Annual Report

and Accounts

for the year ended 31 December 2023

Our Purpose is

to deliver caring

banking so our

customers can

make the most of

life’s opportunities

Banking with heart

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Headlines

Total customer numbers

1.75m

0.08m (2022: 1.67m)

Amounts receivable

from customers

£2.2bn

£0.3bn (2022: £1.9bn)

Adjusted profit before tax

– continuing operations

£24.9m

£101.7m (2022: £126.6m)

Regulatory capital

£609.0m

£69.8m (2022: £678.8m)

Liquidity

£703.3m

£225.1m (2022: £478.2m)

Statutory (loss)/profit before tax

– continuing operations

£(4.4)m

£114.5m (2022: £110.1m)

Operational carbon footprint offset

100%

(2022: 100%)

1 Total customer numbers net of cross product

holding.

2 The reduction in regulatory capital is primarily

due to the scheduled unwind of IFRS 9

transitional relief and dividends paid.

3 Not including scope 3 emissions associated

with suppliers’ and financed vehicle

emissions.

Certain alternative performance

measures (APMs) have been used

in this report (see pages 189 to 191)

Strategic Report

1 Headlines

2 Who we are

3 Investment case

4 Chairman’s statement

6 Chief Executive Officer’s review

8 Market overview

9 Strategy

10 Business model

12 Key performance indicators

14 Sustainability

29 Our customer case studies

32 Financial review

35 Operating review

40 Section 172(1) statement

42 Non-financial and sustainability

information statement

44 Risk management and principal risks

51 Viability statement

Governance

52 Chairman’s introduction to governance

54 Board of Directors

57 Setting our strategy

59 Promoting long-term sustainable

success: Board focus areas during 2023

61 The Board: our culture

63 Stakeholder engagement

and decision making

67 Effective engagement with shareholders

and stakeholders: investor relations

68 Division of responsibilities

70 Composition, succession and evaluation

71 Director induction and training

72 Outcome of the 2023 Board and

committee effectiveness review

73 Nomination Committee Report

78 Customer, Culture and Ethics

Committee Report

80 Audit Committee Report

84 Risk Committee Report

87 Directors’ Report

Directors’ Remuneration Report

93 Annual Statement by the Chair

of the Remuneration Committee

96 Remuneration at a glance

99 Annual Report on Remuneration

Financial statements

116 Independent auditor’s report

124 Consolidated income statement

124 Consolidated statement

of comprehensive income

124 (Loss)/earnings per share

125 Dividends per share

125 Balance sheets

126 Statements of changes

in shareholders’ equity

128 Statements of cash flows

129 Statement of accounting policies

136 Financial and capital risk management

141 Notes to the financial statements

189 Alternative performance measures

Shareholder information

192 Information for shareholders

Contents

Visit: vanquisbankinggroup.com/sustainability

Visit: vanquisbankinggroup.com

2023 was a challenging year for Vanquis Banking Group. After disappointing interim results in July 23, our

new management team took immediate action to return the Group to a path of sustainable, profitable

growth. Our North Star strategy will enable us to meet the needs of an expanded customer base and deliver

attractive returns to our shareholders by 2026.

Adjusted return on tangible equity

3.2%

(2022: 21.8%)

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Vanquis Banking Group is a specialist bank

with a strong social purpose

Who we are

Customers Colleagues Communities The environment

Our ESG priorities

Ensuring that every

decision we take, from

proposition development

through to in-life

management, is guided

by a clear understanding

of how they will benefit

our customers.

Creating and sustaining

an inclusive and

supportive workplace

culture, where colleagues

feel healthy, well and

engaged, and that they

can reach their maximum

potential and deliver

their best work.

Improving the lives

of children and

young people in the

communities where

our customers live

and work by providing

them with access to

education, social and

financial inclusion, and

economic development

opportunities.

Ensuring that

climate-related risks

and opportunities are

integrated into our

business strategy and

decision making in areas

such as operational

resilience, customer

service, supply chain

management and,

where appropriate,

capital allocation.

Our customers’ core needs

Help me borrow healthily

Help me feel in control of my

everyday spending

Help me build a financial

safety net

‘To deliver caring banking so our customers

can make the most of life’s opportunities.’

Our Purpose

Credit Savings Money management

To offer our chosen target customers differentiated credit, savings and money management solutions,

with lending predominantly funded by retail deposits.

Our business model

We put our

customers at

the heart of

everything we do

We create

differentiated

solutions that

meet our

customers’ needs

We meet our

customers

where they are

We serve our

customers

efficiently and well

We deliver attractive

returns to all our

stakeholders

Read more on page 16

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Investment case

We have the potential to transform

our business

Despite a very challenging year, we have made a strong start to our transformation initiatives and are on track to deliver

customer benefits and efficiency gains in 2024 and beyond.

Our management team is implementing our new strategy

at pace to deliver attractive, sustainable returns.

A new Chairman, Chief Executive and Chief Financial Officer are now in post, supported

by a blend of new and experienced Board members and a well-balanced Executive

Committee of new and long-serving leaders.

We have a compelling social purpose.

We know that financial security is a challenge for many people, and that this has

become a more acute issue in recent years. Supporting our customers with a holistic

proposition is central to fulfilling our Purpose.

We participate in attractive and sizeable markets.

The consumer lending market is undergoing considerable change, marked by

economic headwinds, digital innovation, regulatory evolution and a socially motivated

drive towards financial inclusion. We are well placed to capitalise on these trends.

We have unique competitive advantages.

We benefit from a differentiated approach to our target customers and have carefully

developed propositions to respond to their needs. Assets to help us meet these needs

include the Snoop money management app and access to retail funding.

We are primarily funded by retail deposits.

We benefit from lower funding costs compared to many competitors, which

is achieved through the strategic use of retail deposits, thereby enhancing our

price competitiveness.

Read more on page 12

2026 adjusted ROTE:

‘mid-

teens’

Source: Experian (Financial Strategy Segments tool). This figure is the number of

individuals aged 18+ in the segments which comprise VBG’s chosen target market.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Introduction

2023 was a pivotal year for Vanquis Banking Group.

We successfully rebranded the Group under the Vanquis

brand and welcomed a new CEO, Ian McLaughlin, in late July.

However, it was also a challenging year, with poor interim

results leading to a significant fall in shareholder value.

We saw the departure of our Chairman and CFO in Q3. Yet,

in the toughest of corporate conditions, I take comfort from

the fact that dedication by colleagues to our customers

has remained a constant. This reinforced for me the bank’s

immense potential to serve an important social purpose,

namely to create equity of opportunity by helping our

customers to access the banking system. For us, the ‘S’ of ESG

could not be more real. It was the reason I joined the Board.

First impressions and immediate action

Since joining the Board in April 2023 and taking over as Chair

in September, I have visited all of our offices several times,

meeting colleagues and seeing first hand their commitment

to customers. It has also been a real pleasure to work with

Ian McLaughlin. His impact from day one has been nothing

short of inspirational. He has strengthened the executive

team, with the appointments of Dave Watts as CFO, Jill

Armstrong as Chief Customer Officer (CCO) and Jem Walters

as Chief Technology Officer (CTO), overseen the successful

acquisition and integration of Snoop to the Group, led by John

Natalizia, and embarked at pace on a plan to reset, redefine

and reinvigorate our business with the passion of someone

with a career-long commitment to retail banking.

Early progress and long-term potential

The Board is highly supportive of our Purpose and the strategy

being developed by the executive team, and is encouraged

by our early progress. The team have made difficult decisions

and started to deliver tangible results in a short space of time:

managing receivables growth while analysing customer

needs, applying necessary price increases and taking hard

decisions about colleagues to achieve an immediate reduction

in our cost base. The strategic review has been similarly well

executed, creating fresh enthusiasm and excitement amongst

colleagues about the business, and we look forward to further

improving customer outcomes and restoring intrinsic value.

An important first milestone for the new team was to deliver on

the guidance for FY23 set in October 2023, notably an adjusted

profit before tax (PBT) range of £25-30m, with an adjusted PBT

of £24.9m. We also recognise that we recorded a statutory loss

after tax for the year of £(6.0)m, generating a profit on a statutory

basis in the second half, thanks to cost management actions

and impairment provision releases of £74.5m in 2023 (2022:

£94.1m). Return on tangible equity (ROTE) for FY23 was 3.2%. At

our strategy seminar on 27 March 2024, we will set out how we

intend to build returns substantially over the next three years to

achieve a target adjusted ROTE of mid-teens by 2026.

Chairman’s statement

A pivotal year

“ The Board is highly supportive of

our Purpose and strategy being

developed by the executive

team, and is encouraged by our

early progress.”

Sir Peter Estlin

Chairman

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Capital management and dividend

The Group intends to propose a final dividend of 1.0p per share

for 2023, subject to final Board and regulatory approvals. The

Group also signals its intention to pay a dividend of up to 1.0p

per share for 2024, subject to Board and regulatory approvals,

with measured progression in 2025. From 2026, following full

implementation of the new strategy, the Board will revisit the

capital allocation policy and reset the level of dividend from

which to maintain a progressive policy thereafter.

Board priorities

Aligned to the Group’s new strategy, we have initiated

changes in Board governance.

First, we have absorbed the work of the Customer, Culture and

Ethics Committee into main Board discussions to match the

over-arching customer focus being ingrained in the business.

Second, will use the opportunity of member succession to

ensure that we have the requisite skills and diversity of

thought to oversee the activities of a specialist bank. I would

like to take this opportunity to publicly thank Andrea Blance

for her near seven-year commitment to the Group, and in

particular for her role as Senior Independent Director (SID).

I look forward to working with Angela Knight as she takes

on the SID role. Further changes to the Board are expected

shortly as two existing directors are considering not standing

for re-election at the forthcoming AGM. In their stead, we

aim to announce the appointment of three new non-executive

directors, bringing a wealth of experience and skills to the

Board. We have also appointed Kate Rosenshine, as a Board

Observer, who will use the opportunity as an observer to

gain an understanding of what it takes to be a non-executive

director. Kate is currently a serving executive with Microsoft

where she leads their Digital Natives strategic partnerships.

Finally, while continuing to discharge our governance duties,

we intend to enhance shareholder engagement, equip

ourselves with better management information, adopt a

laser-sharp focus to critical risks and allocate more time on

our agenda to consider longer-term industry issues such as

knowing our customers in a digital world, and how to continue

to help improve the quality of regulation of the banking industry.

Conclusion

I want to conclude with heartfelt thanks to all my Board

colleagues for the support they provided to the business

during the past year. On behalf of the Board of Directors,

I also want to thank everyone at Vanquis Banking Group

who went above and beyond in their commitment to the

business, particularly in the last few months.

Looking forward into 2024, the Board will support and

challenge the executive team as it aims to balance

successful delivery of short-term milestones with long-term

value creation. Change takes its toll, and perhaps the most

important role for the Board is to ensure that key individuals,

and the organisation as a whole, have the resources

and mental resilience they need to keep pace with the

transformation under way. We are here to support them

and I look forward to reporting back on our progress.

Sir Peter Estlin

Chairman

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Introduction

After I started at Vanquis Banking Group on 26 July 2023,

we immediately experienced a significant fall in our share

price as the market reacted to an unsatisfactory set of

interim results on 28 July. I spent my first five months rapidly

implementing the immediate changes required to put us on

a path to better performance. We also initiated a thorough

strategic review which will be presented at our strategy

seminar on 27 March 2024. I have been extremely impressed

with how my colleagues have responded and I am looking

forward to working with them for the benefit of our customers

as we bring our new strategic ambition to life.

Reflections on 2023

Despite some serious challenges being evident, I also discovered

many positives. First and foremost, our people really care about

doing the right thing for our customers; there is a genuine sense

of social purpose. Progress had also been made in creating

a fit-for-purpose corporate structure, including differentiating

ourselves through access to retail funding. However, the business

had been operating in product silos and the communication

and alignment between teams was not where it needed to

be. This had led to duplication in functions and there was little

evidence of cost discipline. Particularly evident was a lack of

visibility and accountability of centrally held costs.

Financially, the Group generated a £5.5m adjusted loss before

tax from continuing operations in the first six months of 2023

(1H22: profit £54.3m), despite 11% growth in net receivables (1H22:

0%). Costs rose by 6% in the 6 month period to 1H23, compared

to 1H22 and net interest margin (NIM) declined by 2.5% to 19.1%

(1H22: 21.6%). The Group recorded a statutory loss before tax from

continuing operations of £14.5m (1H22: profit of £46.9m). These

results drove a 29% decline in our share price on the day of

publication and crystallised the need for swift remedial action

as well as a fundamental review of our strategic direction.

Immediate action was taken in the second half of 2023 to

moderate lending growth, reduce IFRS 9 strain, reduce costs, and

implement appropriate price rises to improve product profitability.

In our Q3 trading statement on 17 October 2023, we committed to

deliver adjusted PBT for the year of £25-30m, and I am pleased

that the business traded broadly in line with our expectations,

delivering adjusted PBT of £24.9m (FY22: £126.6m). We recorded

a statutory loss after tax for the year of £(6.0)m. H2 performance

benefited from a combination of cost management actions and

impairment provision releases. Moderation of net receivables

growth in the second half led to year-on-year receivables growth

of 14% and swift action on costs contributed to a 10% half-on-half

reduction in adjusted operating costs. NIM for the year amounted

to 19.0% (FY22: 21.2%), reflecting the higher funding costs and lower

asset yield. Our key financial ratio is adjusted return on tangible

equity (ROTE). This rose from (1.8%) in 1H23 to 3.2% for FY23.

Three further priorities were established to help restore overall

performance and credibility.

1. Refreshed our Executive team to create the right mix of

customer experience, capability and personal values with

five new hires in key roles – Chief Customer Officer, Chief

Financial Officer, Chief Technology Officer, Chief Digital,

Data and Analytics Officer, and Chief of Staff – alongside

seven seasoned Vanquis Banking Group executives in

Operations, Transformation, HR, Communications, Risk,

Legal, and Internal Audit.

Chief Executive Officer’s review

Transforming our business - caring for

our customers

“ We’re here to deliver caring

banking so our customers

can make the most of life’s

opportunities. Doing that

well will allow us to deliver

attractive and sustainable

returns for our shareholders.”

Ian McLaughlin

Chief Executive Officer

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

2. Better communication to engage our colleagues,

partners and other key stakeholders on the need for

substantial change.

3. Simplifying our operating model and removing

duplication, this delivered cost savings in 2023 and will

deliver c.£60m of cost savings - without compromising on

customer service.

In summary, we have demonstrated an ability to set and

execute plans at pace and are seeing early progress from this.

However, we still have a lot to do.

Strategy

I am excited by the output of our North Star strategic review

and am looking forward to turning our plans into reality. We

have a new sense of purpose – ‘to deliver caring banking so

our customers can make the most of life’s opportunities’. The

power of purpose to unite and motivate an organisation is

immense. For us, the social purpose, the ‘S’ at the centre of

ESG, is vital. Environmental and Governance objectives are

also critical, and we will fulfil all our ESG responsibilities, but

the ‘S’ of social purpose is at the heart of our business.

We have always cared about the customers we serve: now we

have fundamentally changed the way we organise ourselves to

serve them even better. Previously, we defined our customers by

risk categories and organised our business around product lines.

Now, we put their needs at the very heart of the way we operate.

We undertook deep analysis using a well-respected financial

segmentation model, augmented by our own customer research

and data. From this, we identified three core customer needs:

- Help me borrow healthily.

- Help me feel in control of my everyday spending.

- Help me build a financial safety net.

We are expanding our customer proposition to meet these

needs and we are restructuring our service operation to

serve them more effectively. We will refresh our distribution

strategy, meet our customers where they are and develop new

partnerships to introduce ourselves to them.

Over time, we aspire to measure our success through a series

of customer KPIs which are somewhat unusual in the banking

sector, such as lifetime value, the increase we can drive in

customers’ credit scores and the cumulative value of savings

delivered to customers by Snoop. To these we will add more

traditional measures of sustainable performance such as

adjusted ROTE and Cost:Income ratio.

Key initiatives for 2024

As we start to implement our North Star strategy, these

initiatives will be our top priorities in 2024.

1. Develop compelling propositions for core customer needs.

2. Establish exceptional ‘through the journey’

management of risk.

3. Drive our distribution strategy to meet our customers

where they naturally are and improve our costs of

acquisition.

4. Establish Snoop as a uniquely valuable first point of

customer contact.

5. Continue to improve operational effectiveness, for example

by building on our successful offshoring programme.

6. Embed strong leadership and innovation, specifically

in digital, data and analytics.

7. Better manage our complaint volumes.

Outlook

Our customers have proved their resilience in the face of cost

of living pressures, and no discernible impact has been seen

in the business’s credit performance. We operate in a clearly

defined, growing market sector and have attractive points of

differentiation versus current peers (for example, Snoop and

lower funding costs).

As a business, we have short-term challenges to address,

however I am confident that our new strategy will deliver good

outcomes for our customers and attractive and sustainable

returns for our shareholders over the medium and longer term.

We are currently experiencing significant levels of third-party

complaint submissions many of which are speculative in

nature. The majority of complaints, which primarily relate

to lending origination rather than in-life servicing and are in

respect of a wide range of different matters with no common

theme or systemic issue, lack substance and are not upheld.

However, the higher than normal volumes and reviewing

them is materially impacting our costs and we are therefore

exploring proactive legal steps to address the situation.

The next two years, 2024 and 2025, will be periods of

restructuring for Vanquis Banking Group. We are already

taking significant steps to redevelop our customer proposition

and reset pricing, and we expect to return to modest lending

growth from the start of the second quarter of 2024. In 2025,

we intend to deliver accelerated but disciplined growth across

our full range of products, but the near-term adverse impact

of IFRS 9 accounting requirements linked to receivables

growth means that adjusted ROTE is expected to remain in the

low single digits.

Looking ahead to 2026, we expect to be delivering an adjusted

ROTE in the mid-teens driven by a return to sustainable

income growth serving a broader customer base; together

with the benefits of greater efficiency and significant payback

from our technology infrastructure investment.

