Vanquis Banking Group plc

Good morning, everyone. Thank you for joining us for Vanquish Banking Group's full year 2025 results. I'm Ian McLaughlin, the Chief Executive Officer of Vanquish, and I'm joined this morning by our Chief Financial Officer, Dave Watts. Dave, good morning. Good morning. I'll start with an overview of our performance in 2025. Dave will then take you through the financial results in more detail, and I will then come back to talk about the strategic priorities, and Dave will then end by covering our financial guidance through to full year 2027. After that, as usual, we'll be happy to take your questions. If I can take you to slide four, you can see how our full year performance compares against both the prior year and against the guidance that we set out at the start of 2025. And the headline here is simple. We delivered a performance that was at or better than all of our key commitments for the year. Most importantly, after the turnaround of the business in 2024, where we delivered a loss before tax of £138 million, we returned to profitability in 2025, with a profit before tax of £8.3 million. During the year, we also took the opportunity to deploy capital to accelerate balance growth, which will support our future profitability. And you can see that in our customer interest earning balances, which ended the year at $2.8 billion, ahead of our guidance of greater than $2.7 billion, and therefore well ahead of our original 2025 goal of greater than $2.6 billion. Net interest margin was 16.8%, reflecting a deliberate shift in mix towards lower risk secured lending in second charge mortgages, as we've signalled previously. Excluding this, NIM actually increased by 50 pips, reflecting our continued pricing discipline in cards and vehicle finance. Our cost to income ratio was in the high 50s, so again in line with guidance and reflecting our improving operating efficiency. And return on tangible equity was 2.3%, so consistent with our guidance for a low single-digit return. Following the AT1 capital issuance in the second half of the year, our Tier 1 ratio increased to 19.3%, putting us in a strong position to support the next phase of our strategy. So while there's always more to do, we have delivered what we said we would in 2025, growing in a resilient and sustainable manner with margins and costs under tight control. After what is now five quarters of consecutive book growth and four quarters of consecutive profitability, you can see that the actions that we've been taking over the past two years are translating into more predictable and sustainable financial outcomes. Slide five sets out the underlying actions we've taken to deliver the results that I've just discussed, and I'll step through a few of these. Firstly, as I've already mentioned, we accelerated our balance growth, but we did so with discipline, actively managing mix to maximize returns on deployed capital. Secondly, we continue to make strong progress on Gateway, our technology transformation program. The fundamentals of Gateway are now substantively delivered, and the program will complete this year. We also delivered further transformation cost savings with efficiency gains, creating positive operating leverage as the business continued to scale. Credit quality remains robust, reflecting continued customer resilience and responsible lending across all our portfolios. And we continued to develop our customer proposition. A bit more on that in a moment. Taken together, these actions will allow us to continue to transform the banking. Slide 6 then highlights the progress we made across our customer proposition and on risk management during 2025. We continued to strengthen all our product offerings, balancing growth, risk discipline, and good customer outcomes, and we got busy. In credit cards, for example, we launched 66 new product variants, including credit builder, balance transfer, and other promotional offers. We also expanded our retail savings range, including new ICES and the Snoop-branded Easy Access account, strengthening deposit growth, product flexibility, and cost-efficient funding. And Snoop continues to play an increasingly important role in our ecosystem, helping customers with their money management. Active users were up 12% to 328,000, including 43,000 bankless customers. We also grew our partnership with Fair Finance. In 2025, this helped 20,000 applicants to identify around 34 million in potential annual benefit entitlements. That's an average of over £1,750 per annum per person. So genuinely helping people transform their financial lives for the better. We also delivered a profile-raising campaign to refresh and relaunch the Vanquish brand with our target customers, including our successful partnership with the professional darts corporation. We also introduced a new, consistent customer satisfaction measure across the group during the year, giving us a more data-driven view of customer experience. And our overall CSI customer satisfaction score averaged 83.7 in 2025. And this is supported by consistently excellent Trustpilot ratings across both Vanquish and Moneylarn brands. Fundamentally, of course, Vanquis is a risk management business. We have therefore prioritised making meaningful improvements to our risk management capabilities. In vehicle finance, we developed a new credit decisioning platform, improving the speed, consistency and quality of our lending decisions. And this contributed to the improved risk adjusted margin performance in the business. In credit cards, we made many improvements to our credit risk scorecards through the year and to our affordability assessments. And we are upgrading the decisioning platform alongside other technology improvements, which I'll turn to in more detail on this slide seven. We launched our new mobile app as part of an enhanced digital onboarding journey, underpinning our clear focus on improving customer engagement, conversion and retention. And last February, we centralized around 30 billion rows of customer product and decisioning data onto a single modern platform, significantly strengthening analytics, insight and decision-making capabilities. In operations, we expanded the use of digital tools, AI, and self-service functionality across key processes, again, significantly improving efficiency. And the impact here is tangible. Complaint handling costs, for example, were down 10%, and fraud losses fell by 25% in 2025 as a result of these improved processes. And we're applying this disciplined approach across every aspect of our business. A good example, we've reviewed our property footprint and reduced space at our Bradford headquarters by over 70%, as we modernise and right-size to align with current and future workplace needs. Finally, all we have delivered is down to the engagement and efforts of our fantastic people, and we were pleased to see that colleague engagement improved significantly through the year, up 13 points to 73%. And that improvement reflects growing confidence in the direction and performance of our business, and resulted in Vanquist being certified as a great place to work for the first time ever. As I said earlier, there's more to do and we are not finished yet. But hopefully you can see that the progress made in 2025 is tangible and we are seeing a positive response from colleagues and from customers. Alongside this internal progress, I should note that the external headwinds of 2024 and 2025 have also largely receded. For example, elevated FOS fees from unmerited CMC complaints. Dave will touch on that shortly and remind you that our exposure to motor finance commissions is differentiated and any potential liability remains limited for Vanquish. Overall, the two words I've used most to describe 2025 are discipline and delivery. Both of these will serve us well as we take this business forward from here. With that, I'll now hand over to Dave to take you through the financials in more detail. Dave, over to you.

