Look, Dave, maybe I'll come to you on that first one in terms of what we're seeing, in split in terms of BTs and credit builder in terms of the new business flow.

It's broadly 50/50 of new business coming through between the BTs and the credit building.

Yeah. Good.

Look, to the broader question then about what are we seeing any change in competition in cards, how is there anything that, we're seeing in the back book? I think nothing other than what we've already described in the remarks that we've made so far.

It's a really interesting one, this back-book spend. As I said, I want to be re-emphasize and be very clear: our active cards customers are spending more with us.

I gave you that stat of, they're up 10%, our relevant peer group is -1%. We are winning, but not as much as we'd assumed when we originally did the plan a couple of years ago.

That is quite a change, and we're planning on the basis that those behaviors continue through the plan period to the end of 2027. We're not expecting them to worsen, we're not expecting them to miraculously turn around and improve.

Obviously, if anything changes, we will come back and let you know. I think I would make the point that normally in a business like this, where you're dealing with less prime customers, your worry is at the other end of the spectrum, which is, your expected credit losses and are things going bad.

Actually, what we're seeing is that the support that we're giving to our customers to help them improve their financial resilience and their, sensible approach to uncertainty is to spend less, save a little bit more, and create a bit of headroom. I think over time, that will turn out to be very positive, but it obviously has an impact in the plan assumptions that we had on back-book retail spend in the short term.

That's why bringing more of those type of customers in is actually a very good thing as they season and mature, but it does take longer for them to season and mature than if it was the existing customers spending. There's a really interesting dynamic here, but we obviously have to change our planning and drive a different way of getting to our end result.

We're not seeing any issue with getting to the end result, as Dave described, all of the business that we're writing across all three products hurdles. Eventually, if it hurdles mid-teens ROTE as it comes in, eventually, you get to mid-teens ROTE.

The question is how quickly, and that's what this moderated consumer confidence has eased us back on as we change the mix. Just to reiterate some of my remarks earlier.

Again, Dave, anything you want to add?

Just a couple of points. We will always react to how our customers' behavior changes over a period of time.

That's the most appropriate way to run a business. Hence, as Ian said, we're planning our business on that basis there.

As we've talked about in previous presentations, is a big underserved market out there, which we need to go and serve more into. There is the actual demand for the products we're offering in the credit card business.

Yeah.

Thank you both. The final question on the webcast is very much around the macro.

Essentially, they're suggesting that would you agree that this seems to be an inflection point for Vanquis, and, in fact, Vanquis should benefit from a weaker economy in the long term, but the extent of the UK weakness and uncertainty that we've seen, I suppose referring to the dynamics around credit card spending of our existing customers, has out-weighed that? Once the UK recovery starts, that should be a win-win for us, I suppose.

Some comments on that would be helpful.

Yeah. I sort of covered it in my previous answer, but I think we are being sensible here.

Some things have not worked quite in line with our original plan assumptions. As I said, we are growing.

We're just not growing quite as much in that cards back book as we'd originally planned. Therefore, we are reacting to put a different plan in place that still gets us to our destination.

Look, our experience, I think, in our careers, never mind just for Vanquis, is you always learn more when things don't go quite the way you planned. That's the time for cool heads, sharp pencils, resilience, and working out, okay, if that's changed, how do we still get to the destination that we want to get to?

That's exactly the process that we're going through. I think the underlying question in what you've read out, James, is are we expecting to get a win from the UK economy?

That would be great if it happens, but actually, we're planning on a very sensible basis on what we factually can see at the minute and assuming that persists over this period, and therefore reacting to make sure that we can still deliver what we want to deliver, albeit in a different way by bringing more new customers in with that delay in profitability curve that we've already talked about. Dave, I don't know if you want to add anymore there?

The only other thing on the, we've called out the £8.5 million macro adjustment for the IFRS provisioning accounting. It is provisioning accounting under IFRS 9.

We can't change that. Clearly, if you get an outlook for unemployment that improves from the peak forecast of 5.7% at the moment, you get a natural unwind of that over a period of time.

The final point I'd make just to come back on that again is, don't underestimate the board's intention on dividend that we've announced as well. I think that's a really important signal that both the board and management remain absolutely confident that we can get to where we want to get to.

It's just the shape of how we're going to get there needs to change a bit to react to those two headwinds that I've spent a lot of time describing. I think that's a very important point to end on.

Yeah.

Yep, no further questions on the webcast, so, Ian, back to you to close.

Okay. Look, I think that's hopefully been helpful to give you a bit of context around what's happened, why it's happened, what's within our control directly, what is more market-related, and most importantly, as a relatively experienced, hopefully, management team, what are we going to do about it.

We have a plan that takes us forward. We have a really committed team that if you look below the level of the headlines from this morning, there are some great things being delivered that will absolutely underpin the success of this business.

That's what we need to focus on going forward. If things get easier, great, but actually, we're planning for things to stay as they are and still achieve our goals, and I think that's the key message for today.

Dave, you want to say anything?

Just thank you.

Okay. Thank you all very much for your attention, and we look forward to seeing you on the road.

Thank you.