Conclusion

Reflecting on the huge amount of change we have driven

in a very short period of time, I want to pay tribute to my

colleagues for the way they have embraced it. Thank you, to

each and every one of you. I also want to thank our investors

for trusting us to turn this business around. The change

programme ahead of us will be challenging and exciting.

Success is in the hands of a very talented and dedicated

team. As the UK’s largest specialist finance provider, we

have unmatched dedication to our chosen customers and

substantial potential to grow by meeting their needs. We

relish the challenge ahead and our colleagues are absolutely

focused on delivering caring banking so our customers can

make the most of life’s opportunities. This is when Vanquis is at

its best. It’s what we call ‘Banking with Heart’.

Ian McLaughlin

Chief Executive Officer

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Market overview

Embracing key trends

Market trends

The consumer finance market continued to experience

significant change in 2023, marked by consumers adapting

to economic headwinds, digital innovation, regulatory

evolution, a commitment to financial inclusion, and increased

responsiveness to ESG considerations.

Consumers adapting to economic headwinds: In 2023, UK

consumers have grappled with substantial economic hurdles,

including escalating interest rates, a growing tax load, and

inflation rates surpassing recent historical averages. Despite

these obstacles, they have shown resilience by adjusting their

habits. This has manifested in a more prudent approach to

spending together with a shift towards more environmentally

friendly choices.

Digital innovation: The industry emphasis is on creating

a low-friction, secure and convenient customer journey,

increasingly coupled with provision of tools to assist

consumers to improve their financial outcomes. The use

of AI, machine learning and data science is becoming

more prevalent throughout the consumer journey, as well

as within specialist functions such as finance, risk and HR.

Early proof points have included the early detection of

fraud through intelligent algorithms, and AI-based financial

management tools that leverage open banking and make

personalised recommendations.

Regulatory evolution: Regulatory frameworks continue

to mature, with emphasis on responsible lending practices

and consumer outcomes shaping the industry. Particularly

noteworthy in 2023 has been the introduction of Consumer

Duty by the FCA, together with clarification on the vehicle

finance discretionary commission investigation timeline.

It is to be noted that Vanquis Banking Group has never

used discretionary commission.

Financial inclusion: Lenders are actively engaging in

initiatives to bridge the financial inclusion gap for individuals

with non-prime credit histories. This ranges from alternative,

and frequently manual, underwriting through to tailored

approaches to forbearance.

ESG (environmental, social and governance) considerations:

Sustainability and responsible lending practices are gaining

prominence, with lenders increasingly factoring in ESG

within their propositions, aligning with a growing consumer

consciousness about the impact of their purchase choices.

This trend is not only driven by regulatory pressures but also

reflects a broader shift in societal values, as evidenced by

a range of recent consumer surveys that have found that

sustainability is an important consideration for consumers

when making a purchase.

Market opportunity

Our business model is to offer our chosen target customers

differentiated credit, savings and money management solutions,

with lending predominantly funded by retail deposits.

Our approach to targeting in the past has been ‘who-led’ - that is,

we have defined target customers at product level first in terms of

hard data characteristics such as credit score. Whilst this remains

undoubtedly useful for credit decisioning, we have been minded

to develop a different way of thinking.

Our revised approach is ‘needs-led’. We have identified and

profiled substantial groups of customers where core needs are

common, even if demographics and attitudes vary.

This offers a more intuitive starting point for the development of

value propositions and solutions, and allows us to take a holistic

view of the customer rather than several single-product lenses.

This has enabled us to develop a richer understanding of our

existing customer base and our ‘market penetration’ strengths

to consolidate.

We have identified additional ‘market development’ space where

we can grow because we have both the capability to play and

a clear ‘right to win’.

As we develop a wider, holistic proposition for our chosen

target customers, we will seek further growth through

‘product development’.

The chart below summarises our breakout approach:

Existing

markets

New

markets

Existing products

Market

penetration

Consolidating

existing

strengths

Market

development

Growing

our customer

footprint

Product

development

Building a

holistic

proposition

Diversification

current

plans

New products

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Strategy

Our North Star strategy

Our customer-led strategy is based on our

detailed understanding of the lives and needs

of those we serve.

We acknowledge and celebrate the diversity and individuality

of modern society, and have come to appreciate that, amid

this complexity, we can identify sizeable cohorts of consumers

who have core needs in common. Three such core needs are:

– Help me borrow healthily.

– Help me feel in control of my everyday spending.

– Help me build a financial safety net.

Our ethnographic studies, other qualitative research, surveys,

benchmarking and data science have together helped us

establish existing strengths to consolidate, areas to develop

and opportunities for business growth.

This has led us to review and re-articulate our Group Purpose:

’to deliver caring banking so our customers can make the most

of life’s opportunities’.

Our future solution set and customer experience are being

co-created with customers through an ‘empathic design’

process which draws in expertise from across the Group.

Our strategy is being delivered through five strategic themes:

Market status quo

– Parent/child relationship

– Banking jargon

– Customer feels judgement and bias

– Bank’s timeframes

– Customer as a profit source

Our principles

– Coach and empower

– Simple language

– Customer feels supported towards resilience

– Respect customers’ time

– Customer integral to Purpose

Delivery of these themes will be underpinned by a set of progressive principles which contrast markedly to the industry norms,

creating an organisation that is intrinsically differentiated.

Our five strategic themes and objectives

Strategic themes Objectives Focus for 2024 Links to risks

Find our Principal

risks on pages

44 to 50

Links to KPIs

Find our KPIs on

pages 12 and 13

1. Customer

centricity

To serve our customers with

differentiated solutions that proves

Vanquis Bank:

– cares about my needs;

– is an organisation I trust;

– empowers me to make the right

financial choices for me; and

– supports me when it matters.

– Understand the customer and

introduce targeted customer

propositions.

– Grow customer engagement to drive

card utilisation.

– Improve customer experience.

2. Insightful risk

management

To provide exceptional ‘through the

journey’ management of risk, based

on an intimate understanding of the

customers and their needs.

– Invest in our risk management

capability to differentiate in the

market.

3. Efficient

organisation

To establish a high-performing and

continuously improving organisation

across management, operations

and financial resource management

and capital.

– Optimise capital and liquidity

management.

– Execute cost transformation.

– Continue enhancing operational

excellence, with a focus on collections

and fraud.

4. Digital, tech,

data and

analytics

To leverage efficient modern

technology that supports digital-first

customer and colleague experience.

– Continue with the technology

transformation.

– Execute data and analytics

transformation with the benefit of

Snoop functionality.

5. A great people

proposition

To empower people with the skills,

career and culture that inspires great

customer empathy and belief in

our Purpose.

– Progress our collective ‘one Group’

culture.

– Create an enabling environment that

is supportive of the strategy.

10 3

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Business model

We are driven by our

customer-centric approach

Our business model is the way that we generate financial

and non-financial value for customers and broader

stakeholders, and starts with a deep understanding of our

customers’ needs, preferences and behaviours, gained from

extensive market research and data analysis. This approach

ensures that every decision we take, from proposition

development through to in-life management, is guided by

a clear understanding of how it will benefit our customers.

The comprehensive analysis undertaken has revealed

the co

re needs of

consumers, and will allow us to

build a tailored proposition. This continuously deepening

understanding positions us more favourably to

become the preferred partner for our target customers.

Here is a glimpse into the work we have undertaken

on the core needs of those we serve:

Building on our Group Purpose to deliver caring

banking so our customers can make the most of life’s

opportunities, we care about our customers’ needs, earn

their trust, empower them to make healthy financial

choices and support them when it matters.

Here is how we look to make a difference for our

customers at each stage of the journey:

Understanding our customers’ needs Our customer proposition

Core needs:

‘Help me borrow healthily’

We understand that healthy borrowing is based on

establishing quality, long-term relationships with customers.

Banking can often be filled with jargon, creating a trust gap

with customers who may feel judged in difficult situations.

We can help to bridge this gap by communicating with

customers in a language they understand, helping them

grasp their commitments so they can successfully manage

their debts over time. We encourage customers to reach

out to us if they need assistance, providing options, flexibility,

and a supportive environment where trust can be built

without fear of judgement.

‘Help me feel in control of my

everyday spending’

We understand that money is simply a tool, and we

recognise that our customers may be managing

tight finances or seeking to maximise opportunities

while prioritising peace of mind, short-term goals,

and quality interactions. Long-term goals can often

seem unattainable.

We can help by recognising that our customers’ emotional

needs are just as important, and we strive to offer tools

and services that provide customers with guidance and

personalised insights. Our aim is to simplify day-to-day

financial decisions and help customers achieve peace

of mind in their everyday lives.

‘Help me build a financial safety net’

We understand that money is tight for many people, with

often little or no savings to fall back on when an unexpected

household expense hits. This can lead to increases in

indebtedness and take some time to recover from.

We can help people be prepared for the unexpected by

building a savings buffer, guiding them to unlock hidden

opportunities to save money, and offering motivation to

get started and keep going.

Customer centricity: our customer journey

Awareness

We create awareness by meeting

customers where they are.

Consideration

We have a differentiated value proposition

that is designed around customers’ core

needs rather than being product led.

Conversion and onboarding

We aim to provide a frictionless first contact

and onboarding journey, leveraging

our evolving systems capability and

emerging technologies.

Addressing customers’ core needs

We empower our customers to borrow

healthily, feel in control of their everyday

spending and build a financial safety net.

Support when it’s most needed

We are committed to being there for our

customers in challenging times as well

as good ones.

Deepening relationships

We present solutions which address our

customers’ needs and encourage longer

and deeper relationships.

Advocacy

We have genuinely positive impact on our

customers, so they are much more inclined

to recommend us.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Our needs-led approach is naturally inclusive of anyone

who has the needs we have identified. We are open to

receiving custom from a diverse group and our target

market has a wide income range.

The common denominator for the customers we aim to

serve is that they have low financial resilience, relatively

low levels of disposable income and savings, and they are

using their opportunities to the limit due to circumstances

or priorities. Long-term goals feel so hard to reach that we

observe people prioritising short-term goals.

Our customers do not aim to accumulate wealth, but to

have comfort, stability, peace of mind and to live life to its

fullest. They simply want ‘enough’ to remove some of the

barriers and burdens they face and to feel they have the

space to truly live, rather than just get by.

Ultimately, they are striving for peace of mind. Money is

intrinsically related to their goals as an enabler - it is a

means to an end for them.

We believe deeply that our customer proposition and

solutions can serve to empower the millions of people

in this position to get closer to achieving their goals by

borrowing healthily, feeling in control of their everyday

spending and building a financial safety net.

Our customer proposition is carefully designed and

developed to achieve success in our chosen markets,

leveraging our existing capabilities and adopting

enhancements and continuous improvements we make

on the basis of customer and colleague feedback.

Furthermore, we are capitalising on our ongoing

investments in technology to bolster our capabilities,

drive process efficiencies and add further value for our

customers. Collectively, these will move us to a position of

clearer differentiation and improved market positioning.

Our success in the marketplace will be determined by

the strength of our business model and the relative

advantages that are intrinsic to our organisation.

These strengths provide value to our customers,

colleagues, regulators, shareholders, suppliers and

communities, while reaffirming our commitment to

quality and innovation:

Our strengths

Our core products

– Credit cards

– Vehicle finance

– Personal loans

– Savings

– Budgeting and money management

Lower funding costs

We benefit from lower funding costs compared

to many competitors, which is achieved through

the strategic use of retail deposits, thereby

enhancing our price competitiveness.

Financial efficiency

Our robust retail deposit base equips us with

the capability to align lower-cost deposits with

lending volumes, ensuring financial efficiency in

the matching of assets and liabilities.

Risk-based pricing

Our organisation has extensive credit experience

and capability in the markets we serve.

Broad product portfolio

Our broad product portfolio caters to a spectrum

of needs within our target market, providing

comprehensive financial solutions and fostering

opportunities for cross-purchase.

Snoop

Snoop, a unique capability, empowers our

customers to manage their finances effectively

and realise tangible savings.

Established brands

Our Vanquis and Moneybarn brands have

earned a strong reputation and trust within our

target market, reinforcing our market presence.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Key performance indicators

The key performance indicators (KPIs) represent the principal metrics reported to Group

management on a monthly basis to support the strategic decision making.

Customer centricity A great people proposition

Customer satisfaction

- Cards

4.4

21 22 23

4.7

4.6

4.4

Definition

The extent to which surveyed

customers were satisfied with

the service provided on a scale

of 1 to 5.

Strategic focus

Demonstrates how happy our

customers are with the service

they are receiving.

Comment

Senior management

gender diversity

35%

21 22 23

Definition

The percentage of the Group’s

senior management who

identify as female.

Strategic focus

Committing to the Women in

Finance Charter by achieving

40% target by 2026 through

delivering signatory actions to

create a more equal, inclusive

and diverse workplace.

Comment

We continue to drive

actions to support better

gender balance.

Customer satisfaction

- Vehicle finance

3.7

21 22 23

4.4

4.3

3.7

Definition

The extent to which surveyed

customers were satisfied with

the service provided on a scale

of 1 to 5.

Strategic focus

Demonstrates how happy our

customers are with the service

they are receiving.

Colleague

engagement score

56%

21 22 23

Definition

A metric used to gauge

colleagues’ engagement,

motivation and commitment

towards their work.

Strategic focus

To continuously monitor and take

action to maintain and improve

colleague engagement.

Comment

The survey conducted in

December 2023 is reflective of

the extent of change in 4Q23.

3 4

Community

investment (£m)

£1.4m

21 22 23

1.4 1.4 1.4

Definition

The cash cost of contributions

provided to community

projects or charities.

Strategic focus

Investments in the

communities we serve to

improve our customers’ lives.

Comment

We continue to invest in

our Foundation partners

to address the wide range

of social and financial

inclusion issues that are

relevant to our customers

and the communities where

we operate.

Insightful risk management - Efficient organisation - Digital, tech, data and analytics

Adjusted ROTE

(%)

3.2%

21 22 23

32.2

21.8

3.2

Definition

Adjusted return on tangible equity

(ROTE) is defined as adjusted profit

after tax for continuing operations

as a percentage of average

tangible equity for the 12 months

ended 31 December.

Strategic focus

Demonstrates how well the

Group’s returns are generated

from its tangible equity. Removing

the impact of whether the

development has occurred through

organic or inorganic growth.

Comment

The reduction reflects the lower

adjusted PBT in 2023.

Adjusted PBT

(£m)

£24.9m

21 22 23

167.8

126.6

24.9

Definition

Adjusted profit before tax is

stated before amortisation

of acquisition intangibles,

discontinued operations and

exceptional items.

Strategic focus

Profits which will impact

organic investment within the

Group or dividend payments

to the Group’s shareholders.

Comment

The reduction primarily

reflects the increased cost

of risk year-on-year.

Statutory (LAT)/PAT

(£m)

£(6.0)m

21 22 23

134.6

82.3

(6.0)

Definition

Statutory (loss)/profit after tax

is stated before discontinued

operations.

Strategic focus

Profits which will impact

organic investment within the

Group or dividend payments

to the Group’s shareholders.

Comment

Concrete plans are in place

to deliver progressive growth.

A great people

proposition continued

Whilst declining, customers remain positive about the experience we

deliver. Management actions in FY23 are expected to yield service

improvement in FY24.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Key

Certain alternative performance measures (APMs) have been used in this report.

See pages 189 to 191 for an explanation of their relevance, definition and method of calculation. In the current year, the updated

management team have revised their focus to the APMs presented below, there have been no changes to these APMs in the year.

Links to remuneration

Net interest margin

(%)

19.0%

21 22 23

20.5

21.2

19.0

Definition

Interest income less interest

expense, excluding exceptional

items for the 12 months ended

31 December as a percentage

of average gross receivables.

Strategic focus

Demonstrates the returns

generated from customers.

Comment

The decline reflects the higher

interest costs and lower

asset yield.

Risk-adjusted margin

(%)

13.9%

21 22 23

21.3

20.3

13.9

Definition

Total income, excluding

exceptional items, less

impairment charge for the

12 months ended 31 December

as a percentage of average

gross receivables.

Strategic focus

Demonstrates the returns

from customers after

impairment charges.

Comment

The decline reflects higher

impairment charges and

higher interest costs.

Customer receivables

(£bn)

£2.2bn

21 22 23

1.7

1.9

2.2

Definition

Amounts receivable from

customers as reported on

the balance sheet for the

Group’s continuing operations

representing gross receivables

less impairment provision

calculated in accordance

with IFRS 9.

Strategic focus

Amounts receivable from

customers net of provisions.

Comment

Receivables have grown

year-on-year notwithstanding

the active volume

management in 2H23.

CET1 ratio

(%)

20.5%

21 22 23

29.1

26.4

20.5

Definition

The ratio of the Group’s

Common Equity Tier 1

(CET1) to the Group’s risk-

weighted assets measured in

accordance with the Capital

Requirements Regulation (CRR).

Strategic focus

Demonstrates the Group’s

ability to withstand

financial distress.

Comment

The Group maintained a

robust capital position with a

CET1 ratio of 20.5%, within the

Group’s updated CET1 target

range of 19.5% to 20.5%.

Cost:income ratio

(%)

60.9%

21 22 23

54.8

59.9

60.9

Definition

Adjusted annualised operating

costs as a percentage of

annualised total income for

continuing operations.

Strategic focus

Efficiency of the cost base

in delivering returns.

Comment

The rising trend reflects

broadly static income, with

cost headwinds mitigated

by proactive management

actions in the second

half of 2023.

Total capital ratio

(%)

30.6%

21 22 23

40.6

37.5

30.6

Definition

The ratio of the Group’s total

regulatory capital (own

funds) to the Group’s risk-

weighted assets measured in

accordance with the CRR.

Strategic focus

Demonstrates the Group’s

ability to withstand financial

distress and the ability to

facilitate future growth in risk-

weighted assets.

Comment

The Group continues to hold a

significant total capital surplus.

Liquidity coverage ratio

(%)

1,263%

21 22 23

2,073

1,139

1,263

Definition

A regulatory measure that

assesses net 30-day cash

outflows as a proportion

of high-quality liquid

assets (HQLA).