Thank you, Ian. I'm pleased to present our results today, given the significant progress we have made in 2025. Slide 9 summarises my headlines before I go into more detail. Our return to profitability was achieved by growing income, reducing costs and importantly the non-repeat of the notable items that were reported in 2024. This is evidence that the financial impact of the business turnout is firmly behind us and we were able to focus on sustainable, profitable growth in 2025. With this backdrop, we accelerated balance growth to build scale and drive long-term profitability. This was aided by our first 81 issuance in October last year, which freed up additional capital to be deployed for growth. This growth comes with upfront IFS 9 impairment charges, although credit quality remained strong and write-offs decreased. We maintain our cost discipline, delivering ongoing cost savings in excess of our commitment for the year. At the same time, we continue to invest in improving the fundamentals of the business, including our technology capabilities via the Gateway Transformation Program. Following the new FOS fee charging structure implemented in April last year, we saw a material reduction in CMC claims to FOS, resulting in much lower complaint costs in 2025. We also continue to dynamically manage liquidity and funding. We diversified our liquid asset buffer investments to generate higher returns. We introduced new savings products to provide more stability and flexibility while lowering our cost of funds. As a reminder, our exposure to motor finance commissions is differentiated and any potential liability is limited. While the final scope and mechanics of the FCA compensation scheme remain subject to change, we did recognise the £3 million provision in 3Q25. You can find further details on why our exposure is differentiated in the appendix. Going into more detail, slide 10 summarises the group's performance for 2025. We generated a profit from continuing operations of £8.3 million, supported by a 5% growth in risk-adjusted income and a 33% reduction in operating costs. Excluding notable items, costs were down 9%. meaning the group generated 11% positive cost income jores. After factoring in tax, the profit from discontinued operations related to the sale of the personal loans business and 81 coupon costs, profit attributable to shareholders was £8.2 million. At the same time, we grew customer interest earning balances by 22% to over £2.8 billion. On slide 11, you can see what this meant for our financial KPIs. £8.2 million of bottom-line profits translated into a return on tangible equity of 2.3%, in line with our guidance. This was driven by an improvement in the cost-income ratio to 58.4%, again in line with guidance. As we previously guided to, asset yield... NIM, and total income margin, all reduced, driven by the deliberate growth in lower margin and lower risk second-charge mortgages. The reduction in risk-adjusted margin to 11% was smaller, only 80 basis points, reflecting 110 basis points reduction in the cost of risk. With greater clarity on the cost of risk across our products, we intend to focus on risk-adjusted margin as a core metric going forward. The NIM drivers are set out on slide 12. A small 20 basis points reduction in asset yield was more than offset by a 50 basis points improvement from lower funding costs. This net positive outcome was more than offset by a 170 basis points dilution due to a shift in mix towards second charge mortgages and a 30 basis points reduction from a larger liquid asset buffer. As a result, NIM decreased at 16.8%. However, To highlight the group's pricing discipline, excluding second-chargers mortgages, NIRM increased 50 basis points year-on-year to 19.4%. After factoring in balance growth, NIRM interest income rose by 3% in 2025, and importantly, it rose by 6% in the second half of the year. Slide 13 details our customer interest earning balances, which increased to over £2.8 billion. Credit card balances increased 19%. This reflected both new customer acquisitions and increased card utilisation by existing customers. Vehicle finance balances were reduced by 8% as we managed new business growth while we developed the new onboarding and servicing platform. Second-charge mortgages continued to grow strongly, increasing by over £380 million. Gross and net receivables increased by 21% and 25% respectively. Importantly, we now have established debt sale programmes in both credit cards and vehicle finance, with the vehicle finance post-charge of asset continuing to reduce following the completion of a number of debt sales. Further details are set out in the appendix. Slide 14 summarises the year-on-year impairment charge movement. Bottom line, impairment reduced by 2% driven by a 5% reduction in gross charge-offs. Within this, credit card gross charge-offs reduced by 19% to a gross charge-off rate of 12.7%. This highlights the improving quality of the portfolio. Backbook credit risk improved with fewer negative stage migrations and lower impairment releases from write-offs and debt sales. In summary, the overall group cost of risk has reduced to 7.3%, with all products coming within guided expectations, reflecting our responsible approach to lending. As you would expect, we anticipate impairment will increase in 2026, in line with balanced growth, and have slightly refined the cost of risk guidance by a product on this slide. In the appendix, we have included a slide on expected credit losses and coverage ratios. ECLs reduced 7% despite a 21% increase in gross receivables, reflecting an increase in stage 1 and stage 2 balances and a reduction in stage 3. As a result of this improving credit quality, the group coverage ratio reduced to 8.4%. We remain comfortable with the current coverage ratio based on a clearer understanding of the credit risk of our portfolios. Turning to operating costs on slide 15. Total operating costs fell 33%, primarily due to the absence of 2024's Notable Items. Costs, excluding Notable Items, reduced 9%, with transformation savings and lower complaint costs, more than offsetting growth and inflation-rated increases. We delivered £28.8 million of transformation cost savings in 2025, well above the £15 million we committed to. This included an acceleration of some gateway technology-driven savings into 2025. Complaint costs reduced 44% to £26.6 million. This amount includes the £3 million provision for motor finance redress. Excluding this provision, total complaint costs reduced to £7.5 million in the second half, a much lower run rate than previously. As set out in the appendix, the material drop in FOSS referrals from CMCs following the introduction of the new FOSS charging structure in April was the main driver of the reduction. We did accrue discretionary staff costs, having not paid bonuses to colleagues for the last two years. This, alongside a 10% increase in customer-focused FTE, drove a 2% increase in staff and outsourced people costs, albeit outsourced FTE reduced by 28% in the year. We have embedded cost discipline across the business. We expect operating costs to reduce further in 2026 and in 2027, driven by both gateway and broader operating efficiency enhancements. Let me now touch upon the performance of each of the lending products, starting with credit cards on slide 16. The business delivered a profit of £38.2 million, up 27%. This was while growing interest-only balances by 19%, which drove a 13% increase in impairment charges due to the expected IFS 9 impairment provision on origination. At 10.2%, the cost of risk was at the lower end of the guided range, with 19% lower gross charge loss, as mentioned earlier, highlighting the improved quality of the book. With the portfolio having reduced 10% in 2024, balances at the end of 2025 were 7% higher than two years ago. The improved quality has been driven by the actions taken by the new experienced cars management team following their granular vintage analysis review. Asset yield declined 80 basis points to 27.1%. This was driven by the weighted average APR of the portfolio reducing to 33.7%. due to the increased take-up of balance transfers and 0% promotional offers, which increased to 15% of the portfolio. These offers are effective acquisition tools that are expected to drive further interest income over time. Excluding these offers, the weighted average APR increased to 39.6%, reflecting our disciplined, risk-based pricing strategy. combined with lower funding costs, nearly reduced 50 basis points to 23.3%, while risk-adjusted margin was 15.6%. Overall, we are well positioned for continued profitable growth. We would, however, expect balances to grow at more moderate levels in 2026 and beyond. Slide 17 covers vehicle finance. Balances reduced by 8% as we managed new business volumes ahead of the new platform launch, which will be delivered by a gateway in the second half of 2026. The business remained loss-making, although the loss reduced materially year-on-year to £12.7 million. Repricing actions lifted the weighted average APR to 29.1%, boosting both asset yield and nearby 0.7%. Combined with a reduction in the cost of risk to 5.6%, risk-adjusted margin increased to 7.4%, driving a 31% increase in risk-adjusted income to £54.2 million. Operating costs reduced by 17% to £66.9 million. However, the resulting cost-income ratio of 69.9% remains far too high. Post the launch of the new platform, building scale and automated processes will be the key to improving efficiency. Second-charge mortgages continue their strong growth as shown on slide 18. Balances reached just under £600 million. Risk-adjusted margin increased to 2.8% and the business delivered a profit of £5.4 million. With a weighted average loan-to-value on the combined first and second charge mortgages of just over 70%, the cost of risk remains low. As a secured product, second charge mortgages have a low RWA density, driving attractive returns on capital. We have rapidly become a market leader in this space. Through strong origination partnerships, we remain excited about its growth potential, with the overall market originations growing annually at mid-teens percentages in recent years. Slide 19 shows the streamlining corporate centre, following the reallocation of both funding and operating costs of product lines. Excluding local items, the corporate centre has reported a loss of circa £20 million in each of the last two years. It includes returns from the liquid asset buffer, interest costs from unallocated tier 2 capital, and operating costs from retail savings and SNOOP. Liquidity and funding remain core strengths, as shown on slide 20. At year end, we held £653 million of excess high-quality liquid assets over the regulatory minimum. We continue to improve returns from the liquid asset buffer, with £250 million now invested in UK gilts. Retail deposits have grown to nearly £3 billion, representing close to 90% of total funding. We have diversified our deposit mix, introducing both fixed and instant access ISAs, as well as Snoop-branded Easy Access accounts. The former provides increased stability in the retail funding base, while the growth in Easy Access accounts provides more pricing flexibility and has contributed to the reduction in the cost of funds over the last 12 months. We also obtained £58.5 million of our outstanding Tier 2 capital. This further reduced funding costs and was part of a broader capital optimisation transaction, which is summarised on slide 21. At the end of the third quarter, we successfully issued £60 million of AT1 capital and concurrently executed a Tier 2 tender. This transaction had no impact on the total capital ratio, as the Tier 2 capital was replaced with AT1. the group retains a significant total capital surplus above its regulatory minimum. The key to the transaction was that we were able to improve the efficiency of our Tier 1 capital stack, increasing the surplus above the regulatory minimum, which was previously all held in the CT1 capital. With this transaction, the binding capital measure for the group is now the CT1 ratio. With a regulatory minimum 230 basis points lower than the Tier 1 minimum, this transaction has freed up additional capital to deploy for profitable growth, which we accelerated in 2025, as can be seen on slide 22. The CT1 capital ratio reduced by 2.3% to 16.5%, as a 25% increase in net receivables equated to £304 million of RWA growth. This was partially offset by the capital benefit from the statutory profit in 2025 and the personal loan sale. We expect profits to become a more significant, positive contributor to the ratio in future years. At 16.5%, the group retains a surplus of 5.2% above the 11.3% regulatory minimum. This equates to £107 million of surplus CT1 capital. The group's disclosed and undisclosed capital requirements were also reviewed by the regulator in the second half of last year, which gives us confidence to reduce our target ratio to greater than 14.5%, which I will cover later. Ultimately, our capital strength and the expectation of increased future profits supports our continued growth in lower-risk second-charge mortgages. The reduction in risk-adjusted margin to 11% was smaller, only 80 basis points. reflecting 110 basis points reduction in the cost of risk. With greater clarity on the cost of risk across our products, we intend to focus on risk-adjusted margin as a core metric going forward. The NIM drivers are set out on slide 12. A small 20 basis points reduction in asset yield was more than offset by a 50 basis points improvement from lower funding costs. This net positive outcome was more than offset by a 170 basis points dilution due to a shift in mix toward second-charge mortgages and a 30 basis points reduction from a larger liquid asset buffer. As a result, NIM decreased at 16.8%. However, to highlight the group's pricing discipline, excluding second-charge mortgages, NIM increased 50 basis points year-on-year to 19.4%. After factoring in balance growth, net interest income rose by 3% in 2025, and importantly, it rose by 6% in the second half of the year. Slide 13 details our customer interest earning balances, which increased to over £2.8 billion. Credit card balances increased 19%. This reflected both new customer acquisitions and increased card utilisation by existing customers. Vehicle finance balances have reduced by 8% as we manage new business growth while we develop the new onboarding and servicing platform. Second-charge mortgages continue to grow strongly, increasing by over £380 million. Gross and net receivables increased by 21% and 25% respectively. Importantly, we now have established debt sale programmes in both credit cards and vehicle finance. with the vehicle finance post-charge of asset continuing to reduce following the completion of a number of debt sales. Further details are set out in the appendix. Slide 14 summarises the year-on-year impairment charge movement. Bottom line, impairment reduced by 2%, driven by a 5% reduction in gross charge-offs. Within this, credit card gross charge-offs reduced by 19%, to a gross charge-off rate of 12.7%. This highlights the improving quality of the portfolio. Back book credit risk improved with fewer negative stage migrations and lower impairment releases from write-offs and debt sales. In summary, the overall group cost of risk has reduced to 7.3% with all products coming within guided expectations, reflecting our responsible approach to lending. As you would expect, We anticipate impairment will increase in 2026 in line with balance growth and have slightly refined the cost of risk guidance by product on this slide. In the appendix, we have included a slide on expected credit losses and coverage ratios. ECLs reduced 7% despite a 21% increase in gross