Strategic focus

Demonstrates the

Group’s ability to meet

its short-term liabilities.

Comment

The Group continues to

hold a significant level

of excess liquidity.

Adjusted RORE

(%)

4.0%

21 22 23

32.3

22.2

4.0

Definition

Adjusted return on required

equity (RORE) is defined as

adjusted profit after tax for

continuing operations divided

by the Group’s monthly

average PRA regulatory capital

requirement including PRA

buffers for the period.

Strategic focus

Demonstrates how well the

Group’s returns are reinvested

and is an indicator of its

growth potential.

Comment

The adjusted RORE reduced

in FY23 reflecting the reduced

profitability year-on-year.

Insightful risk management - Efficient organisation - Digital, tech, data and analytics continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

We have a diverse customer base across

the UK and aim to support their everyday

spending, help to build savings and

promote healthy borrowing.

– We provide access to appropriate

credit products and services to our 1.75

million customers so that they can live

their lives, improve their credit score

and increase future financial options.

– We conduct customer segmentation

research to better understand and

meet the needs of our customers

and support them to be more

financially resilient.

– We work with charities and partners in

the communities we serve to address

issues such as debt advice, financial

education and other consumer

vulnerability matters.

Our shareholders are both institutional

and individual investors. We are

committed to providing them with

clear and accurate information on our

strategy and business performance, and

delivering sustainable, profitable growth

based on our deep understanding of,

and commitment to, our customer base.

– We corresponded and met with

shareholders representing over two-

thirds of our issued share capital

between our interim results in July 2023

and year end in order to create better

shareholder understanding of our

investment case.

– We guided to adjusted PBT for FY23 of

£25-£30m in our third quarter trading

statement in October 2023 to create

greater transparency of expectations,

and delivered in line with this range.

– We issued a market update on 11 March

2024 ahead of our FY23 results on 27

March 2024 to clarify our expectations

for 2024 and 2025.

– We will hold a strategy seminar on

27 March 2024 to communicate the

findings from our North Star strategic

review and describe the benefits we

expect to deliver.

Our colleagues are vital to the Group’s

long-term success. It is essential that

we continue to attract and retain the

best talent by providing a workplace

culture that is encouraging, supportive

and inclusive.

– We have partnered with Great Place

to Work to support our colleague

engagement and culture agenda.

– Our Inclusion Community Affinity

Groups (which focus on gender,

race, disability, LGBTQ+ and social

mobility) have helped to celebrate

diversity and inclusion and improve

our workplace practices.

– We launched a new Learning and

Development Hub for colleagues

which offers more training and

development opportunities

to colleagues.

The suppliers we use are wide ranging,

from our outsourcing partners to IT and

software providers. They play a key role

in the delivery of our operations and we

ensure that they comply with our due

diligence process which covers issues

such as human rights, climate change

and data protection.

– We rolled out new Supplier

Management Framework activities

and standards which continue to

standardise the Group’s procurement

processes and procedures.

– We carried out a ‘voice of the

supplier’ survey to gauge the Group’s

performance in relation to a range of

supplier satisfaction and procurement

satisfaction themes.

– We have continued to engage with

suppliers via our due diligence process

on the climate risk agenda.

We are subject to the regulations,

rules and approvals of the FCA and

PRA. Maintaining proactive, open and

constructive dialogue with these bodies

and policymakers is key to ensuring

that regulations meet the needs of our

customers and other stakeholders.

– We have engaged with our supervisors

at the FCA and PRA on an ongoing

basis on issues that are material to our

business strategy.

– We have participated in FCA

consultations on its Credit Information

Market Study.

– We engaged with Government

bodies and MPs on a range of issues

of importance to the firm including

financial inclusion and social mobility.

Our social purpose inspires us to

improve the lives of children and young

people in the communities where our

customers live and work by providing

them with access to education, financial

and social inclusion, and economic

development opportunities.

– In 2023, we launched the Vanquis

Banking Group Foundation whose

vision is to build a future where

every child and young person

in the UK is supported to achieve

their full potential, contributing

to a brighter future.

– We continued to work with partners

School-Home Support and the Dixons

Academies Trust to support school

pupils with items of uniform including

blazers, shoes, coats and PE kits.

– We disbursed over £236,000 in grants

to 30 voluntary organisations focusing

on inequality, exclusion, disadvantage

and mental health issues.

Sustainability

Customers

Shareholders

Colleagues

Suppliers

Effective engagement with our stakeholders is key to how Vanquis Banking Group operates and

informs our decision making processes, not only in respect of the products and services we offer

to our customers, but also in terms of supporting the delivery of our Purpose. It is also important

that we respond to issues that could impact our stakeholders, such as climate change.

Our key stakeholders

Understanding and engaging

with our key stakeholders

Regulators and Government

Communities

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Introduction: Our ESG strategy

Our Purpose to deliver caring banking so our customers can

make the most of life’s opportunities brings clarity to why

Vanquis Banking Group exists and the important role that

we play in the lives of our 1.75 million customers through the

provision of responsible and sustainable products and services.

It also underlines our commitment to respond to the needs

of our key stakeholders, whether they are our customers,

colleagues, communities, and managing and reporting our

environmental, social and governance (ESG) performance.

ESG strategy

To capitalise on this opportunity, the Group has a sustainability

strategy which is aligned with our Purpose and centres on the

following two areas: operating our business of lending to our

customers in a responsible manner; and acting responsibly and

sustainably in all our stakeholder relationships. This enables us

to focus our attention on championing equality, diversity and

inclusion, and providing our colleagues with a working environment

that is healthy, safe and meritocratic; treating our suppliers fairly;

supporting the communities we serve to be financially and socially

included so that they can thrive; and playing our part in the UK’s

transition to a cleaner, net zero economy.

Our Purpose, and the goals of our sustainability strategy, align

with the UN’s Sustainable Development Goals (SDGs). The

following SDGs are the ones we believe the Group can make

the most significant contribution towards.

ESG KPI performance overview

We use a number of non-financial measures to assess,

manage and report the embedding of our Purpose, vision and

mission as well as our performance against our stated ESG

objectives and targets. These measures also support the Group

to meet non-financial reporting requirements under sections

414CA and 414CB of the Companies Act 2006 and inform the

remuneration of the executive directors, which is, in part, linked

to our progress towards the Group’s ESG objectives which are

set out below.

Our policies

To support the embedding of the Group’s ESG strategy, we

have a number of corporate policies which cover a range of

environmental and social issues. These include an Environmental

Management Policy, Modern Slavery and Human Rights Policy

and Inclusion and Diversity Policy. These and other policies are

available at www.vanquisbankinggroup.com and details of how

they are governed are summarised in our the Group’s Non-

Financial Information Statement on pages 42 and 43, which has

been produced to

comply with sections 414CA and 414CB of the

Companies Act 2006

Objective Measure Performance in 2023

Customers

To ensure that every decision we take,

from proposition development through

to in-life management, is guided by a

clear understanding of how they will

benefit our customers.

Levels of customer satisfaction. Credit cards: 4.4/5 (2022: 4.6/5).

Vehicle finance: 3.7/5 (2022: 4.3/5).

Number/percentage

of customer complaints.

Total number of complaints: 69,609

(2022: 28,576).

Number of complaints referred to the

FOS: 9,974 (2022: 2,953).

% of FOS complaints upheld in the

customer’s favour: 14% (2022: 35%).

Colleagues

To create and sustain an inclusive and

supportive workplace culture, where

colleagues feel healthy, well and

engaged, and that they can reach their

maximum potential and deliver their

best work.

Colleague engagement score as

measured by annual colleague

engagement survey.

Overall colleague engagement score:

56% (2022: 68%).

Better Everyday Index score which

relates to the Group’s culture and the

way we treat customers and colleagues.

Better Everyday Index score: 48%

(2022: 60%).

Communities

To improve the lives of children and

young people in the communities where

our customers live and work by providing

them with access to education, social

and financial inclusion, and economic

development opportunities.

The amount invested per year to

support community programmes,

money advice programmes and

social research, including the number

of grants distributed to grass roots

community organisations.

£1.4m invested to support the Group’s

Foundation (2022: £1.4m).

1,696 hours volunteered by colleagues

(2022: 1,014).

The environment

To ensure that climate-related risks

and opportunities are integrated into

our business strategy and decision

making in areas such as operational

resilience, customer service, supply

chain management, and, where

appropriate, capital.

Absolute scope 1 and 2 greenhouse

gas (GHG) emissions.

Scope 1 and 2 emissions: 806 tCO

(2022: 1,017 tCO

e), a reduction of 21%.

Total scope 1 and 2 (and associated

scope 3) emissions: 1,039 tCO

(2022: 1,348 tCO

e), a reduction of 23%.

Updated report which complies with

the recommendation disclosures of

the Task Force on Climate-related

Financial Disclosures (TCFD).

Refer to pages 19 to 28 of this report.

“ Through the management and

reporting of our ESG priorities, we’re not

only able to ensure that our Purpose is at

the heart of our business, which will put

customers at the centre of everything

we do, but that the Group is on a path to

a strong and sustainable future which

delivers for our customers, colleagues,

communities and shareholders.”

Ian McLaughlin

Chief Executive Officer

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Colleague engagement

Colleague engagement is a key way of monitoring and

assessing our culture where colleagues can learn and

develop their careers, and deliver on our Purpose. In

December 2023, we used a new survey provider, Great

Place to Work (GPTW), to measure colleagues’ views and

experiences. Trust is at the heart of the GPTW model, which

is grounded by strong values and effective leaders. Scores for

overall colleague engagement and our Better Everyday Index,

which is linked to the Group’s culture, fell during the year, which

reflects the levels of uncertainty and change that colleagues

have experienced, and are set out opposite.

Overall colleague engagement score in 2023:

56%

(2022: 68%)

Better Everyday Index score in 2023:

48%

(2022: 60%)

Sustainability continued

Our colleagues

Having happy and healthy colleagues is critical to the Group’s

success. We recognise that each colleague has an important

role to play in creating and sustaining an inclusive and

supportive workplace culture. We know that when colleagues

feel healthy, well and engaged, they can reach their maximum

potential and deliver their best work.

About our workforce

Our workforce is made up of permanent and fixed-term

employees, and contractors (individuals from companies

or suppliers who provide a service to the Group). At Vanquis

Banking Group we call these our colleagues.

Building an inclusive culture

Continuing to build and sustain an inclusive workplace

culture, where all our colleagues can be themselves and

thrive, is key to the delivery of our strategy and ensuring that

we are best placed to deliver for the diverse customer base

we serve. Throughout the year, our five Affinity Groups (which

focus on gender, race, disability, LGBTQ+ and social mobility)

have celebrated a variety of events, including Leeds Pride,

Black History Month, National Inclusion Week and National

Apprenticeship Week. They have also supported the business

to help build inclusive teams by establishing partnerships

with Women in Data, LGBT Great, Investing in Ethnicity and

by becoming a Disability Confident Committed Employer.

We also continue to engage with colleagues through

an annual survey to collect diversity, inclusion and

socio-economic background information.

Diversity and inclusion data as at 31 December 2023

– 18% (2022: 18%) of colleagues informed us that they had

a disability or long-term health condition.

– 18% (2022: 17%) of colleagues informed us that come from

a Black, Asian, other White or Minority Ethnic background.

– 5% (2022: 6%) of colleagues informed us that they were

part of the LGBTQ+ community.

– 69% (2022: 71%) of colleagues attended a state-run or

state-funded school when growing up.

1 This data is based on colleagues’ voluntary self-declaration via our

December 2023 Great Place to Work colleague engagement survey

which accounts for 70% of the Vanquis Banking Group workforce.

By being a signatory to the HM Treasury Women in Finance

Charter, the Group is committed to improving female

representation at senior management and director level. This

commitment is supported by a target to have 40% female

representation in the Group’s senior management population

by December 2026. Further inclusion and diversity information

which relates to the FCA’s Listing Rules 9.8.6(9) and 9.8.6(10) is

set out in the report of the Nomination Committee on pages

75 to 77.

As of 31 December 2023, the representation of women and men in the Group’s workplace is as follows:

Total No. of women % of women No. of men % of men

Board 10 5 50% 5 50%

Executive Committee 10 3 30% 7 70%

Senior management population 105 36 34% 69 66%

All workforce 1,478 720 49% 758 51%

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Community Foundation overview

Our Purpose and values of caring about people, pulling

together as a team, finding a better way and getting the

right things done have their roots in the heritage of our

Company which was founded by Joshua Waddilove in 1880.

They underpin our long-standing commitment to champion

the communities we serve and, in particular, support and

empower children and young people.

The Vanquis Banking Group Foundation

We support the communities we serve through the Vanquis

Banking Group Foundation which we launched in June 2023.

This Company-led Foundation aims to improve the lives of

children and young people in the communities where our

customers live and work by providing them with access to

education, social and financial inclusion, and economic

development opportunities.

Our vision for the Foundation is to build a future where every

child and young person in the UK is supported to achieve their

full potential, contributing to a brighter future. Our mission is

to improve the lives of children and young people by providing

educational and social development opportunities which

support financial and social inclusion. This mission is aligned

with the five UN Sustainable Development Goals that relate to:

No Poverty, Quality Education, Gender Equality, Decent Work

and Economic Growth, and Reduced Inequalities.

The Foundation will address the root causes of financial

exclusion by focusing on three key strategic pillars:

Education Community Financial inclusion

We back programmes that boost literacy

and numeracy rates and offer insights into

the world of work and the skills needed to

secure opportunities.

We support social and financial inclusion in

the communities where we operate.

This work supports our customers and

other consumers to make the most of their

financial options.

The methodology we use for reporting on community investment aligns with the B4SI framework, which is a recognised global

standard in measuring and managing corporate community investment. In 2023, we invested £1.4m in the communities we

serve via the Vanquis Banking Group Foundation.

Education

We support programmes to boost the literacy and numeracy

of children, young people and other groups, and offer them

insights into the world of work and the skills that will help them

secure opportunities, including employment.

National Numeracy – The Group has been a supporter

of National Numeracy since 2018, supporting the National

Numeracy Day campaign for six years. In 2023, National

Numeracy Day was held on 18 May and celebrated the

importance of numbers in everyday life and inspired children

and adults to improve their numeracy skills in their lives at

home, work and school. Along with inspiring almost 830,000

actions to improve number confidence and skills in May alone,

the campaign led to 16,854 downloads of National Numeracy

resources, a 70% increase on 2021. In addition, eight colleagues

have volunteered as part of the charity’s volunteering

programme and the Group is a member of the charity’s

Leadership Council.

School-Home Support – The funding we provide to School-

Home Support enables its practitioners to provide advice and

support to families in Bradford and Kent, enabling them to

access vital support with bills, gain employment and, crucially,

get children in school and ready to learn. In 2023, the charity

supported 133 individuals via intensive casework support

and worked with 269 individuals that benefited from early

response support.

The average school attendance increased by 11.7%. We

also provide funding to School-Home Support and another

partner, the Dixons Academies Trust, to deliver our School

Uniform Project. In 2023, this project provided funding to over

1,000 families in Bradford, Blackpool, Liverpool, London and

Manchester, so that they could access essential items of

school uniform for their children, ensuring that they did not

lose out on their education because they could not afford to

buy it. In September, we were able to host their annual staff

conference in our Bradford head office.

Ahead Partnership – A group of students from New College

Bradford, who were all taking IT and business-focused courses,

took part in our new mentoring programme facilitated by the

Ahead Partnership. The programme comprised five sessions,

developed to support these young people in thinking about

their next steps for their futures. The sessions included:

meeting colleagues from different functions and levels in

the business during a tour of our Bradford offices; a careers

speed networking session; goal setting and actions planning;

interview preparation and practice; and help with where to

look for and apply for jobs. Their mentors also supported them

in developing an app idea that would encourage people aged

16-18 to save money and led to the development of a ‘Design

an app’ day at the request of the students.

2023

2023 community investment figures

2022

Cash £1,152,579

Management costs £169,231

Value of colleague time £62,225

Total £1,384,035

Cash £1,221,822

Management costs £156,592

Value of colleague time £21,132

Total £1,399,546

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Sustainability continued

Community

Through our community foundation partners, we aim to

help to address the wide range of social and financial

inclusion issues that are relevant to our customers and the

communities where we operate.

Community foundations: we currently have community

foundation partnerships with Bradford District Community

Foundation, Hampshire and Isle of Wight Community

Foundation, Kent Community Foundation and London

Community Foundation to support investment in the

communities that are close to our main business premises.

By working with our community foundation partners, we

have the confidence that we are directing our funding to

the places where it is needed the most. In 2023, through our

four partnerships in Bradford, Kent, London and Hampshire,

we provided grants totalling £236,270 to 30 grass roots

community organisations. The grants will help organisations

to address a wide range of complex issues, such as reducing

inequality, exclusion and disadvantage for children and young

people. The organisations we’ve supported this year include:

– Level Up, Gosport – our funding will help to deliver work

placements for young people aged 18-25 who have

additional support needs. The work will take place in

Gosport and aims to reach 48 young people facing

challenging lives.

– Bangladeshi Youth Organisation, Bradford – our funding

will support Aspire 2 Success which will engage children

and young people from the disadvantaged Manningham

and City wards, including new arrival refugees and

children from the more established BAME community, who

are ‘at risk’ of falling behind and not realising their true

potential, to deliver a training development programme

to raise their aspirations.

– Youth Resilience UK – our funding will help to support

the continuation of services across Medway, Swale and

Thanet, working with disengaged young people, either as

an intervention measure within their school if the individual

is at risk of exclusion or at an alternate education provision

post-exclusion. This will include a broad range of services,

including counselling, peer-support training programmes,

mental health support and raising awareness about the

dangers and impact of crime and substance misuse.

– Family Friends, Brent – our funding will support the

provision of a dedicated family connector and volunteer

network to lead on the delivery of family befriending

in Brent, including navigating financial struggles,

housing insecurity, mental health concerns, and

educational obstacles.