receivables, reflecting increased stage 1 and stage 2 balances and a reduction in stage 3. As a result of this improving credit quality, the group coverage ratio reduced to 8.4%. We remain comfortable with the current coverage ratio based on a clearer understanding of the credit risk of our portfolios. Turning to operating costs on slide 15. Total operating costs fell 33%, primarily due to the absence of 2024's notary items. Costs, excluding notary items, reduced 9%. with transformation savings and lower complaint costs more than offsetting growth and inflation-rated increases. We delivered £28.8 million of transformation cost savings in 2025, well above the £15 million we committed to. This included an acceleration of some gateway technology-driven savings into 2025. Complaint costs reduced 44% to £26.6 million, This amount includes the £3 million provision for motor finance redress. Excluding this provision, total complaint costs reduced to £7.5 million in the second half, a much lower run rate than previously. As set out in the appendix, the material drop in FOSS referrals from CMCs from the introduction of the new FOSS charging structure in April was the main driver of the reduction. We did accrue discretionary staff costs, having not paid bonuses to colleagues for the last two years. This, alongside a 10% increase in customer-focused FTE, drove a 2% increase in staff and outsourced people costs, albeit outsourced FTE reduced by 28% in the year. We have embedded cost discipline across the business. We expect operating costs to reduce further in 2026 and in 2027, driven by both gateway and broader operating efficiency enhancements. Let me now touch upon the performance of each of the lending products, starting with credit cards on slide 16. The business delivered a profit of £38.2 million, up 27%. This was while growing interest-only balances by 19%, which drove a 13% increase in impairment charges due to the expected IFS 9 impairment provision on origination. At 10.2%, the cost of risk was at the lower end of the guided range. with 19% lower gross charge-offs as mentioned earlier, highlighting the improved quality of the book. With the portfolio having reduced 10% in 2024, balances at the end of 2025 were 7% higher than two years ago. The improved quality has been driven by the actions taken by the new experienced cars management team following their granular vintage analysis review. Asset yield declined 80 basis points to 27.1%. This was driven by the weighted average APR of the portfolio reducing to 33.7% due to the increased take-up of balance transfers and 0% promotional offers, which increased to 15% of the portfolio. These offers are effective acquisition tools that are expected to drive further interest income over time. Excluding these offers, the weighted average APR increased to 39.6%, reflecting our disciplined, risk-based pricing strategy. Combined with lower funding costs, Neem only reduced 50 basis points to 23.3%, while risk-adjusted margin was 15.6%. Overall, we are well positioned for continued, profitable growth. We would, however, expect balances to grow at more moderate levels in 2026 and beyond. Slide 17 covers vehicle finance. Balances reduced by 8% as we manage new business volumes ahead of the new platform launch, which will be delivered by a gateway in the second half of 2026. The business remained loss-making, although the loss reduced materially year-on-year to £12.7 million. Repricing actions lifted the weighted average APR to 29.1%, boosting both asset yield and NIM by 0.7%. Combined with a reduction in the cost of risk to 5.6%, risk-adjusted margin increased to 7.4%, driving a 31% increase in risk-adjusted income to £54.2 million. Operating costs reduced by 17% to £66.9 million. the resulting cost-income ratio of 69.9% remains far too high. Post the launch of the new platform, building scale and automating processes will be the key to improving efficiency. Second-charge mortgages continue their strong growth as shown on slide 18. Balances reached just under £600 million. Risk-adjusted margin increased to 2.8%. And the business delivered a profit of £5.4 million. With a weighted average loan-to-value on the combined first and second charge mortgages of just over 70%, the cost of risk remains low. As a secured product, second charge mortgages have a low RWA density, driving attractive returns on capital. We have rapidly become a market leader in this space. Through strong origination partnerships, we remain excited about its growth potential, with the overall market originations growing annually at mid-teens percentages in recent years. Slide 19 shows the streamlined corporate centre, following the reallocation of both funding and operating costs to product lines. Excluding notable items, the corporate centre has reported a loss of circa £20 million in each of the last two years. It includes returns from the liquid asset buffer, interest costs from unallocated Tier 2 capital, and operating costs from retail savings and Snoop. Liquidity and funding remain core strengths as shown on slide 20. At year end we held £653 million of excess high quality liquid assets over the regulatory minimum. We continue to improve returns from the liquid asset buffer with £250 million now invested in UK gilts. Retail deposits have grown to nearly £3 billion representing close to 90% of total funding. We have diversified our deposit mix introducing both fixed and instant access ISAs, as well as Snoop-branded Easy Access accounts. The former provides increased stability in the retail funding base, while the growth in Easy Access accounts provides more pricing flexibility and has contributed to the reduction in the cost of funds over the last 12 months. We also obtained £58.5 million of our outstanding Tier 2 capital. This further reduced funding costs and was part of a broader capital optimisation transaction, which is summarised on slide 21. At the end of the third quarter, we successfully issued £60 million of AT1 capital and concurrently executed a Tier 2 tender. This transaction had no impact on the total capital ratio, as the Tier 2 capital was replaced with AT1 capital. the group retains a significant total capital surplus above its regulatory minimum. The key to the transaction was that we were able to improve the efficiency of our Tier 1 capital stack, increasing the surplus above the regulatory minimum, which was previously all held in the CT1 capital. With this transaction, the binding capital measure for the group is now the CT1 ratio. With the regulatory minimum 230 basis points lower than the Tier 1 minimum, this transaction has freed up additional capital to deploy for profitable growth, which we accelerated in 2025, as can be seen on slide 22. The CET1 capital ratio reduced by 2.3% to 16.5%, as the 25% increase in net receivables equated to £304 million of RWA growth. This was partially offset by the capital benefit from the statutory profit in 2025 and the personal loan sale. We expect profits to become a more significant, positive contributor to the ratio in future years. At 16.5%, the group retains a surplus of 5.2% above the 11.3% regulatory minimum. This equates to £107 million of surplus CT1 capital. The group's disclosed and undisclosed capital requirements were also reviewed by the regulator in the second half of last year, which gives us confidence to reduce our target ratio to greater than 14.5%, which I will cover later. Ultimately, our capital strength and the expectation of increased future profits supports our continued growth plans and the execution of our strategy. Finally, before I hand you back to Ian, given that Bankers are now a cleaner, more stable and predictable business, I would expect the level of detail required in our content to reduce in future presentations. Ian will now talk you through our strategic priorities before I return to summarise our financial guidance.