Fundraising

Throughout 2023, our colleagues raised funds for many

causes that are close to their hearts. They have also

generously supported relief efforts from the devastating

earthquakes in Morocco, Turkey and Syria, and flooding

in Libya. This was done through the appeals coordinated

by the Disasters Emergency Committee. The funds raised

by colleagues were then matched by the Group.

Financial inclusion

We fund a range of money advice and debt management

organisations to support the delivery of financial education

to children and young people, and debt advice to our

customers and other consumers.

The Money Charity – we have supported The Money Charity

for over a decade. The charity’s vision is that everyone

achieves financial wellbeing by managing their money,

and it works towards this by delivering products and services

that provide education, information and advice to people

in education, workplace and community settings. Over the

past 10 years, our support has enabled The Money Charity

to deliver 2,478 workshop hours to over 57,000 children and

young people. Throughout 2023, The Money Charity delivered

32 workshop hours to over 2,700 children and young people

in Yorkshire, Greater Manchester, Merseyside and the West

Midlands. Over a third of these workshop hours were targeted

at groups of ‘disadvantaged’ young people, due to an above

average percentage of the young people who go to the

school/college receiving free school meals, or because the

group of young people have another specific vulnerability.

In addition, our support enabled The Money Charity to deliver

36 workshop hours to 228 adults in a range of groups including

those who are at risk of or experiencing homelessness, care

leavers, refugees, and people with disabilities.

Volunteering

We encourage our colleagues to give up their valuable time

to support the projects they care most about as well as

the communities that are supported by the Group. In 2023,

colleagues volunteered 1,696 hours to support community

projects. This compares to the 1,014 hours volunteered by

colleagues in FY22. For example, during 2023, colleagues

from our Customer Experience, Marketing and Data and

Analytics teams volunteered to support two projects. Sixteen

colleagues from our vehicle finance business took part in a

team challenge at the Southsea Green Community Garden

in Portsmouth and rebuilt old and broken raised beds,

refurbished an overgrown memorial garden, built a new shed

and undertook a general garden tidy-up. Eighteen colleagues

from our Cards business spent two days at the Wellgate

Community Farm in Romford and painted farm buildings and

fencing, and cleared land to make way for new animals.

Community Foundation overview continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

The Group recognises that failure to take action on climate change not only poses a significant threat to society at large and

the global economy, but also to the day-to-day operations of our business and the lives of our customers, colleagues and other

stakeholders. We know that we have an important role to play in tackling climate change, and it is the responsibility of businesses and

organisations from all sectors to reduce the carbon intensity of their activities in order to mitigate and prevent further climate change.

Our commitment to achieve net zero GHG emissions by 2040 (in respect of our scope 1, 2 and 3 GHG emissions) is ahead of the UK

Government’s net zero by 2050 target, and has been further strengthened by the carbon reduction targets we set in 2023 and which

have been approved by the Science Based Targets initiative (SBTi) (see page 28 for more information).

Climate-related financial report summary

The climate-related financial report set out below is fully consistent with the four pillars and 11 recommended disclosures of the

TCFD. In doing so, Vanquis Banking Group complies with the FCA’s Listing Rule 9.8.6R(8). The report also meets the requirements of

the Climate-related Financial Disclosure (CFD) Regulations 2022 and the UK Companies Act (that is, sections 414CB(2A)(a to h). Our

2023 report is organised around the 11 TCFD recommended disclosures. Reference is also made to the parts of our report that

comply with the specific sections of the CFD Regulations.

Governance

The Group has developed robust governance and management structures, which includes appropriate processes and controls

at the most relevant levels within the organisation to effectively manage the climate risks we face and to ensure we meet any

reporting requirements. We believe that these structures are proportional to the nature and scale of our business operations,

allowing the Board, its committees and the senior management team to assess, manage and report climate-related risks and

opportunities, as well as monitor and provide rigorous challenge to the Group’s progress against the goals and targets that have

been set in relation to the climate change agenda.

Board oversight of climate-related risks and opportunities

(section 414CB(2A)(a))

The Vanquis Banking Group plc Board has ultimate accountability for all risks, including climate-related risks and opportunities.

It also has overall accountability for the delivery of the Group’s ESG strategy and regularly reviews performance in accordance

with this strategy. The Board fulfils this accountability by receiving regular updates at its meetings. It is also supported by the

Board’s Customer, Culture and Ethics (CCE) Committee and Audit Committee.

The CCE Committee provides oversight of the Group’s approach to managing and reporting its impact on the environment,

which includes considering climate-related impacts on strategy, major plans of action, and business plans as well as setting the

organisation’s performance objectives, monitoring implementation

and performance. The process in place that enables the CCE

Committee to oversee the climate-related risk agenda and its application to the Group and its stakeholders, involves submitting

papers to its members for discussion and approval. The Audit Committee, which provides oversight of, and approves, the non-

financial performance information that is included in the Group’s Annual Report and Financial Statements, reviews and approves

the content of the Group’s climate-related financial report (see below).

Governance and management of climate risks and opportunities

Structure Activities undertaken in 2023

Board

As a minimum, an annual review of the Group’s climate change objectives as part of a broader review of the

Group’s Purpose/ESG strategy.

CCE Committee

Two updates were provided to this Committee in 2023 which enabled members to oversee the Group’s

ongoing compliance with the FCA’s Listing Rule to ensure that its report was consistent with the

recommendations of the TCFD, monitor the progress being made in developing the SBTi-approved carbon

reduction targets that will be set for the Group, and assess the climate-related metrics that are included in

the remuneration scorecard for executive directors.

Audit Committee

Annual review and scrutiny of the Group’s annual climate-related financial report.

Executive Committee

The ExCo has, as a minimum, an annual discussion on the Group’s ESG strategy, including an update on any

climate change objectives. The Committee also reviews and approves any carbon reduction targets and the

content of the Group’s climate-related financial report.

Climate Risk

Committee

Meets at least three times a year and provides guidance and direction for the assessment and management

of climate change-related risks and opportunities that are material to the Group and its stakeholders.

Climate/Environmental

working groups

These groups work closely with the Sustainability team to deliver activity to support the Group in meeting

stated targets/metrics and to comply with reporting requirements.

Sustainability team

Responsible for the ongoing management of the Group’s sustainability activity, including on climate-related

matters. The team coordinates the work required to set targets/metrics, ensure compliance with reporting

requirements and support the wider business to meet targets/metrics.

Climate-related financial report

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Sustainability continued

Climate-related financial report continued

Management’s role in assessing and managing climate-related risks

(section 414CB(2A)(a))

Vanquis Banking Group’s CEO, with support from the Executive Committee, provides management oversight of the progress being

made by the Group in managing its strategic ESG objectives, including those that relate to climate change. The cross-functional

Climate Risk Committee (CRC) provides guidance and direction for the assessment and management of climate change-related

risks and opportunities that are material to the Group and its stakeholders to support the Group’s ongoing compliance in meeting

the recommendations of the TCFD. During 2023, the CRC supported the Group’s scenario analysis work and the setting of the carbon

reduction targets that were submitted to the SBTi for approval in June 2023.

Knowledge and skills

The Group ensures that its Board and senior leadership team have the requisite knowledge and skills that will help us build a business

that will prosper by responsibly helping our customers, while growing sustainably and profitably. Members of our Board have

experience on a range of sustainability issues. They are also able to add to this by accessing resources on the ESG agenda via our

Board reporting portal or through specific programmes that are delivered by, for example, the Corporate Governance Institute. We

also have a number of sustainability experts within our senior management team. For example, members of the Group’s Climate Risk

Committee regularly attend briefings that are delivered by our advisors or third parties such as the UN Global Compact Network UK.

Remuneration

The remuneration of our executive directors is partly linked to our progress in meeting climate risk-related reporting requirements and

working towards the setting of longer-term carbon reduction targets, via their annual bonus plan. There is also an ESG underpin in the

Group’s Restricted Share Plan (RSP), whereby awards are granted annually to executive directors in the form of conditional awards or

options. For more information, refer to the Directors’ Remuneration Report on pages 93 to 115.

Strategy

Our strategy is to ensure that climate-related risks are integrated into our business strategy and decision making in areas

such as operational resilience, customer service, and supply chain management, and, where appropriate, capital allocation.

Our net zero by 2040 long-term target, along with the medium-term SBTi-approved carbon reduction targets that were set

on 30 January 2024, and our evolving transition plan, set out how, and in which areas, we will reduce the GHG emissions of

our operations and supply chain (see page 26 for more information).

Identification of climate-related risks and opportunities over the

short, medium and long term (Section 414CB(2A)(d))

In this section, we identify climate-related risks and opportunities which have potential to impact our business over the

short-term (zero to one year), medium-term (one to five years) and long-term (five or more years) time horizons. These

time horizons are consistent with other risks that we manage, however, we acknowledge that the time horizon over which

climate-related risks will manifest themselves may be a significantly longer time horizon than we experience with other risk

types. We continue to assess the potential of material climate-related risks and opportunities to impact our business, as well as

the resilience of our strategy and stakeholders to such impacts, using scenario analysis. This involves: identifying risk scenarios,

linking the impacts of the scenarios to financial risks, assessing any sensitivities to those risks, and extrapolating the impacts

of those sensitivities to calculate an aggregate measure of exposure and potential losses. In doing so, we use two major risk

categories: physical risks (which include acute, extreme weather events, and chronic, long-term climate shifts), and transition

risks (which relate to regulatory changes, technological innovations and customer demand changes that may occur while

transitioning to a low-carbon economy).

Our scenario analysis makes use of the Group’s financial forecasts, operational footprint, customer data, supply chain

information and environmental data, to create a representation of Vanquis Banking Group. To support our analysis, climate

scenarios of the Network for Greening the Financial System (NGFS) have been adopted when assessing our risks, which

categorise climate scenarios into three transition types: Orderly, Disorderly, and Hot House World.

Scenarios

NGFS Net Zero 2050 (Orderly)

Global warming is limited to 1.5°C through the

introduction of stringent climate policies and

innovation, reaching net zero CO

emissions

globally around 2050. Carbon Dioxide Removal

is used to accelerate the decarbonisation but

kept to the minimum possible and broadly in line

with sustainable levels of bioenergy production.

Physical risks are relatively low but transition

risks are high. Therefore, we have selected this

scenario as it aligns with the Group’s ambition to

achieve net zero GHG emissions by 2040.

NGFS Fragmented World (Disorderly)

This scenario illustrates the adverse

consequences of delayed and divergent

climate policy ambitions globally which

lead to high physical and transition risks.

Countries without net zero targets follow

current policies, while other countries

achieve them only partially (e.g. 80% of the

target). Climate scenarios in the Disorderly

case can limit warming to <2°C resulting

in low physical risks but may demonstrate

higher transition risks compared to the

Orderly case.

NGFS Current Policies (Hot House World)

This scenario assumes that only currently

implemented climate policies are

maintained, with no further strengthening.

Global greenhouse gas emissions

grow until 2080, leading to about 3°C of

warming and irreversible changes such

as higher sea level rise. It is considered

to be best suited to assessing physical

risks according to the NGFS and has been

selected given that there is a potential

for the Group to be impacted by the

climate-related physical risks.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

The climate-related risks and opportunities which have potential to impact our business in the short, medium and long term are

set out below:

Risk/opportunity Impact on business Time horizon(s)

Physical risk (acute)

Extreme weather events (e.g. heavy rain, high wind and heatwaves) may disrupt/

damage our facilities, direct or indirect supply chain operations and result in

negative financial, operational or reputational impacts. The long-term success

of the business is dependent on the protection of our colleagues, customers, and

business infrastructure and processes. More frequent and severe weather events

could pose a threat to these critical assets.

Short and

medium term

Physical risk (chronic)

Long-term changes in climate and weather patterns (e.g. changing annual

rainfall levels, mean temperatures increases and rising sea levels) could disrupt

our facilities, direct or indirect supply chain operations and result in negative

financial, operational or reputational impacts.

Long term

Transition risks (policy

and legal)

New or additional climate-related laws, regulations or contractual commitments

(e.g. those that apply to energy usage, business travel or GHG emissions) may

result in increased compliance costs, taxes on emissions, penalties or restrictions

that relate to our business models.

Medium

and long term

Transition risks

(reputation)

Our customers, colleagues, investors and regulators expect us to take

appropriate measures to reduce our contribution to climate change. Our brand

is essential to the growth and success of our business. Damage to our reputation

as a result of poor environmental performance, including the failure to meet our

climate-related commitments (e.g. our net zero by 2040 ambition) or regulatory

expectations, could result in negative media attention and may impact customer

or investor demand or result in a loss of existing talent or the inability to attract

new talent.

Short, medium

and long term

Climate-related

opportunities (product

and services)

There is an opportunity for us to develop a new business model that introduces

new products to our customers which accommodate their needs and meets

emerging climate-related policies (e.g. to enable our vehicle finance customers

to purchase battery electric vehicles (BEVs)).

Medium

and long term

Climate-related

opportunities

(resource efficiency

and resilience)

We continually identify opportunities to invest in improving the energy efficiency

of operations and infrastructure, ensuring that they are resilient. This not only

helps us to manage our risks but also to reduce operating costs.

Short, medium

and long term

The impact of climate-related risks and opportunities on our

businesses, strategy and financial planning (section 414CB(2A)(e))

In analysing the results of our scenario analysis, we have used high, medium and low financial impact categories, to represent

the estimated loss to the Group’s revenues over the next five years assuming that no mitigating action is taken. These categories

are used within our Risk Management Framework.

The guidance for banks published by the TCFD in 2021 requires us to disclose information on significant concentrations of credit

exposure to carbon-related assets. It is suggested that the vehicle finance business of Vanquis Banking Group is more susceptible to

the risks associated with climate change. In particular, the transition risks associated with the introduction in the UK of a total ban on

the sale of new petrol and diesel cars and vans. However, this ban has been pushed back five years from 2030 to 2035.

The Group’s credit exposure to the assets that are purchased through the loan products that our vehicle finance business

offers, continues to be considered limited, given that the vehicle finance we offer is typically on three to five-year secured

hire purchase contracts. We also continue to monitor the list price of used electric vehicles (which continues to be a barrier to

ownership for many of our customers) and explore the development of new finance products that will enable our customers to

transition from internal combustion engine cars to hybrid vehicles or battery electric vehicles (BEVs).

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Sustainability continued

Climate-related financial report continued

4. The impact of climate-related risks and opportunities on our businesses, strategy

and financial planning (section 414CB(2A)(e)) continued

The table below shows the scenarios that the Group has selected and their overall level of physical and transition risks which are

driven by the level of policy ambition timing, coordination and technology levers as stated by the NGFS.

Physical risks Acute risks Chronic risks

Scenario Orderly Disorderly Hot House World

NGFS Net Zero 2050 NGFS Fragmented World NGFS Current Policies

Description

In this scenario, physical risks

encompass extreme weather

events and rising sea levels, posing

threats to infrastructure, agriculture,

and ecosystems globally. Current

temperatures are high due to the

continued emission of GHGs since

the industrial revolution, resulting

in a global temperature increase

between 1 and 2°C. However, in this

scenario, the global community aims

to limit temperature increases to

well below 2°C above pre-industrial

levels, fostering a more stabilised

climate and reducing the intensity of

temperature-related impacts.

In this scenario, physical risks

intensify, leading to increased

GHG emissions and exacerbated

climate-related challenges. The

NGFS scenarios suggest that current

temperatures are elevated due to

ongoing GHG emissions, contributing

to a global temperature increase

of 1 to 2°C. This scenario anticipates

more frequent and severe extreme

weather events, disproportionately

affecting vulnerable regions. The

lack of global collaboration implies

higher GHG emissions, contributing

to significant temperature increases

and associated impacts on

a global scale.

In this scenario, physical risks include

the continuation of current trends such

as more frequent heatwaves, changing

precipitation patterns, and disruption

to ecosystems. Current temperatures

are high due to ongoing GHG emissions,

resulting in a global temperature

increase of 1 to 2°C. Without substantial

measures beyond current policies to

reduce emissions, temperatures are

expected to rise further. The scenario

projects global warming of 1.5°C by the

2030s, 2°C by around 2050, and 3°C by

the 2090s. These temperature increases

could lead to strong exposure to natural

hazards and acute as well as chronic

climate-related risks due to insufficient

efforts to curb temperature increases.

Risk rating

by NGFS

Low Medium High

Financial

impact/risk

to Group

Low Low Medium

Time horizon

Short and medium term Medium and long term Long term

Impact

In this scenario, there is likely to

be an increase in the instances

of extreme weather events such

as heavy rain, high wind and

heatwaves. The impacts of these

events are likely to be minimal.

While climate-related physical risks

also increase in this scenario, the

impact caused by, for example,

extreme weather patterns, is much

smaller than in the Hot House

World scenario. This is because

this scenario assumes that global

climate policies are somewhat

more successful in lowering global

emissions, which mitigates the most

extreme changes in the climate. This

is likely to result in more vulnerable

parts of the world being exposed

to the impacts of the long-term

changes in climate and weather

patterns. In the UK, there would likely

be significant regional variability

in flooding impacts but it should

be noted that, according to the

Flood Re scheme, large areas of the

country are not materially impacted

by flood risk. However, it is likely

that this scenario would result in

more instances of extreme weather

events, such as heavy rainfall and

high winds, which could disrupt work

environments and routines.

The greatest impact in physical risk

is seen in this scenario as the cost of

damage caused by inland and coastal

flooding, high winds and subsidence

is expected to increase as the global

mean temperature rises. This could

pose a significant threat to the Group’s

properties and infrastructure which,

in turn, could impact our insurance

or reinsurance costs, as insurance

companies could face higher payouts

due to climate-related damages. This

scenario could also have greatest

consequences in terms of colleagues’

productivity as extreme weather events

may disrupt work environments and

routines which could have implications

for our customers.

1 High - A loss impacting the profit and loss statement by more than 20% and/or by more than £20m.

Medium - A loss impacting the profit and loss statement by between 10% and 20% and/or between £5m and £20m.