Dave, thank you. I'd now like to take you through the market opportunity and how we will complete what is year three of our current strategic plan that will take us through to 2027. So slide 24 shows how we frame our strategy in terms of our purpose. and our ambition. Vanquis, as you know, is a specialist bank with a clear social purpose focused on serving customers who are underserved by mainstream lenders. Our purpose is to deliver caring banking so our customers can make the most of life's opportunities. Now that means different things to different people. It might be accessing credit when it matters most, improving your credit profile to unlock better options, or simply feeling more in control of your money. Caring banking is about how we show up for our customers, whatever stage of their financial journey that they happen to be at. And it means understanding customers' needs, earning their trust, supporting them to make healthy financial choices, and being there for them when it matters most and when they need us most. Our ambition then builds upon that purpose. We aim to be the UK's most trusted and inclusive specialist bank. unlocking financial opportunity for underserved customers and helping them thrive. And that ambition is very deliberate. It recognises the scale of the market we serve and the responsibility that comes with serving these customers. This brings me to our strategy on slide 25, and this is deliberately simple and practical, built around a new three pillar framework. Serve more, serve responsibly, scale profitably and this is not a change in direction for us it's just a clear articulation of how we run and grow the business as we continue to move from turnaround towards sustainable growth to give some more depth to these three pillars serve more is about widening access to responsible affordable credit and deepening long-term customer relationships Serve responsibly ensures that growth is predictable, well controlled with strong affordability, disciplined risk decisions and consistently good customer outcomes delivered. And scale profitably is how we turn that growth into returns through the discipline, cost control, capital allocation and margin management that you are seeing us to deliver and as Dave has just discussed in detail. Gateway underpins all three of these pillars by providing a modern, efficient technology platform to grow on and supports a lower run rate cost base. And together, these pillars link growth, control and returns and provide the framework that guides the decisions that we make and execute day by day. Looking now at slide 26, this addresses one of the questions that I'm most regularly asked, which is, what is the total market opportunity that Vanquish is focused on delivering to? And what this shows you is the UK has a large and persistent underserved adult population. Our research indicates that over 24 million UK adults face barriers to accessing mainstream credit. This is therefore not a niche segment. It represents more than half of the adult population who have an active credit profile. And importantly, this is a structural feature of the UK market rather than a cyclical one. At Vanquis, we exist to serve this segment responsibly, providing access to credit where it's affordable, appropriate, and introducing customers to other solutions if we can't immediately serve them. Our existing product set allows us to address a large proportion of this market within our current risk appetite, within credit cards, vehicle finance and second charge mortgages, as Dave has just described. On slide 27, you can see how we think about the market opportunity through to 2027 and how importantly we will grow within it in a disciplined way. We plan to grow balances across all our asset products, but that growth will be deliberate and phased. Credit cards will continue to grow, but at a moderated pace compared to the 19% in 2025. Vehicle finance growth is more back-ended, linked to the completion of our new onboarding and servicing platform under Gateway. From the second half of 2026, vehicle finance will become an increasingly cost-efficient line of growth, facilitated through the strong broker relationship that we have retained. Second charge mortgages plays a different role in our mix. As you know, this is a secured product with a lower risk weight density. It's become very successful for us and we expect the rate of growth to continue at broadly similar levels. As this drives a mix shift over time, our group risk adjusted margins will naturally change to reflect this. But the business we are writing remains attractive across all products and consistent with our return targets. Overall, what you're seeing us do is about balance, growing, but managing mix and quality carefully so that we convert that growth into sustainable returns. Slide 28 is where serve responsibly underpins our ability to deliver the strategy with that discipline. And responsible lending is not a constraint on growth for us. It's actually what ensures that our growth is sustainable and predictable. In credit cards, more granular risk-based pricing allows us to widen access to credit while ensuring pricing accurately reflects individual risk and affordability. And that allows us to grow the book while maintaining credit quality and customer outcomes. In vehicle finance, you can see we've rebalanced the APR mix and tightened alignment between risk, pricing, and returns. And again, this will support controlled growth as the platform scales. And the second charge mortgage product is primarily used for debt consolidation enabling customers who have lower monthly outgoings and resulting in improved financial resilience for them. Loan to value ratios remain well controlled as Dave mentioned and that underpins the strong returns as this portfolio continues to grow. And these disciplines support responsible growth, protect customer outcomes and deliver predictable performance across credit cycles. Slide 29 shows how we support customers to improve their financial health. And Snoop is central to this, as I've mentioned. It acts as a key enabler of our inclusion strategy and long-term growth model. Using open banking data and AI, Snoop helps customers manage everyday money, helps them build confidence and develop healthier financial behaviours. And for many users, this translates into meaningful savings over time through better bill management, smarter spending and easier supplier switching. For those customers who are not yet ready or we're able to offer credit right now, the program we've delivered with Fair Finance provides a responsible alternative for them. And the Vanquish Foundation and our community partners extend this support, investing in financial education, inclusion initiatives, and accessible debt advice to build capability with customers earlier and reduce long-term financial exclusion. Turning to slide 30, and again, building on Dave's earlier comments, our banking licence gives us a clear and durable funding advantage. Retail deposits provide a stable, low-cost funding that many specialist lenders do not have access to. And through 2025, as you've seen, our deposit costs reduced steadily. This reflects a combination of lower interest rates and a shift towards lower-cost savings products. You can see this clearly in the funding mix on the slide. This has allowed us to price competitively, protecting margins and improving overall funding efficiency. We will continue to diversify and optimise our deposit base as we look ahead, expanding flexible savings products and using Snoop as a scalable distribution channel to support efficient, low-cost deposit-led growth. In short, our funding advantage strengthens our margins, improves resilience across the cycle and underpins our ability to grow profitably over time. Now coming back to Gateway on slide 31, it's been an underlying theme of my remarks as it is the catalyst that underpins our long-term growth and innovation agenda. It's a fundamental reset to address the previous underinvestment in technology which this business was suffering from. It will enable us to operate as a modern, efficient and digital first bank and to scale. Importantly, as you can see on the left-hand side of the slide, the majority of Gateway's core capabilities have already been delivered with clear progress across customer experience control and resilience. Gateway is now an operational platform with regular feature releases and improvements. For example, we've already launched a chat channel for customers and are deploying agentic AI agents to improve service quality and to reduce our costs. Looking ahead, the last major components of Gateway complete in 2026 and the benefits then become structural through fewer systems, streamlined processes and improved automation, which in turn means improved resilience, lower run rate costs and better operating leverage. In short, Gateway is the strategic enabler of our business, allowing us to complete those three pillars of serve more, serve responsibly and scale profitably. Let me pause there as we'll come back to expand further on our next three year strategic cycle at a future date. Our focus for now remains on disciplined execution and delivering 2026 as planned. With that, I'll now hand back to Dave to talk through our guidance.