Low - A loss impacting the profit and loss statement by between 5% and 10% and/or by between £1m and £5m.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Mitigation:

The Group will adopt the following actions in order to mitigate against these physical risks and ensure that our strategy responds

to any potential opportunities:

– continuing to maintain and test business continuity plans to ensure the continuity of our operations in a range of situations,

including those where an extreme weather event occurs; and

– shifting to more sustainable, low-impact resources and having a series of targets to achieve this aim (for example, to ensure

that we use 100% renewable energy across the Group).

In terms of Vanquis Banking Group’s exposure to physical risks, although it is accepted that extreme weather events will increase

in number and severity compared to the present, they are unlikely to be as severe as those expected under the ‘Current Policies’

scenario. Also, the direct financial impacts associated with these events are considered to be minimal for the Group because

its four main offices are leased, and insurance is in place to help mitigate the impacts of such physical risks.

Transition risks Policy and legal risks

Scenario Orderly Disorderly Hot House World

NGFS Net Zero 2050 NGFS Fragmented World NGFS Current Policies

Description

The scenarios provided by the NGFS use three different models to provide estimates of uncertainty. In the medium term,

the amount of CO

emissions under the ‘Current Policies’ scenario differs considerably. There are also different estimates

for when net zero CO

emissions must be reached in order to limit warming to 1.5°C. A significant shift towards emissions-

neutral alternatives in all sectors is needed to replace fossil fuels and carbon-intensive production and consumption. In

order to facilitate this transition, policymakers will increase the implicit cost of GHG emissions. In the meantime, climate

policies may result in higher costs due to the prolonged development and deployment of alternative technologies.

According to the NGFS scenarios, higher carbon emissions imply strict policies, and a carbon price of around $160 per

tonne would be needed by the end of the decade to encourage a transition to net zero by 2050. Moreover, governments

are enforcing strict policies which bring different costs and benefits.

Risk rating

by NGFS

Medium High Low

Financial

impact/risk

to Group

Low Low Low

Time horizon

Medium and long term Long term Medium and long term

Impact

This scenario assumes a decline

in total global GHG emissions with

advanced economies leading the

way, met through a combination of

rapid deployment of clean energy

technologies, energy efficiency

and demand reduction. As carbon

removal costs are predicted to

increase to accelerate the transition

to a net zero economy, the Group

may be at risk of achieving its

ambition to be net zero by 2040 due

to the rise of cost in carbon removal

strategies. Further, the ongoing

implementation of the carbon pricing

described above might result in

increased costs associated with our

operations and travel and transport.

Both these could contribute to

decreasing the Group’s revenues.

This scenario assumes delayed and

divergent climate policy ambition

globally, leading to elevated

transition risks in some countries and

high physical risks everywhere due

to the overall ineffectiveness of the

transition. In these circumstances,

carbon prices and amounts of

investment are different across

geographies, with some countries’

ambitious efforts being undermined

by limited action in some others.

At the same time, climate policies

differ significantly across sectors;

the transport and buildings sectors

experience carbon prices three times

as high as the rest of the economy.

The combination of these misaligned

efforts across countries and sectors

leads to higher transition risks which

could contribute to decreasing the

Group’s revenues.

In this scenario, we would not see

the impact of transition risks, but

we would expect to see the impact

of physical risk in the long term. As

discussed above, we would expect an

adverse overall economic outcome,

but do not consider it possible to

accurately quantify these impacts.

1 High - A loss impacting the profit and loss statement by more than 20% and/or by more than £20m.

Medium - A loss impacting the profit and loss statement by between 10% and 20% and/or between £5m and £20m.

Low - A loss impacting the profit and loss statement by between 5% and 10% and/or by between £1m and £5m.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Sustainability continued

Climate-related financial report continued

4. The impact of climate-related risks and opportunities on our businesses, strategy

and financial planning (section 414CB(2A)(e)) continued

Transition risks Reputation risks

Scenario Orderly Disorderly Hot House World

NGFS Net Zero 2050 NGFS Fragmented World NGFS Current Policies

Description

Reaching net zero by 2050 is the core driver of the transition risks that the NGFS describes in its scenarios. Firstly, NGFS

explains that decarbonising energy is the fundamental key of the transition to a net zero carbon economy. This will

necessitate the switching to alternative sources of energy such as solar, wind or nuclear, as well as the deployment

of carbon, capture and storage (CCS). In addition, deployment of Carbon Dioxide Removal (CDR) technologies will

compensate for the GHG emissions by removing carbon from the atmosphere.

Risk rating

by NGFS

Low Medium Medium

Financial

impact/risk

to Group

Low Low Low

Time horizon

Short, medium and long term Medium and long term Medium and long term

Impact

As the Group is committed to

reaching net zero by 2040 by

equalising or lessening the emissions

that are emitted into the atmosphere,

there could be a potential risk

imposed to the Group’s reputation

and costs in the short, medium

and long term. Damage to our

reputation from poor environmental

performance, including the failure

to meet our climate-related goals,

could impact customer or investor

demand or result in a loss of existing

talent or the inability to attract new

talent. Failure of the Group to deliver

or sufficiently drive change through

our net zero by 2040 target in this

scenario could result in these risks

being realised.

In these scenarios, as mentioned above, it is expected that global climate

policy ambition would be divergent and/or delayed. This could lead to

negative media attention or changes in consumer, colleague, investor and

other stakeholder preferences which could contribute to reducing the Group’s

revenue and/or market share. However, it is anticipated that these impacts

could take longer than the NGFS Net Zero 2050 scenario to be realised or could

be generated by specific stakeholders or in specific locations (e.g. within the

Group’s supply chain).

1 High - A loss impacting the profit and loss statement by more than 20% and/or by more than £20m.

Medium - A loss impacting the profit and loss statement by between 10% and 20% and/or between £5m and £20m.

Low - A loss impacting the profit and loss statement by between 5% and 10% and/or by between £1m and £5m.

Mitigation:

The actions the Group will adopt in order to mitigate against these transition risks and ensure that our strategy responds to any

potential opportunities include:

– continuing our net zero target by 2040 journey by continuing to adopt sustainable energy sources, implement energy

efficiency measures and engage with our suppliers to encourage them to reduce their own carbon emissions;

– delivering on our SBTi-approved carbon reduction targets;

– continuing to engage with our customers on the benefits of using our vehicle finance products to purchase BEVs/hybrid

vehicles. At the same time, engaging with our stakeholders to gain further insight into the used BEV market and the current

state of the charging infrastructure in the UK;

– continuing to monitor customer default rates due to increased costs (e.g. as a result of energy cost increases); and

– ensuring that the remuneration of the executive directors is partly linked to our progress in meeting the Group’s

climate-related goals and targets.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Climate-related opportunities

We continue to explore opportunities that will enable us to introduce new products to our customers which accommodate their

needs and meets emerging climate-related policies (e.g. to enable our vehicle finance customers to purchase battery electric

vehicles (BEVs) or hybrid electric vehicles). However, the affordability of BEVs continues to be the main barrier to ownership for

the Group’s vehicle finance customers. The average loan amount for our vehicle finance customers stood at £8,525 in 2023.

BEVs are still more expensive than their petrol and diesel counterparts, and there is an insufficient range of affordable BEVs on

the market. Of the 111,671 ‘live’ customers that are served by our vehicle finance business, 274 have purchased a BEV car, and 16

a BEV light commercial vehicle. Take-up of BEVs is also influenced by the ability of our customers to access a reliable charging

infrastructure. According to a House of Lords Committee report on the current state of the BEV industry, up to 40% of households

do not have off-street parking at home and thus are entirely reliant on public charging. The availability of public charge points

across the UK is highly variable, and the Government has missed its targets for motorway charge points. This means that many

consumers face considerable anxiety around whether, and where, they will be able to charge BEVs reliably, affordably, and

quickly, and around the battery range of second-hand cars.

We also continue to identify opportunities to introduce energy efficiency initiatives across the Group. We continue to do this

through the environmental management system (EMS) we have in place at our Bradford head office, and premises in London,

Chatham, Kent and Petersfield, Hampshire.

The resilience of our strategy, taking into account different

climate-related scenarios (section 414CB(2A)(f))

Our sustainability strategy focuses on our customers, colleagues, suppliers, the communities we serve and the environment,

and supports us to deliver strong Company performance. This means that climate change and how our business and key

stakeholders respond and adapt to it is an important part of our sustainability strategy.

The analyses we have undertaken to date, and which are set out above, show that the policy and legal risks, and reputation

risks associated with the transition to a low-carbon economy, as well as the physical risks associated with climate change are

most material to our business activities and key stakeholders and therefore have potential to impact the Group in the short,

medium and long term. While our internal processes determined that these risks are not likely to have a material impact on

our business over our stated time horizons, we nonetheless maintain robust mitigation strategies to improve our resilience to

the impacts of climate change. The NGFS Net Zero 2050 scenario would have the biggest impact on the Group in the short to

medium term before any mitigating actions were considered or taken into account. This is primarily due to the potential for

increases in the price of carbon to have an impact on the cost of our energy use, business and other operating costs. The NGFS

Fragmented World scenario reveals higher levels of disruption as a result of increases in extreme weather events and other

natural disasters compared with the NGFS Net Zero 2050 scenario. However, the actions and an outline transition plan that are

set out above, will enable the Group to address any of the concerns associated with these scenarios as they will contribute to

reducing our exposure to both transition and physical risks. Under the NGFS Current Policies scenario, despite there being much

uncertainty about the impacts of climate change, we can expect our business and our stakeholders to be impacted by more

extreme physical risks in the longer term, as well as lack of policies to support the transition to a low-carbon economy. In these

circumstances, the Group would have to ensure that adequate measures were in place to manage and address the physical

risks and their potential to impact our operations, customers and other stakeholders.

We continue to use climate modelling and scenario analysis to ensure that our strategy of understanding and assessing the

risks associated with climate change and the impact on Vanquis Banking Group’s financial results continues to evolve so that we

can further improve our resilience and respond to any related opportunities.

In preparing the Group’s financial statements (see page 124 to 128), we have considered the impact of the results of our scenario

analysis and climate-related risks on our financial performance, and while the effects of climate change represent a source of

uncertainty, there has not been a material impact on our financial judgements and estimates due to the physical and transition

climate-related risks in the short to medium term.

Our processes for identifying and assessing climate-related risks

(section 414CB(2A)(b))

We have an established Group Risk Management Framework to identify, assess, mitigate and monitor the climate-related risks

and opportunities we face as a business. As with all principal risks, and any sub-category risks, this Framework sets out the high-

level policy requirements and control principles that are in place and those responsible for managing both the overall risk and

the relevant mitigating controls (see pages 19 to 24 for more information). In the Group’s newly agreed risk classifications, climate

risk sits under strategic performance principal risk 12 as a sub-category (12.3). This is because the Group’s long-term success

is dependent on the sustainability of its operations and business models, and the resilience of its supply chain. By integrating

climate risk within our Framework, it is possible to assess how it interacts with other material principal risks, including those that

relate to credit, capital, operations, legal and governance matters and conduct and regulations. All risks are monitored and

reviewed throughout the course of the year to identify changes that could impact the risk profile.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Climate-related financial report continued

Our processes for managing climate-related risks

(section 414CB(2A)(b))

The Group’s cross-functional CRC supports the embedding of the risk management approach for identifying and assessing

climate-related risks and mitigating controls. The CRC continues to recommend that a ‘risk cautious’ appetite for exposure

to climate risk is adopted and supports the implementation of a control framework that prevents significant customer or

stakeholder detriment, regulatory non-compliance and/or reputational damage as a result of climate change. By undertaking

scenario analysis, the CRC has been able to quantify climate-related risks that are material to Vanquis Banking Group and carry

out an initial evaluation of their size, scope and impact. This has enabled the CRC to better understand and prioritise any risks

and assess the resilience of the Group’s strategy and operations to potential climate-related impacts. The Group’s approach to

the ongoing management of climate-related risks is supported by a number of processes. These include: monthly risk appetite

reporting using metrics which to relate carbon pricing, customer default rates, operational impacts associated with extreme

weather events and the progress being made in relation to our net zero target, and a risk control self-assessment (RCSA) process

for climate risk which enables us to identify, analyse and understand the related controls that are in place, and to evaluate these

against our risk appetite and the desired risk levels, to determine whether any improvements need to be made. Regular updates

are also provided to the Board’s Risk Committee on the progress made in terms of delivering mitigating activities which relate to

the Group’s climate risk.

How our processes for identifying, assessing and managing

climate-related risks are integrated into our overall approach

to risk management (section 414CB(2A)(c))

Climate-related risks and opportunities are integrated within our Enterprise Risk Management Framework and are continually

monitored. This enables us to continuously evaluate the significance of our risks based on their likelihood and impact and to

prioritise their management accordingly. Through this framework, we also monitor the environment for new and emerging risks,

and to keep up to date with any evolving regulatory requirements. We remain committed to understanding and assessing the

risks associated with climate change and their impact on the Group’s financial results, and will continue to update our approach

to scenario analysis as more business-related, economic and climate data becomes available.

Metrics and targets

The Group has a number of metrics and targets in place to monitor and manage the most significant risks and opportunities

arising from climate change. These are set out on page 28 and are linked to the risks tested as part of the scenario analysis

and the opportunities identified by the Group. A Group-wide view of our energy consumption and greenhouse gas emissions

data can be found below. In addition, we have set SBTi-approved carbon reduction targets in line with the latest climate

science recommendations necessary to meet the goals of the Paris Agreement and limit global warming to 1.5°C, well

below 2°C. Vanquis Banking Group’s GHG emissions data has been subject to a limited assurance by SLR Consulting Limited

in accordance with the ISAE 3000 Assurance Standard. A full assurance statement is available on the Group’s website at

www.vanquisbankinggroup.com.

The metrics used to assess climate-related risks and opportunities

in line with our strategy and risk management process

(section 414CB(2A)(h))

Our GHG emissions reduction targets have been updated this year to align with the net zero definition of the SBTi. We submitted

targets to reduce our scope 1 and 2 GHG emissions and to engage with our suppliers to reduce our scope 3, category 1 GHG

emissions to the SBTi in 2023 and these were approved on 30 January 2024.

Our transition plan – a path to net zero by 2040

To deliver on our net zero by 2040 ambition, we have developed an outline plan that will enable us to transition to a low-carbon

economy and deliver in line with the science-based carbon reduction targets.

What has been delivered to date?

How will we reduce our scope 1 and 2

GHG emissions?

How will we reduce our scope 3

GHG emissions?

A reduction in our scope 1 and 2

emissions by 21%.

Movement to 100% renewable electricity

purchased.

A reduction in some of scope 3 emissions

by reducing the emissions associated with

well-to-tank and waste generation.

Reduce absolute GHG emissions via the

introduction of energy efficiency measures

and use of alternative fuels.

Implement behavioural change measures.

Monitor technological developments for

low-carbon solutions.

Work across our supply chain to support

decarbonisation.

Reduce absolute GHG emissions associated

with business travel, colleague commuting,

water use and waste generation.

Continuously monitor developments in the

battery electric vehicle market.

Sustainability continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Our scope 1, 2 and 3 GHG emissions and related risks

The Group reports this information in accordance with the UK Government’s Streamlined Energy and Carbon Reporting (SECR)

policy that has been implemented through the Companies (Directors’ Report) and Limited Liability Partnership (Energy and

Carbon Report) Regulations 2018. In doing so, we follow the GHG Protocol Corporate Accounting and Reporting Standard to

calculate the scope 1, 2 and 3 emissions that are material to our operations and business activities. We employ a financial

control approach to account for our GHG emissions and and have used the UK Government Conversion Factors for Company

Reporting (28 June 2023) published by the Department for Energy Security and Net Zero and Department for Business, Energy

and Industrial Strategy.

2023 2022

Scope 1 GHG emissions (CO

Gas use 186 142

Diesel and petrol use 15 13

Scope 2 GHG emissions (CO

Electricity use (market-based emissions) 556 453

Electricity use (location-based emissions) 604 862

Scope 3 GHG emissions (CO

Scope 3 associated ‘well-to-tank’ emissions 81 287

Scope 3 category 1 – purchased goods and services

20,210 16,420

Scope 3 category 3 – fuel and energy-related activities (not included in scope 1 and 2) 233 332

Scope 3 category 5 – waste generated in operations

10 16

Scope 3 category 6 – business travel 688 214

Scope 3 category 7 – employee commuting

9,766 2,389

Scope 3 category 13 – downstream leased assets (market based)

0 0

Scope 3 category 15 – investments

303,846 227,524

Total energy consumed (kilowatt hours) 4,389,415 6,013,939

Scope 1 and 2 (and associated scope 3) emissions intensity ratio (kg of CO

e/per customer) 0.59 0.79

1 The market-based emission factors from two suppliers are in CO

and not CO

e (i.e. do not include non-CO

emissions); however, the variance between CO

and

e is considered to not be material. The supplier emissions factors used in market-based method covers the period 1st April 2022 – 31st March 2023 only.

When calculating the suppliers’ carbon emissions using the spend-based method, we used the UK Government Department for Business, Energy & Industrial

Strategy which was published in June 2023 and present data from 2019. However, due to inflation, an inflation rate of £1.23 has been implemented to ensure

accuracy and transparency.

3 In the absence of water treatment volume data for some offices, we have assumed that the water treatment volume is the same as the water supply

volume; this approach results in an overestimate of the water treatment volumes.

Employee Commuting to Work emissions (tCO

e) are based on the 2023 employee survey. The significant increase in employee commuting emissions is due

to the change in calculations approach. This year environmental factors provided from the UK government have been applied.

5 The market-based method has been used to calculate the GHG emissions associated with an office that is leased by the Group where 100% renewable

electricity is used.

The emissions from the vehicles that are financed by the Group are based on the number of live vehicle financial agreements for the 2023 reporting period. The vehicle

emission factors are in CO

and not CO

e (i.e. do not include non-CO

emissions); however, the variance between CO

and CO

e is not considered to be material.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Sustainability continued

Climate-related financial report continued

The targets used to manage climate-related risks and opportunities

and performance against targets (section 414CB(2A)(g))

Risk/opportunity-

related category

Aspect Metric Target(s)

Policy and legal

GHG emissions

Scope 1, 2 and 3 GHG emissions reporting

and reductions which relate to energy

and water use, business travel and waste

management.