Thanks Ian. Slide 33 summarises the guidance we have laid out this morning. Importantly, we remain on track to deliver our statutory roti guidance of low double digits for 2026 and mid-teens for 2027. However, I would expect profits to be higher in the second half of the year compared to the first half as balances mature and the interest rate income builds. We now expect balances in 2026 to exceed £3.3 billion and to increase to greater than £3.7 billion by the end of 2027. as we balance growth with the improved profits required to deliver the higher royalties we are targeting. The balanced base and the deliberate change in product mix that Ian has talked about, including a greater proportion of second-charge mortgages, is expected to result in a continued reduction in NIM to around 15.5% in 2026 and 14.5% in 2027. Now that we have a greater clarity on the cost of risk across our products, and to better align to how we assess the performance of the respective products, we've also introduced risk-adjusted margin guidance. This is expected to reduce both in 2026 and in 2027, but remain above 9.5% and 9% in the respective years. Again, this is driven by the increasing proportion of second-charge mortgages. Alongside income growth, continued cost discipline will be a key lever of the improving profit trajectory over the next two years. This will drive cost income ratio down from the high 50s in 2025 to the high 40s in 2026 and the mid 40s in 2027. Turning to slide 34, the bridge on the left-hand side provides an indicative view of how we expect to deliver mid-teens roti by 2027. As you can see, risk-adjusted income growth is a meaningful contributor, but continued cost takeout is also a significant lever. This will be achieved through ongoing transformation savings, including an additional £23 to £28 million from the completion of Gateway, and an ongoing focus on cost discipline, driving further operational efficiencies across the Group. At the same time, we will continue to invest in our business. As set out in slide 35, we will continue to deploy capital for growth near term. As I have mentioned, we are now comfortable operating with a CET1 ratio guidance of greater than 14.5%. This follows the capital optimisation transaction that we executed last year, the reducing risk profile of the business and the outcome of the recent regulatory review of the group's capital requirements. The existing capital capacity alongside the capital accretion we expect to generate from increased profits over the next two years, means that we are well positioned to deliver the growth we are targeting. Having achieved what we said we'd do in 2025, we remain laser focused on the execution of our plan and are fully committed to delivering sustainable, long-term value for our shareholders. And with that, I'll hand you back to Ian.

Thank you, Dave. Turning to slide 37, let me close by bringing together our key messages from today. Vanquis is built on a set of clear and durable strengths. We operate in a large and structurally underserved UK market with persistent demand for responsible credit. We have a customer proposition designed to help them to build better financial resilience. Our banking licence provides a cost-effective deposit-led funding model. And Gateway gives us a modern, efficient and scalable technology platform. And these strengths are brought together through a clear and practical strategy, as I've described with serve more, serve responsibly and scale profitably. The strategic framework that we now have in place will allow us to build on the progress that you can see in these 2025 results. We can continue to grow sustainably, strengthening our franchise and delivering attractive long-term returns. That is how we will create long-term value for customers, colleagues and our shareholders. Thank you for listening. I will now hand back to the operator to open the line for questions.

Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Gary Greenwood from Shore Capital. Your line is now open. Please go ahead.

Morning, Gary. Morning, chaps. Thanks for taking my questions. I've got three, hopefully not too long ones. So the first one was on 2CM and the sort of strong growth you're putting on there. So just trying to get a better understanding of what your secret sauce there is in terms of how you're taking market share. Are you just pricing more aggressively or is there something else that's allowing you to grow faster than the market? The second one on vehicle finance is when you're expecting that business to move into profit. I presume when sort of gateways be fully delivered, but does that mean profitability for year 26 or are we looking at full year 27? And then lastly on costs, I think you said costs would come down in each of the next two years, just looking at consensus, that's got costs coming down in 26, but going up in 27. So it looks like cost forecasts need to come down in 2027. I'm just wondering why you think the sort of absolute base that costs will be, because I'm guessing they'll probably grow beyond 2027. I'm just trying to get an idea of the trust level.

Harry, thank you. First out of the door with a question, as always, so much appreciated. Let me take the first one on second charge mortgages. As you said, it's been a really good growth story for us, and we expect that to continue. We've got two forward flow agreements in place that are covering nearly 20% of the market now, and it's a growing market. So we're being very careful about pricing. So we're not pricing to win business. In fact, we monitor that on a very regular basis, and we're holding that very firm. But it is a growing market. There are some new competitors coming in that create a bit of price pressure. But overall, we are growing in a growing market, and we're very happy with the way that's going for us. And about 75% of the customers that we've taken on are using it for some proportion of debt consolidation. So it fits really nicely with the purpose that I've just talked about. So, Dave, anything you want to add on second charge?

Nothing else.

Yeah. So onwards and upwards with that. But there is a really important point here. We'll allocate our capital to where we think we're going to get the best return. So it's a balance between the asset products on an ongoing basis. And that then brings me to vehicle finance. As you've seen, we've moderated our growth quite carefully through 2025 in advance of that gateway platform bill that I talked about in my remarks a little while ago. That will really be the catalyst for scalable, profitable growth. But we are looking, you can see in our numbers that we did price up a little bit in that market even through 2025. So we're looking at how quickly can we get it to profitability through this year. And then there's a real step up that happens when the cost to serve those customers and process that business through our lovely brokers comes down as we get Gateways vehicle finance platform in place. But again, David, anything you want to add on that one?

Yes, a couple of things to add there, Ian. You've seen balances came down by 8% in 2025 as we managed our new customer business. That will continue that same sort of rate in the first half of this year, 2026, but that should stop at that point and start as a new gateway application comes on board, start growing towards the tail end of 2026 and grow further into 2027, which will be the real catalyst for growth in our profitability in the vehicle finance business.

But, Gary, there's a really important point here that, you know, all of our products should be profitable on a standalone individual basis. So that's what we're aiming for. So if we're not actually there already, as we are with cards and second charge mortgages, we've certainly got a plan to get there as soon as possible. So I think that probably covers that one. Dave, do you want to do costs? Obviously, that's been a big, big feature of our results over the last couple of years.

Yeah. As we covered in the presentation in 2025, we delivered over £28.8 million worth of cost savings, which exceeded our £15 million of commitment in 2025. Now, part of that's going to roll through into the 26 numbers. We've also committed to delivering another £23 to £28 million of gateway savings in 2026. The complaints numbers you saw have come down in the second half year to £7.5 million. We'd like that to be at that level or slightly lower as we go through into 2026. There's other aspects of operational efficiency we're still looking at, whilst at the same time, we are still continuing to invest in the business as we go further forward. So as we've laid out, we expect 26 costs to come down from 25. 27 will also be lower than 26, but we're not going to guide on an absolute amount of cost.

And all I'd add to that one, Gary, is there's that old adage about you can't cut yourself to greatness. So There was definitely opportunity for us to take some, you know, some costs out of the business. And we've done that and done that in a very disciplined way. I think we've beaten every single cost objective that we've put out since Dave and I started. And so you can you know, that's something that we're good at, but it's not something we particularly enjoy. We want to get into a cycle where we're investing into the business. But how we invest will be much more around areas like data, like credit risk and into technology with benefits from AI will will flow through. over the next couple of years as well. So, you know, I think we're in a good place on costs, but we will continue that discipline of making sure we're investing where it generates a return.

Just to clarify, will 27 be the sort of trough for costs and costs will grow thereafter?

Gary, I'm going to stick to what we said so far. 27 will be lower than 26. It comes down to what our forward-looking strategy would be, which I think will come back to the market probably next year.

Okay, thanks very much. Thank you, Gary. Gabrielle, have we other questions?

Yes. Our next question is from Ray Maley from Pamir Liberum. Your line is now open. Please go ahead.