See our environmental KPI results and

GHG emissions table on page 27 of this

report and the ESG data table on the

Group’s website.

Science-based

targets

(SBTi approved)

Carbon reduction. Reduce scopes 1 and 2 GHG emissions by

39.9% by 2028 from a 2021 base year.

78% of suppliers by spend covering

purchased goods and services will have

science-based targets by 2027.

Energy source

Renewable energy

Renewable energy use. Continue to use 100% renewable electricity

across our business premises by

December 2024.

Market

opportunities

Customer

engagement

Customer sentiment and perception

regarding their ability to transition to a low-

carbon economy as well as the Group’s ESG

performance.

Monitor the number of Group customers

using our vehicle finance products to

purchase BEVs and hybrid electric vehicles.

Monitor customer attitudes and

perceptions towards buying BEVs.

Engage with policymakers to support the

uptake of BEVs by consumers in the mid-

cost and near-prime parts of the consumer

credit market.

Reputation

Supplier

due diligence

Monitor supply chain activities in line

with the Group’s ESG commitments

and Corporate Environmental

Management Policy.

See SBTi-approved target above. Also,

engage with 100% of materially significant

suppliers to determine their exposure to

climate risks.

Investor relations

Investor sentiment and perception

regarding the Group’s ESG performance.

Continue to participate in CDP, the

FTSE4Good Index, MSCI, and the S&P Global

Corporate Sustainability Assessment.

Policy/liability

Executive

remuneration

The remuneration of the executive

directors is partly linked to our progress in

meeting the Group’s climate-related goals

and targets.

Please refer to the Directors’ Remuneration

Report on pages 93 to 115.

Physical risks

Weather patterns

Operational impacts caused by

severe weather events and changes in

weather patterns.

Monitor increases in operating costs (e.g.

associated with increased insurance

premiums and potential for reduced

availability of insurance on assets in ‘high-

risk’ locations).

1 These targets are not dependent upon any UK Government policy initiatives that support the reduction of GHG emissions over time.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Vanquis credit card customer

Age: 27

Lives with: Partner and three-year-old boy.

Lives in: Three-bedroom semi-detached home in New

Path, Annan.

Job role: Mental Health Nurse working for Dumfries and

Galloway NHS at the local drug and alcohol service.

Likes: Spending time with family and being a mum,

meditation and watching TV.

Perceives credit: As being a necessary back up,

a just in case.

“I’ve lived here all my life, as have my parents and their

grandparents. I’m really close with my family and our

cousins live just a couple of doors down from us.

Everyone is within walking distance, which is nice. I work

part time three days a week and it suits our lifestyle. As a

Mental Health Nurse, I have a caseload and my day-to-

day includes things like treatment reviews, supporting

people suffering from substance abuse. I do home visits

as well as run clinics, but it’s full-on work. There are lots

of people in crisis situations but in my role I get to help

them, care for them and help them learn to care for

themselves. I enjoy helping people and in this job I can

engage with someone and support them to improve

their lives.

Me working three days is the balance we need at the

moment. I get to spend more time with my son, and it

reduces the amount we have to spend on child care

which was around £300 last month. I’m so blessed to

have family close by to help on the other days because

otherwise I wouldn’t have been able to go back to work.

But my little boy gets his free hours soon, so that’ll be

a big help.

It can be difficult managing family life. Occupational

health is helping me get to work and back at the moment

whilst I’m waiting for my licence back following some

seizures I’d had. They’re all under control now, so it’s just

a waiting game. But this has been making things a bit

trickier for us.

When I get my licence back, I’ll be able to take us out and

about on some ‘free’ trips and just get out the house a

bit more. It also means I can spend more time with my

friends – we’ve all got children about the same age, so

it’s nice to go and do things with them on my days off.

I became a Vanquis Credit Card customer about a year

ago. I was initially looking for a balance transfer and

Vanquis were offering six months with no interest. I didn’t

particularly plan on using it too much, but I have used it

on the run up to Christmas and birthdays – and to make

life more manageable.“

Meet

Beth

“ Vanquis has been the backup

we’ve needed when our wages

have run out, but we can’t do

without – and there’s still a week

‘till payday.”

Our customer case studies

Strategic Report

Our customer case studies continued

Vehicle finance customer

Age: 27

Drives: Red BMW 116D with a private plate.

Length of agreement with Moneybarn: Three years

and counting.

Lives with: Mum Paula, Dad, three dogs and two kittens

in Selby with a very small garden that has been taken

over by the dogs.

Lives in: A three-bedroom semi-detached council house.

Job role: Swimming teacher who works term times at the

local leisure centre.

Likes: Family time, gym time, road trips, Spotify and

watching The Vampire Diaries.

Perceives credit: As something everyone has (or has

had) an issue with.

“When I left school, I went on to complete a childcare

course at college and I started working as a Lifeguard. My

brother and cousin both started as Lifeguards, too. But

I’m good with kids and wanted to find a role which meant

I could work more directly with children. That’s when I

started my training to become a swimming teacher. I

teach the duckling stages, which is from babies up to

age three and also stages 1-4 for the over four-year-

olds – I do both groups and one-to-one lessons. It’s my

absolute dream job and I’m being trusted to do more

managerial tasks, too, now.

When I’m not at work, I just like to chill. I spend a lot of

time at the gym with my friend, sitting in my comfy chair

listening to Spotify or maybe watching The Vampire

Diaries. My mum is my best friend, we spend a lot of

time together just hanging out – we do pretty much

everything together.

Everyone suffers with bad credit, don’t they? From

making mistakes in the past with past relationships

and things like that – it’s so common. Everyone I know

struggles to get credit.

So when I came to needing a bigger car I went to Walkers,

the garage on the corner, and explained that I’d been

refused finance before.

I did have a Corsa but when me and my boyfriend

started to get more serious, I had to think about the

future and fitting a car seat in as well as a push chair

for his three-year-old boy, AJ. I was needing a bigger

boot and back seat area. The guy at the garage

recommended Moneybarn and a bigger car to me.

I’ve wanted a BMW ever since I was young. Then I got my

private plate – It looks like Niffa, like my other nickname

– as in Jenn-NIFFA!

Moneybarn has been brilliant. They’ve helped me get

the car of my dreams that meets my needs and my

credit rating has improved. I’d still look to use them

again because the customer service is so good, plus

I’ve recommended them to some people.

Whilst I do use my car for work, it mainly gets used for

trips at weekends and out of term time. Most recently

we’ve booked to go see the Blackpool lights and we’ve

got a hot tub holiday coming up, too.”

Meet

Jenn

“ They’ve helped me get the car

of my dreams and even my

credit rating has improved.”

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Credit card and loan customer

Age: 41

Lives with: Partner and three children (aged 1, 7 and 12)

in Beeston, Nottingham.

Lives in: Three-bedroom semi-detached house in which

her and her partner have shared ownership. It’s the first

home either of them has owned.

Job role: Refugee Worker (Project Manager/Bid Writer),

Town Councillor (as of May ’23) and Founder of the

Broxtowe Community Projects charity.

Likes: Coffee and quizzes with friends and visiting theme

parks. Ellie’s children’s hobbies include climbing, archery

and roller skating.

Perceives credit: As something she’ll only use if it’s

absolutely necessary.

“I came to University in Nottingham and never left. I lived

in Beeston and found work here soon after leaving uni,

and since then I’ve built up my roles in the community

around my work with the church. In my Refugee Worker

role, I’m writing bids and trying to find money to help

the people in the community. There are many refugees

situated in a hotel near to the church and through the

charity I founded in the pandemic, Broxtowe Community

Projects, I’ve been running a local food bank for quite

some time. But I’ve noticed the need is becoming

greater and greater. That’s why I’m looking at setting up

a social supermarket for this community. I’ve found a

space and members will pay £3.50 a week for a value

of approximately £20 worth of food. We’ve also been

running English lessons and we have around 100 people

coming to learn English every week, rising to around 200

students when we run event days.

I first came across Vanquis through ClearScore a couple

of years ago and I thought that a credit card could come

in handy for when I was really stretched. Normally my

credit cards live in a box in the house.

I don’t spend on them casually, it’s always an intentional,

considered, thought-through spend. I like to work out

when I’m able to pay off the credit that I’ve used –

I don’t like revolving debt or even the idea of it. My card

is used always with intent. We’re not poor but we’re not

rich either, so I think it’s just smart to keep a close eye

on finances.

We moved house in February this year. This is the first

home I’ve owned. It’s a shared ownership, so we’ve

bought our share and the rent we’re paying is minimal.

It’s the move that we’ve been using credit for. We’ve

always lived in rented accommodation, so we had to buy

everything – absolutely everything! I initially used my

credit card to pay for the carpets, that was around £400.

But we knew we’d need quite a bit more.

Because I already had the card with Vanquis, we looked

to them to take out a bigger loan. It just works out less

expensive overall that way. My Vanquis loan has paid for

our privacy and our ability to function in our new home.

We’ve bought blinds, the right sized curtains, curtain

poles, loo roll holders. All the things you take for granted

in a rental, we have to pay for all at once and make sure

the children had everything they need to be comfortable

and live life practically.

We spent a bit of the loan on tidying up some smaller

debts but the rest has gone on life’s essentials. The card

and the loan has helped us so much – the move just

wouldn’t have been possible without Vanquis.”

Meet

Ellie

“ Our house move wouldn’t

have been possible

without Vanquis.”

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Financial review

A business in transition

Income statement

2023

£m

2022

£m

Interest income 556.0 491.5

Interest expense (113.4) (58.8)

Net interest income 442.6 432.7

Fee and commission income 44.2 47.0

Fee and commission expense (1.7) (2.8)

Net fee and commission income 42.5 44.2

Other income 3.7 3.8

Total income 488.8 480.7

Impairment charges (166.1) (66.1)

Risk-adjusted income 322.7 414.6

Operating costs (327.1) (304.5)

Statutory (loss)/profit before taxation from

continuing operations (4.4) 110.1

Tax charge for continuing operations (1.6) (27.8)

Statutory (loss)/profit after taxation

from continuing operations (6.0) 82.3

Loss after taxation from discontinued

operations — (4.9)

Statutory (loss)/profit for the year

attributable to equity shareholders (6.0) 77.4

Add back:

Tax charge 1.6 27.8

Amortisation of acquisition intangibles 7.9 7.5

Exceptional items 21.4 9.0

Loss after taxation from discontinued

operations — 4.9

Adjusted profit before tax 24.9 126.6

Certain alternative performance measures (APMs) have been

used in this report. See pages 189 to 191 for an explanation of

their relevance as well as their definition.

To enhance transparency and understanding of our financial

performance, the Group has taken the decision in the

current year to enhance the presentation of our financial

performance to initially focus on the statutory income

statement with a reconciliation to adjusted profit before

tax, which is a primary measure to assess our financial

performance. All periods presented have been retrospectively

re-presented. This change does not constitute a change in

accounting policy and there is no impact on recognition,

measurement or profit and loss in any period presented in the

financial statements.

In line with these changes, the Group has rationalised its use

of APMs, which are summarised on pages 189 to 191 including

an explanation of their relevance as well as their definition.

“Afteradisappointingfirsthalf

of 2023, the Group’s full-year

financialperformancewasin

line with expectations after

taking swift action in the second

half of 2023 to manage volume

growth, stabilise margin and

reduce costs. Our capital,

liquidity and funding positions

remain strong, as we look to

grow our business in 2024.”

Dave Watts

Chief Financial Officer

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Profit/(loss) before tax

The Group’s statutory loss before tax, including amortisation

of acquisition intangibles and exceptional items, was £4.4m;

prior year profit before tax was £110.1m, or £99.4m including

the discontinued consumer credit division (CCD).

The Group reported a lower adjusted profit before tax of £24.9m

(2022: £126.6m). Total income of £488.8m (2022: £480.7m) was

£8.1m higher, driven by higher receivables across all product

lines and repricing initiatives in cards, offset by higher

funding costs. Impairments of £166.1m (2022: £66.1m) reflect

higher new originations, comparatively reduced benefits of

enhancements in IFRS 9 models and post-model releases

than in 2022, lower debt sale profits, and lower revaluation of

the post charge-off asset. The back book underlying asset

quality remained broadly stable. Higher costs of £327.1m

(2022: £304.5m) from inflationary headwinds, elevated

customer compensation claims from claims management

companies and higher exceptional costs. Exceptional costs

of £21.4m were recognised in 2023 (2022: £9.0m), including

transformation costs of £17.0m (2022: £5.3m), comprising

redundancy and outsourcing (£9.4m), property exit costs

(£4.1m) and strategic consultancy (£3.5m).

Income

Net interest income increased by 2% to £442.6m (2022: £432.7m)

with interest income rising 13% driven by receivables growth

in the first three quarters of 2023. The Group’s funding cost

increased from £58.8m in 2022 to £113.4m in 2023, as market

savings rates on retail deposits increased from their historically

low levels as the UK bank base rate has moved upwards.

The Group’s NIM, net interest income as a percentage of average

gross receivables, decreased by 2.2% from 21.2% in 2022 to 19.0%

in 2023, reflecting the higher funding costs and lower asset

yields in both vehicle finance and personal loans. Management

actions, including repricing, taken during the second half of 2023

increased 4Q23 NIM by 0.2% relative to 3Q23.

Fee and commission income reduced 4% to £42.5m (2022:

£44.2m). The Repayment Option Plan (ROP) has been

discontinued; excluding ROP, underlying fee and commission

income increased £2.8m year-on-year.

Impairment/cost of risk

Impairments have benefited from a release of provisions no

longer required in credit cards and vehicle finance, arising

from ongoing IFRS 9 model refinements (£57.7m in 2023), and

the full release of the cost of living post-model adjustment

(£10.8m). The level of releases in 2023 (£74.5m) were lower than

releases in 2022 (£94.1m), contributing to a higher impairment

charge this year.

The macroeconomic environment, the minimal impact of

the cost of living crisis, and refreshed model parameters

reflecting the refocus onto lower-risk market segments, are

the predominant reasons for release of provision. Underlying

asset quality remained high and delinquency trends

remained stable.

The Group’s cost of risk, defined as impairment charges as a

percentage of average gross receivables, has increased from

3.2% in 2022 to 7.1% in 2023.

Risk-adjusted net interest margin, defined as risk-adjusted net

interest income as a percentage of average gross receivables,

has decreased from 20.3% in 2022 to 13.9% in 2023 as a result of

higher impairment charges and higher funding costs.

The Group’s coverage ratio has reduced from 24% at

December 2022 to 21% at December 2023, reflecting the

current nature of the macroeconomic environment,

the release of impairment provision no longer required

predominantly due to IFRS 9 model refinement, and the

stable underlying credit quality of our portfolios.

Costs (adjusted)

Excluding amortisation of acquisition intangibles and

exceptional items described above, adjusted operating

costs increased 3% to £297.8m (2022: £288.0m). Proactive

management actions taken during the second half of 2023

has in part mitigated cost headwinds. These headwinds

include inflation and heightened (speculative) customer

complaints from claims management companies. The Group

has continued investment in the diversification of customer

propositions and the IT investment in the Gateway platform.

Cost management is being embedded as a core discipline

throughout the Group, and transformation cost savings are on

track to meet £60m savings target as advised at 3Q23 with full

benefit expected in 2024.

Tax

The tax charge of £1.6m (2022: £27.8m) on the loss before

tax (profit in 2022) reflects the mainstream corporation tax

rate of 23.5% (2022: 19.0%) on the Group’s (loss)/profit before

tax, exceptional items and amortisation of acquisition

intangibles, generating a tax charge of £7.7m (2022: £29.4m),

a tax credit of £4.3m (2022: £0.2m), and a tax credit of £1.8m

(2022: £1.4m) respectively.

The tax charge arises principally from adverse impacts of

(a) non-deductible expenses of £0.9m (2022: £0.9m), (b) prior

year adjustments of £1.5m (2022: beneficial impact £3.6m)

as a result of write offs of deferred tax assets which are no

longer supportable and lower than anticipated share prices

on vesting of share awards offset in 2022 by the beneficial

impact of agreeing historic tax liabilities; (c) revaluing

deferred tax balances in credit cards and loans of £1.3m (2022:

£3.2m) to reflect from 1 April 2023 the reduction in the bank

corporation tax surcharge rate from 8% to 3% and the increase

in the threshold below which banking profits are not subject

to surcharge from £25m to £100m; (d) net of the beneficial

impact of £1.4m (2022: £nil) from using brought forward capital

losses to offset capital gains. The tax charge for 2022 also

reflected the adverse impact of the bank corporation tax

surcharge of £8.4m and a net beneficial impact of £2.3m from

transactions with discontinued operations including payment

for losses at a discounted price.

Adjusted return on tangible equity (ROTE)

The Group’s adjusted return on tangible equity (ROTE) has

decreased from 21.8% in 2022 to 3.2% in 2023, reflecting the

lower adjusted PBT in 2023.

Earnings per share (EPS)

With the £83.4m decrease in the Group’s profit after tax, the

basic earnings per share has decreased from 32.8p in 2022

to 2.4p loss per share in 2023. The adjusted basic earnings

per share has decreased from 38.7p per share in 2022 to

6.8p in 2023.

Dividend policy

The Board proposes a final dividend of 1.0p per share for 2023,

subject to final regulatory approvals. The Group also signals

its intention to pay a dividend of up to 1.0p per share for 2024,

subject to Board and regulatory approvals, with measured

progression in 2025. From 2026, following full implementation

of the new strategy, the Board will revisit the capital allocation

policy and reset the level of dividend from which to maintain a

progressive policy thereafter.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Financial review continued

Summarised balance sheet

2023

£m

2022

£m

Assets

Cash and balances at central banks 743.3 464.9

Amounts receivable from customers

2,171.9 1,905.4

Pension asset 38.2 30.7

Goodwill and other intangibles 146.8 134.5

Other assets 108.5 127.8

Discontinued operations — —

3,208.7 2,663.3

Liabilities

Retail deposits 1,950.5 1,100.6

Bank and other borrowings

582.5 815.4

Trade and other payables 44.1 62.6

Other liabilities 48.5 69.8

Discontinued operations — 0.2

2,625.6 2,048.6

1 Amounts receivable from customers in 2023 are presented net of £3.2m

(2022: £7.9m) fair value adjustment for portfolio hedged risk. Underlying

receivables from customers are £2,175.1m (2022: £1,913.3m).

2 Bank and other borrowings in 2023 are presented net of £1.0m (2022:

£4.6m) fair value adjustment for hedged risk. Underlying bank and other

borrowings are £583.5m (2022: £820.0m).

Assets have increased by 21% to £3,209m driven by growth

in receivables, and higher balances placed with the Bank of

England, driven by the surplus deposits raised from customers.

Receivables from customers increased by £266.5m (14.0%)

in the year from £1,905.4m in 2022 to £2,171.9m in 2023.

Strong growth in the first half of 2023 was partially offset

by management action to moderate growth in the second

half of the year to enhance the capital position.

Liabilities have increased by 28% to £2,626m as retail deposits

increased by 77% following management actions to promote

retail savings products offered by the Group.

Liquidity and funding

The Group’s liquidity is almost entirely held in the Bank of

England reserve account (2023: £703.3m, 2022: £478.2m).

This represents a significant level of excess liquidity and

a liquidity coverage ratio of 1,263% (2022: 1,139%).

At 31 December 2023, the bank had retail deposit funding

of £1,950.5m (2022: £1,100.6m), and was able to deliver the

required funding base at an attractive cost compared to

wholesale alternatives, and the Group is now significantly

funded by retail deposits (84% of total funding). All outstanding

senior unsecured wholesale funding has now been extinguished

for cost efficiency, although the Group maintains its access

to the wholesale markets via its £2bn Euro Medium-Term Note

programme updated in 2023. Ongoing funding diversification

is provided by modest levels of private securitisation and

Bank of England funding collateralised by both vehicle finance

and credit card assets, together with further retail funding

capabilities developed through 2023 to include notice

accounts and, imminently, easy access and ISAs. The Group’s

cost of funds rose from 2.8% to 4.4% but remains below market

benchmark interest rates, reflecting changes to the Group’s

funding mix post-waiver, and the stable contractual term

duration of the Group’s funding.

Capital

The Group maintains a robust capital position with CET1

ratio of 20.5% (2022: 26.4%) and a total capital ratio of 30.6%

(2022: 37.5%). This is within the Group’s updated CET1 target of

19.5% to 20.5% and represents a surplus of £142.5m (Tier 1) and

£283.4m (total capital) above the Group’s total capital

requirement and regulatory combined buffers. As permitted,

the Group elected to phase in the impact of adopting IFRS 9 over

a five-year period, and has now fully unwound the transition

adjustment as the transition period ended on 1 January 2023.

The overall reduction in the capital ratio in 2023 reflects mainly

the scheduled unwind of the final IFRS 9 adjustment on 1

January 2023, together with additional capital required to be

held for higher lending in the year.

Further information on the impact of the IFRS 9

transitional arrangements is provided in the Group’s

Pillar 3 disclosures available on the Group’s website,

www.vanquisbankinggroup.com.

The risk weighted exposures (RWE) have increased by £180m

year-on-year, primarily because of receivables growth

(£167m of RWE) in 2023.

At 31 December 2023, the Group’s leverage ratio of 16.4% (2023:

21.0%) remains comfortably above the minimum requirement.

Pillar 3 disclosures

Pillar 3 disclosure requirements are set out within the

Disclosure (CRR) part of the PRA rulebook. The consolidated

disclosures of the Group, for the 2023 financial year, will

be issued concurrently with the Annual Report and

Accounts and can be found on the Group’s website,

www.vanquisbankinggroup.com.

Summary balance sheet and financial metrics

2023

£m

2022

£m

Receivables

Gross receivables 2,351.1 2,176.6

Net receivables 2,175.1 1,913.3

Per share metrics

Adjusted EPS (p) 6.8 38.7

Dividend (p) 6.0 15.3

Selected key ratios

Adjusted ROTE 3.2% 21.8%

Asset yield 22.6% 23.7%

Cost of funds 4.4% 2.8%

Net interest margin (NIM) 19.0% 21.2%

Cost of risk 7.1% 3.2%

Risk-adjusted margin (RAM) 13.9% 20.3%

Adjusted cost: income ratio 60.9% 59.9%

Total capital ratio 30.6% 37.5%

CET1 capital ratio 20.5% 26.4%

Liquid assets (HQLA) (£m) 682.0 421.0

Excess HQLA over LCR (£m) 627.0 384.0

Dave Watts

Chief Financial Officer

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Operating review

Product trading performance

Detailed analysis of the product contribution to the trading results of the Group can be found on page 36 for credit cards,

page 37 for vehicle finance, page 38 for personal loans, and page 39 for Snoop.

Corporate centre

The corporate centre includes operations, technology & change, and support functions which collectively serve the needs of

the wider Group. Costs excluding exceptional items were £60.9m (2022: £64.4m), £3.5m lower than prior year. Excluding inflation

headwinds, costs were £7m lower than prior year, primarily due to management action taken in the second half of 2023 to

realise savings through new transformation initiatives, optimisation of resources, and process efficiency drives, as part of the

commitment to reduce Group costs by £60m.

Funding costs of £28.9m (2022: £13.1m) were higher year-on-year due to the higher interest rate environment. Interest income of

£8.4m (2022: £3.3m) was higher due to higher interest rates on higher cash reserves in the BOE reserve account.

Segment analysis – Adjusted product contribution

Cards

FY23

£m

Vehicle

finance

FY23

£m

Loans

FY23

£m

Other

FY23

£m

Corporate

centre

FY23

£m

Total

FY23

£m

Interest income 371.0 150.3 25.9 0.4 8.4 556.0

Interest expense (51.6) (28.7) (4.0) (0.2) (28.9) (113.4)

Net interest income 319.4 121.6 21.9 0.2 (20.5) 442.6

Fee and commission income 44.2 — — — — 44.2

Fee and commission expense (1.7) — — — — (1.7)

Net fee and commission income 42.5 — — — — 42.5

Other income 1.3 2.0 — 0.4 — 3.7

Total income 363.2 123.6 21.9 0.6 (20.5) 488.8

Impairment charges (130.0) (15.2) (20.9) — — (166.1)

Risk-adjusted income 233.2 108.4 1.0 0.6 (20.5) 322.7

Adjusted operating costs

(167.8) (49.5) (16.0) (3.6) (60.9) (297.8)

Adjusted PBT/(LBT) contribution 65.4 58.9 (15.0) (3.0) (81.4) 24.9

Cards

FY22

£m

Vehicle

finance

FY22

£m

Loans

FY22

£m

Other

FY22

£m

Corporate

centre

FY22

£m

Total

FY22

£m

Interest income 337.4 137.7 13.1 — 3.3 491.5

Interest expense (22.4) (22.1) (1.2) — (13.1) (58.8)

Net interest income 315.0 115.6 11.9 — (9.8) 432.7

Fee and commission income 47.0 — — — — 47.0

Fee and commission expense (2.8) — — — — (2.8)

Net fee and commission income 44.2 — — — — 44.2

Other income 0.9 2.9 — — — 3.8

Total income 360.1 118.5 11.9 — (9.8) 480.7

Impairment charges (16.8) (40.8) (8.5) — — (66.1)

Risk-adjusted income 343.3 77.7 3.4 — (9.8) 414.6

Adjusted operating costs

(164.8) (39.7) (19.1) — (64.4) (288.0)

Adjusted PBT/(LBT) contribution 178.5 38.0 (15.7) — (74.2) 126.6

1 Adjusted operating costs are stated before exceptional items.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

2023

£m

2022

£m Change

Total customer numbers ('000) 1,375.5 1,540.8 (10.7%)

New customer bookings ('000) 267.3 224.6 19.0%

Period-end receivables 1,277.7 1,181.6 8.1%

Average gross receivables

1,416.9 1,331.9 6.4%

Interest income 371.0 337.4 10.0%

Interest expense (51.6) (22.4) 130.4%

Net interest income 319.4 315.0 1.4%

Net fee and commission

income 42.5 44.2 (3.8%)

Other income 1.3 0.9 44.4%

Total income 363.2 360.1 0.9%

Impairment charges (130.0) (16.8) 673.8%

Risk adjusted income 233.2 343.3 (32.1%)

Adjusted operating costs

(167.8) (164.8) 1.8%

Adjusted PBT contribution

65.4 178.5 (63.4%)

Asset yield

24.7% 25.0% (0.3%)

Cost of risk

(9.2%) (1.3%) (7.9%)

Risk adjusted margin

16.5% 25.8% (9.3%)

1 Average of gross customer interest earning balances for the 13 months

ended 31 December.

2 Adjusted operating costs are stated before exceptional items.

3 Adjusted PBT contribution is stated as profit before tax before exceptional

costs.

4 Interest income from customer receivables for the 12 months ended 31

December as a percentage of average gross receivables.

5 Impairment charges for the 12 months ended 31 December as a

percentage of average gross receivables.

6 Total income, excluding exceptional items less impairment charge for

the 12 months ended 31 December as a percentage of average gross

receivables.

The Group’s credit card business is a leading player in

the non-prime Credit Card market. In 2023, we received

Moneyfacts Consumer Awards winner – Credit Card App of

the Year and Credit Builder Card Provider of the Year, together

with two Card and Payments Awards for ‘Best Customer

Service’ and for the ‘Best Benefits/Loyalty Scheme’.

We offer our card products to a broad spectrum of customers

but are focused particularly on providing access to a credit

card to customers who may struggle to obtain one from

a mainstream provider. We support our customers through

great service whether it be our award-winning app or the

people in our customer service teams.

In 2023, we extended our digital service to customers

by offering Apple Pay, as well as new features within the

Vanquis App including enabling customers to view their card

information and PIN, and a new way for customers to register

for Google Wallet from within the Vanquis App. Take-up of all

these new features has been strong, with over 450k of our

customers already signing up to Apple Pay.

We are committed to continuously improving our services

and support for customers, and in 2023 we sought to

embed new ways of working based on an ‘empathic design’

approach and conducted a significant piece of qualitative

research to deeply understand our customers, putting our

customers at the very heart of how we design and improve

our customer journeys.

From a service rating perspective, Vanquis credit card’s latest

2023 Institute of Customer Service (ICS) Satisfaction Index

score is 86.8 vs an all-sector average of 77.7. We aim to make

our customer experience effortless, and these results directly

demonstrate the progress we have made.

Total customer numbers decreased by 10.7% to 1,375.5k, as

of December 2023 (2022: 1,540.8k), which in part was driven

by a campaign to close dormant accounts at the end of

the year for customers who no longer needed/wanted their

Vanquis card.

New customer bookings for the year were 267.3k, up

from 224.6k in 2022, as a result of expanding the range of

promotional offers to new customers and working with

affiliates and our partner for our co-branded card (thimbl).

Financial performance

For FY23, the business reported adjusted PBT contribution of

£65.4m (2022: £178.5m) and period-end net receivables of

£1,277.7m (2022: £1,181.6m).

Throughout 2023, the management team has focused on

increasing customer engagement and new customer growth,

delivering 6.4% growth in average receivables to £1,416.9m

(2022 £1,331.9m), partly due to the uptake of digital wallet

usage amongst customers.

During the second half of the year, deliberate action was taken

to moderate growth to improve profitability by reducing the

day one impact of IFRS 9 driven expected credit losses from

new business.

Total income was up 0.9% to £363.2m (2022: £360.1m), due to net

interest income increasing by 1.4% to £319.4m (2022: £315.0m),

net fee and commission income declining by 3.8% to £42.5m

(2022: £44.2m), and other income increasing by 44.4% to £1.3m

(2022: £0.9m). Asset yield reduced from 25.0% to 24.7%.

Interest expense rose from £22.4m to £51.6m as market savings

rates and UK bank base rate moved upwards, impacting the

Group’s funding cost.

Risk adjusted income fell £110.1m to £233.2m (2022: £343.3m), as a

result of impairment charges rising to £130.0m (2022: £16.8m).

Impairments benefited from a release of provisions no longer

required arising from ongoing IFRS 9 model refinements

(£17.0m) and the full release of the cost of living post model

adjustment (£10.0m), but the level of releases in 2023 were

lower than releases in 2022. Impairment provision releases

(£92.5m) last year related to Covid-19 and model recalibration.

Underlying asset quality remained stable year-on-year. The

annualised cost of risk increased from 1.3% to 9.2%, and risk

adjusted margin fell to 16.5% (2022: 25.8%).

Adjusted operating costs increased by 1.8% to £167.8m

(2022: £164.8m), against a backdrop of significant inflation

and growth in customer acquisition.

Operating review continued

Credit cards - Continues to attract new customer bookings

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

2023

£m

2022

£m Change

Total customer numbers ('000) 111.7 100.0 11.7%

New customer bookings ('000) 50.8 42.1 20.7%

Period-end receivables 792.2 655.4 20.9%

Average gross receivables

784.7 656.6 19.5%

Interest income 150.3 137.7 9.2%

Interest expense (28.7) (22.1) 29.9%

Net interest income 121.6 115.6 5.2%

Other income 2.0 2.9 (31.0%)

Total income 123.6 118.5 4.3%

Impairment charges (15.2) (40.8) (62.7%)

Risk-adjusted income 108.4 77.7 39.5%

Adjusted operating costs

(49.5) (39.7) 24.7%

Adjusted PBT contribution

58.9 38.0 55.0%

Asset yield

19.2% 21.0% (1.8%)

Cost of risk

(1.9%) (6.2%) 4.3%

Risk adjusted margin

13.8% 11.8% 2.0%

1 Average of gross customer interest earning balances for the 13 months

ended 31 December.

2 Adjusted operating costs are stated before exceptional items.

3 Adjusted PBT contribution is stated as profit before tax before exceptional

costs.

4 Interest income from customer receivables for the 12 months ended 31

December as a percentage of average gross receivables.

5 Impairment charges for the 12 months ended 31 December as a

percentage of average gross receivables.

6 Total income, excluding exceptional items less impairment charge for

the 12 months ended 31 December as a percentage of average gross

receivables.

The Group’s vehicle finance business is a significant player in

the non-prime UK vehicle finance market, as recognised by

the numerous awards won in 2023, reflecting our hard work,

passion, and dedication.

We are experts in helping customers to access finance when

they might have struggled to get approval from mainstream

lenders. Our customers represent one in five of UK adults who

have a poor credit history but need a reliable car, motorbike,

or van to suit their lifestyle and financial situation. Our core

product is a Conditional Sale Agreement, which is a type of

vehicle finance that helps spread the cost of a used vehicle

over time, instead of paying for it all upfront. This is different

to the other types of vehicle finance, like Hire Purchase (HP)

or Personal Contract Purchase (PCP), as a Conditional Sale

Agreement has no additional fee to own the vehicle; once

the customer has made the final repayment, they legally own

the vehicle. A Conditional Sale Agreement uses a fixed APR,

so monthly payments are predictable and remain the same

for the duration of the agreement, which is typically between

36-60 months.

Good customer outcomes are important to us, and once a

customer is with us, we’re focused on helping them to achieve

the best outcomes possible, whether that’s simply paying

their finance each month until they own their used vehicle,

or for example by supporting them if they’re able to settle

their agreement early. We also understand that customers

may experience difficulties during their agreement, and

we’re focused on supporting them should that happen.

We have a range of options that allow us to help customers

get back on track, or to otherwise exit the agreement in the

‘best way possible’.

Total customer numbers grew 11.7% to 111.7k, as of December

2023 (2022: 100.0k). This has been achieved through several

initiatives that have included technology investment in

Moneybarn Direct, targeted retention of customers, and

entry into the Personal Contract Hire market.

New customer bookings for the year were 50.8k, up 20.7%

from 42.1k in 2022, as a result of strengthened distribution and

competitive pricing. The improved price competitiveness

was due to our funding costs from retail deposits being

comparatively lower than the wholesale funding relied

upon by most of our competitors.Notably, Moneybarn Direct,

our direct to customer channel, had a strong year with

approvals up 82%.

Financial performance

For FY23, vehicle finance reported an adjusted PBT contribution

of £58.9m (2022: £38.0m) and receivables at the end of the

period up 20.9% to £792.2m (2022: £655.4m).

Throughout 2023, management focused on sustainable

growth, delivering 19.5% growth in average gross receivables

to £784.7m (2022: £656.6m), with deliberate action taken to

moderate growth in the second half of the year to improve

profitability by reducing the day one impact of IFRS 9 driven

expected credit losses from new business.

Interest income rose by 9.2% to £150.3m (2022: £137.7m),

delivering 19.2% annualised asset yield (2022: 21.0%).

Net interest income rose by 5.2% to £121.6m (2022: £115.6m),

as a result of the increase in receivables being offset by

rising interest expense due to market savings rates and UK

bank base rate moving upwards, impacting the Group’s

funding cost.

Other income fell to £2.0m (2022: £2.9m), with total income

amounting to £123.6m (2022: £118.5m).

Risk adjusted income increased by £30.7m to £108.4m

(2022: £77.7m), benefiting from impairments reducing £25.6m

to £15.2m (2022: £40.8m). The impairment reduction reflects

IFRS 9 model refinements and recalibration leading to an

impairment provision release of £47.0m in 2023 (2022: £0.5m),

as Vehicle Finance has purposefully transitioned towards the

lower credit risk near prime market. This one-off impairment

provision release masks higher expected losses from receivables

growth (£18.1m) particularly evident during the first half of 2023.

As a result, cost of risk dropped from 6.2% to 1.9%.

The risk adjusted margin improved to 13.8% (2022: 11.8%).

Adjusted operating costs rose by £9.8m (24.7%) to £49.5m

(2022: £39.7m) with efficiency gains offset by increased

complaints costs driven primarily by spurious claims from

claims management companies, and higher volume.

Vehicle finance has never entered into discretionary broker

commission arrangements.