Morning, gents. Ray Male from Pamir Liberum. Two rather big-natured questions. Firstly, can you talk a little bit about the regulatory environment these days? Obviously, shareholders will know that regulation has been the bugbear of the non-standard market for many years. I wonder how has the regulatory environment developed over a period of time and certainly how has the company's relationship with the regulator changed over the last couple of years? And then secondly, Ian, you touched on the question of competition in second-charge mortgages. Could you talk more generally about the competitive environment that the business is facing, please?

Thank you, Ray. Two really good questions. Let me take the regulatory one first, as I probably, with our chief risk officer and Dave, spend more time in front of regulators than anyone else in the business, and rightly so. Look, my view is we've got a very supportive relationship. It's challenging, as you'd expect. I'm a firm believer, and I've said this for decades of my career, that you get the regulation that you deserve in the end. And I think regulators are seeing that what we're doing is well grounded in good customer outcomes, that we're trying to serve a market that we define, as you've just seen the numbers that we've presented. There's a big underserved base out there that need help. And that supply demand equation is out of whack at the minute. There's more customer demand for less standard credit than there is supply into that market. So that's what underpins our investment thesis. And and our purpose, which, as I've described, is grounded in helping those customers when they often struggle to get help from other places. I would comment on, as well as FCA, its PRA and then Treasury have been incredibly supportive as well. So there's a big government agenda, obviously, behind this, which I think is in our favor, too. And you've seen tangible outcomes from those relationships. You know, they're not just a nice fluffy thing in itself. It's actually about what changes as a result. Dave might want to comment on PRA and the prudential regulation in a second. But we certainly saw FOS changes and CMC charging changes, which were, I think, a very tangible outcome of very constructive conversations that we and other banks had been having with Treasury. So I'm very pleased about that as well. So I think so far, so good. It's you know, but the relationships are incredibly important to us going forward. Hence, I guess your question. And we'll continue to invest in them and be open and transparent and do the right things for customers, as you'd expect. Dave, do you want to comment on that?

Good morning, Ray. Look, we have a good working relationship with the PRA over the last two years. I think you get some productive outcomes from opening up to your regulators and be clear and with great clarity of how the business is operating, what it's doing. I think that was recognised in terms of a sort of positive response. try a new C-shaped review with the PRA at the tail end of 2025, which I commented on earlier on. So, yeah, I expect to have a good productive relationship with them going forwards.

Ray, if I could turn then to your question on competition, and thank you, as you described it, for the two sort of higher-level questions. I mean, back to my point about supply and demand. You know, we've got less than 2 million customers, and there's an opportunity pool of over 20 million, say 24 million, as we've just described. So there's a lot of room here. So there is a really good target addressable market available to us. In cards, if I just take the products, it's pretty stable. We haven't seen anything dramatic in terms of new competitors coming in. We watch that on a daily basis. And obviously our pricing reflects what other activity is going on around us too. But you've seen in our NIM numbers and our risk adjusted NIM in particular that We're very disciplined on our pricing and there are times that we will pull back a little bit if we do believe we're getting squeezed. 2CM, I mentioned earlier on that. But broadly, we see that there's plenty of room for us to grow. Vehicle finance is probably the watch one because obviously we've got the FCA redress scheme. We'll get the details on that towards the end of March based on current plans. And we'll see what happens to that market. I would expect there to be some people will choose not to participate because As that market gets through redress and cleans up, then there may be other people that will choose to come in. We'll keep an eye on that. But, you know, as I said, the key message for us is we've got a sort of 10x customer demand opportunity for Vanquis, and that's very exciting, and that's what we're focused on delivering to.

That's great. Thank you very much indeed. Thank you, Ray.

Thank you, Ray. Our next question is from James Allen from Barenburg. Your line is now open. Please go ahead.

Hi, morning, Ian. Morning, Dave. Three questions for me, if I can. First one, you're clearly making good strides on improving return on tangible equity. I was just wondering where you would like to get to on a steady state basis on that metric beyond FY27. Second question, the rationale for the 81% being excluded in the ROTI calc. Presumably that's just to preserve the focus on returns for common equity shareholders when looking at that metric. And then final question, my understanding is you can't necessarily promote Vanquish products over other banks on Snoop at the moment. But is there any kind of potential change in regulation that may be coming in at some point that maybe would allow you to direct more customers into Vanquish products via Snoop?

Thank you. James, thank you. I'll leave the 81 routine calculation one to Dave in a second. But if I start with, you know, what's our routine trajectory? I think what you're seeing with Dave and I and the board and our management teams is, you know, when we commit to something, we really commit to it. So we committed to getting to low single digit routine 2025. That's exactly what we've done. We've got a clear commitment for low double digit roti for this year. And then we've got a mid-teens roti commitment for 2027. So that's as far as we're going in terms of our commitments. Underneath that, of course, we're looking at as we go through every day, week, month, quarter of this business, we're learning as we go and we're spotting new opportunities. So we will keep that all under review. And we, as Dave mentioned earlier, I think to Gary's question, we'll come back sort of this time or early in 2027. to talk about that next strategic cycle, that next sort of three-year phase, and we'll update on ROTI and that. But what you can expect from us for this year is an absolute focus on delivering what we've committed in terms of our ROTI guidance. Dave, anything you want to add on that one?

No, I think you've covered it in detail here. Do you want to do the 81 calculations, ROTI prospects? So James, you're correct on your understanding of that part there. So I'm glad that the clarity we've given in the presentation has enabled you to get to that position. Yeah, it's to focus on the equity shareholders.

I won't add anything to that. Then on Snoop and Vanquish, look, Snoop has been a fantastic acquisition for us on a range of levels, but the quality of the customer proposition and how we're tangibly able to show customers how to manage their money better is perfect.