Vehicle finance - continued robust performance

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Operating review continued

Personal loans - A stable year-on-year performance

2023

£m

2022

£m Change

Total customer numbers ('000) 43.7 34.4 27.0%

New customer bookings ('000) 29.6 27.0 9.6%

Period-end receivables 102.4 76.3 34.2%

Average gross receivables

123.1 50.9 141.8%

Interest income 25.9 13.1 97.7%

Interest expense (4.0) (1.2) 233.3%

Net interest income 21.9 11.9 84.0%

Total income 21.9 11.9 84.0%

Impairment charges (20.9) (8.5) 145.9%

Risk-adjusted income 1.0 3.4 (70.6%)

Operating costs (16.0) (19.1) (16.2%)

LBT contribution (15.0) (15.7) (4.5%)

Asset yield

21.0% 25.7% (4.7%)

Cost of risk

(17.0%) (16.7%) (0.3%)

Risk adjusted margin

0.8% 6.7% (5.9%)

1 Average of gross customer interest earning balances for the 13 months

ended 31 December.

2 Interest income from customer receivables for the 12 months ended 31

December as a percentage of average gross receivables.

3 Impairment charges for the 12 months ended 31 December as a

percentage of average gross receivables.

4 Total income, excluding exceptional items less impairment charge for

the 12 months ended 31 December as a percentage of average gross

receivables.

The Group’s unsecured personal loan business was

established to provide our customers with a broader range of

borrowing options, with a product tailored to the non-prime

market. Most customers are taking out a personal loan to

either consolidate other debts or to enable them to make

home improvements, although the full range of reasons for

borrowing includes a wide range of purposes.

When selecting their loan, customers are looking for a loan

that provides them with the amount of money they need, with

repayments over a period that makes their monthly payment

affordable, at the lowest possible price (APR). From extensive

market research, we have identified that our customers

value repayment certainty and flexibility if circumstances

change, so we offer fixed APRs for the period of the loan,

no penalty fees for additional interest charged for missed

or late payments and there is no retention of interest when

customers pay off the loan early.

Total customer numbers grew 27.0% to 43.7k, as of December 2023

(2022: 34.4k).

New customer bookings for the year were 29.6k, up 9.6% from

27.0k in 2022, driven by the expansion of the product range

offered to both existing and new to Vanquis customers, with

Vanquis branded loans launched on the new technology

platform.

Loans customers are highly satisfied by their Vanquis loan and

the service they receive. This is evidenced by loans customers

giving their loan a Net Promoter Score of 51, a customer

satisfaction score of 89% and by 89% of customers also saying

that they would use a Vanquis loan again. The Vanquis loan

product was also the winner of ‘Best Loan Provider’ in the 2023

Consumer Credit Awards.

Financial performance

For FY23, the business reported a LBT contribution of £(15.0)m

loss (2022: £(15.7)m) and receivables at the end of the period

up 34.2% to £102.4m (2022: £76.3m).

Personal loans average gross receivables increased 141.8%

to £123.1m (2022: £50.9m). Deliberate action was taken to

moderate growth in the second half of the year to improve

profitability by reducing the day one impact of IFRS 9 driven

expected credit losses from new business. This included a

temporary pause in active marketing of personal loans as we

undertook the Group wide strategic refresh.

Interest income rose by 97.7% to £25.9m (2022: £13.1m),

delivering 21.0% asset yield (2022: 25.7%), as a result of the

year-on-year receivables growth and introduction of lower

APR loans as part of the product range expansion.

Interest expense rose by 233.3% to £4.0m, reflecting

receivables growth and rising interest expense due to market

savings rates and the UK bank base rate moving upwards,

impacting the Group’s funding cost.

Net interest income was up 84.0% to £21.9m (2022: £11.9m).

Risk adjusted income decreased by £2.4m to £1.0m (2022:

£3.4m), as a result of an increase in impairment from £8.5m to

£20.9m. The increase in impairment reflects a recalibration of

expected losses as we refine our underwriting parameters on

this relatively immature portfolio, resulting in the cost of risk

increasing to 17.0% from 16.7%.

The risk adjusted margin declined to 0.8% (2022: 6.7%).

Operating costs were ongoing, albeit lower by £3.1m to £16.0m

(2022: £19.1m), largely due to reduced technology investment.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Snoop customer

Age: 29

Lives with: Partner, Danielle in a semi-detached house

in Burton on Trent.

Job Role: Radiographer at Queens Hospital.

Likes: Cinema, video games and going to the gym.

“My partner and I live in Burton on Trent in a two

bedroom semi with a nice garden. It’s close to work as

we’re both radiographers at Queens Hospital in Burton,

working a range of shifts, so it’s ideal.

I’ve been using Snoop for around two years now

after hearing about the app through a money saving

website. The main attraction was being able to track

my spending and see where I could save myself some

money. I downloaded the app and started using it right

away. It’s very user friendly with a good tips section and

I like that it alerts you to upcoming deals.

Being able to see my outgoings by category has really

helped and seeing how the price of things fluctuates

has helped me refine some of my spending habits and

really think about what I’m buying now.

For example, I didn’t realise how much money I was

spending each month on takeaways – it was a lot and

was quite a shock to me at the time. Now I’m aware

of it, I maybe have one a week now, but I don’t buy

without consideration.

I’ll think about what I’m ordering, only order what I really

need and as a result I’m saving a lot more money each

month – and I’m eating more healthy foods!

I’m getting so many insights into my financial habits.

The tips section has been great; Snoop shared an offer

with me to switch bank accounts to get £175 cash back

from the bank. That was useful and bumped up our

savings that month.

The Snoop brand is cool too, breaking things down and

explaining everything really clearly. The emojis make all

the messages feel more personal, like we’re connected,

and I like the cute little symbol too.”

Meet

Hugo

Snoop is an award-winning fintech that uses open banking

to help users save money and manage their finances more

effectively. The app helps its customers build their financial

capability, and targets annual savings of up to £1,500. Snoop

demonstrably improves financial wellbeing with over 15,000

four and five-star reviews, and from a survey of 500 users,

a 95% customer recommendation rate, and 80% of users

reporting increased financial confidence. As such, it is an

important addition to the Group’s customer proposition.

Leveraging Snoop’s innovative technology and data capabilities

will also unlock valuable opportunities for the Group. Test

marketing of Snoop to Vanquis customers progressed ahead

of expectations in 4Q23 and we will continue to actively

promote Snoop to our 1.5 million strong customer base in 2024.

This will position the Group as a relevant presence in their daily

lives, drive improved creditworthiness and support improved

borrowing and debt management.

Snoop’s impact extends beyond individual users, offering

businesses valuable insights into evolving consumer spending

behaviours. In 4Q23, Snoop launched SpendMapper, a self-

service business intelligence dashboard. SpendMapper

leverages over £100bn of real-time spending data to help

businesses understand how and where consumers spend,

and how this is changing. Further scaling the business in 2024

will enrich Snoop’s data insight proposition and enhance the

Group’s overall data capabilities.

Snoop was incorporated into the Group on 7 August 2023, and

the business reported an adjusted loss before tax of £(2.5)m

from the date of incorporation to 31 December 2023.

Snoop - Helps our customers save money

“ I downloaded the app and

started using it right away.

It’s very user friendly.”

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Section 172(1) statement

The directors have acted in a way that they

considered, in good faith, would be most likely

to promote the success of the Company for

the benefit of its members as a whole, having

regard to the matters set out in section

172(a)–(f) of the Companies Act 2006 (s.172).

Stakeholder engagement

The Group has a well-established stakeholder

engagement strategy which defines our

priorities, opportunities and responsibilities

for engagement with our stakeholders and

recognises differing stakeholder interests and

preferred methods of engagement.

Our stakeholders, how we’ve engaged with

them during 2023 and the outcomes of this

engagement can be found on pages 63 to 67.

Principal decisions

S.172 of the Companies Act 2006 necessitates

effective decision making by the Board.

The decisions of the Board are led by the

Group’s Purpose, culture and strategy with the

objective being to deliver long-term value for

its stakeholders. Board activities during the

year are detailed on pages 59 and 60 and the

principal decisions made by the Board can

be found on pages 41, 58, 60, 65 and 74.

Disclosures relating to how the directors

have discharged their responsibilities under

s.172 are integrated throughout the Strategic

Report and Governance Report; please

see the table opposite for references. More

information on our Board’s setting of the

Group’s strategy can be found on page

57 and 58.

Section 172 provision Relevant disclosure Pages

The likely

consequences

of any decision

in the long term

Chairman’s Statement

Business model

Strategy

Sustainability

Non-financial and sustainability

information statement

Risk management and principal risks

Viability statement

Board focus areas during 2023

Stakeholder engagement and

decision making

Governance Report

Nomination Committee Report

Directors’ Remuneration Report

The interests of

the Company’s

employees

Chairman’s Statement

CEO’s Review

Sustainability – our colleagues

Risk management and principal risks

Chairman’s introduction to governance

Board focus areas during 2023

The Board: our culture

Stakeholder engagement and

decision making

Our Designated Non-Executive

Colleague Champion

The need to foster the

Company’s business

relationships with

suppliers, customers

and others

Chairman’s Statement

CEO’s Review

Business model

Strategy

Sustainability

Key performance indicators

Non-financial and sustainability

information statement

Risk management and principal risks

Stakeholder engagement and

decision making

Engagement with shareholders

The impact of the

Company’s operations

on the community and

the environment

Chairman’s Statement

CEO’s Review

Sustainability – Community

Foundation overview

Sustainability – TCFD disclosure

Non-financial and sustainability

information statement

Sustainability - Our ESG Strategy

Stakeholder engagement and

decision making

Customer, Culture and Ethics

Committee report

The desirability

of the Company

maintaining a

reputation for

high standards of

business conduct

Chairman’s Statement

CEO’s Review

Strategy

Sustainability

Sustainability – TCFD disclosure

Non-financial and sustainability

information statement

Stakeholder engagement and

decision making

Board focus areas during 2023

The Board: our culture

Assessing Board performance

Audit and Risk Committees

80 to 86

The need to act fairly

as between members

of the Company

Stakeholder engagement and

decision making

Investor relations

Board activities

Directors’ Remuneration Report

Business model

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Decision making for long-term success

We believe that considering the broad range of our

stakeholders’ perspectives in our Board discussion and

decision making is central to us making balanced and

well-informed decisions. For the last three years we

have integrated an s.172 impact analysis into our Board

reporting and this helps draw out stakeholder perspectives.

Stakeholders have different interests and priorities and the

Board sees its role to make decisions that balance stakeholder

interests, recognising that decisions will not always result in

a positive outcome for all stakeholders. Ultimately, the Board

aims to make decisions that drive the Company’s long-term

success and align to the Group’s Purpose, culture and strategy

and deliver sustainable value to our stakeholders as a whole.

During 2023, the Board made several principal decisions that

demonstrate this commitment. You can read about these

principal decisions, including the Board’s decision making

process and considerations in reaching their decision, below

and on pages 41, 58, 60, 65 and 74.

Principal decision: the acquisition of money-saving fintech Usnoop Limited (Snoop).

The Board approved the acquisition of fintech business Snoop which had developed an award-winning personal financial management

app. The Snoop app was considered by the Board as being of benefit to the Group’s customers and aligned with the Group’s Purpose to

assist its customers with their financial planning and education. To read more about Snoop please see page 39.

Decision making process

The Board was made aware of the potential acquisition of Snoop in

Q2 2023, and supported management to proceed with undertaking

due diligence with the support of third-party advisors. At the Group

Strategy Conference held in June 2023, the Board was introduced to

Snoop’s management and proposition in person. A further request

for approval to proceed in principle with the proposed acquisition of

Snoop was received by the Board in July 2023 which was supportive

and delegated authority to a sub-committee to oversee and finalise

the transaction. At each stage, the Board, and later the dedicated

sub-committee, considered what value and benefits the Group and

its customers would receive from the purchase, the rationale for the

purchase, what other options might be available to the Group, and

that the transaction had been structured appropriately.

Strategy and Purpose

The Group’s Purpose is to deliver caring banking so our customers

can make the most of life’s experiences, and Snoop’s Purpose, to

make everyone better off, aligned well. The Snoop app is a personal

financial management tool that offers money management, bill

management, bill switching and personalised financial insights to

its customers. The Board recognised the Snoop app as having the

potential to support the Group’s current customers and potential

customers to better control their finances and reduce their cost-of-

living proactively and sustainably. The Snoop app was recognised as

best in class and provided a straightforward and high-quality user

experience. Becoming part of the Group provided Snoop with the

potential opportunity to access a large number of customers that

might benefit from their app.

The Board further recognised the Group’s strategy to modernise

and benefit from mature, open-banking-driven technology that

could provide insights into the financial wellbeing of its customers.

Furthermore, the Snoop management team alongside the Snoop

technology would bring additional and valuable expertise into

the Group.

Challenges

The Board sought and received independent legal, commercial

and financial advice regarding the transaction and ensured that

a comprehensive due diligence process had been completed to a

high standard.

The Board noted the financial projection risks that accompanied a

fast-growing start-up, and noted that management had addressed

these potential risks (including the risk of revenue and customer

growth failing to meet projections) in the transaction structure.

Snoop was considered a relatively low business risk from a conduct

risk perspective as it did not provide lending, had not taken any

customer deposits and did not provide financial advice.

Balancing stakeholder interests

The Board carefully considered the risks and benefits of the

transaction as they pertained to its stakeholders. The Board expected

the acquisition of Snoop to deliver benefits to the Group’s stakeholders

as a whole and in particular to its customers. Analysis had identified

that those Group customers who already had the Snoop app had

demonstrated active use compared to other cohorts of users. The

Board recognised the potential to provide the Group’s customers with

value-added services commensurate with the Group’s community

purpose to improve financial education and aid social mobility which

was also a keen interest of the Group’s regulators, the PRA and FCA.

In making this decision, the Board expected Snoop to contribute

to the long-term success of the Group to the benefit to its investors

and shareholders.

Links to stakeholders

Links to risks

P10

P11

Links to strategic themes

Links to s.172

Strategic themes

Find our key risks on

pages 46 to 50

Links to risks

Customer centricity

Insightful risk management

Efficient organisation

Digital, tech, data

and analytics

A great people proposition

Links to s.172Links to stakeholders

Customers

Colleagues

Regulators and

government

Shareholders

Communities

Suppliers

The need to act fairly as between

members of the Company

The likely consequences of any

decision in the long term

The interests of the

Company’s employees

The need to foster the Company’s

business relationships with suppliers,

customers and others

The impact of the Company’s

operations on the community and

the environment

The desirability of the Company

maintaining a reputation for high

standards of business conduct

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Non-financial and sustainability information statement

Information on the Group’s non-financial impact can be found throughout the report.

The table below explains how the Group meets the non-financial and sustainability information

reporting requirements of section 414CB of the Companies Act 2006. The requirements are

addressed in this section by means of cross referencing to indicate which sections of the

narrative they are embedded.

Pages

Business model

The Group has re-articulated its Purpose: to deliver caring banking so our customers can

make the most of life’s opportunities. The Group is committed to delivering differentiated

solutions to meet customer needs. You can read about the Group’s strategy and

business model on pages 9 to 11.

Pages 2-3

Pages 9-11

Colleagues and their

contribution

Our colleagues are central to the Group’s long-term success and the achievement

of its mission. We continue to work to enhance our workplace culture and maximise

colleague engagement.

Supporting policies: Inclusion and Diversity Policy, Family Friendly Policy, Mental Health

& Wellbeing Policy.

Due diligence: All People policies were reviewed during 2022 to ensure a unified

approach under the new shared corporate services model. Diversity metrics are closely

monitored (see Nomination Committee Report from page 73-77). Health and Safety

training is mandatory for all new colleagues and there is regular refresher training

throughout the year.

Our Affinity Groups and peer circles allow us to take a Group-wide approach when

it comes to moving essential conversations forward around inclusion and diversity.

They also provide both a sounding board and spring board for ideas, as well as a

platform for transformative action.

Risks and risk management: People risk (page 50).

Measurement: Colleague engagement is measured through our Group colleague

surveys (page 16).

Pages 14-16

Page 64

Environmental impact

Supporting policies: Environmental Management Policy, Climate Principal Risk Policy

and Procurement Policy.

Due diligence: The Group reports in line with the recommendations of the Task Force on

Climate-related Financial Disclosures (TCFD) which enables us to consider the impact

of climate-relate risks and opportunities on the Group’s financial performance. Also,

the Group’s supplier due diligence processes and procedures involve engaging with

suppliers to understand their exposure to material climate-related risk and carbon

reduction commitments.

Risks and risk management: Strategic performance risk (page 50), customer risk

(page 46) and regulatory risk (page 47).

Measurement: Pursuant to the FCA’s Listing Rule 9.8.6R(8) and the Companies (Directors’

Report) and Limited Liability Partnership (Energy and Carbon Report) Regulations 2018

and the Companies (Strategic Report)(Climate-related Financial Disclosure) Regulations

2022, the Group publishes an annual TCFD report and discloses comprehensive

environmental data in its Annual Report and Accounts. The Group also makes an

annual submission to the CDP. Finally, as a signatory to the UN Global Compact, the

Group is aligned with its environmental principles and reports on its progress annually,

www.vanquisbankinggroup.com/sustainability/responding-climate-change/.

Page 15

Pages 19-28

Page 64

Social and

community impact

The Group’s community investment activities are delivered through the Vanquis Banking

Group Foundation. The mission of this Foundation is to improve the lives of children and

young people by providing educational and social development opportunities which

support financial and social inclusion.

Supporting policies: Community Involvement Policy and Volunteering and Matched-

Funding Policy.

Due diligence: The activities and initiatives that are delivered via the Group’s Foundation

are reviewed and approved by the Group Executive Committee and Group plc Board on

an ongoing basis. This involves ensuring that the Group’s investments have a sustainable

benefit to the communities it serves and the business itself. A dedicated Group team is

responsible for the design, development and delivery of the Group’s Foundation.

Risks and risk management: People risk (page 50) and regulatory risk (page 47).

Measurement: The Group reports on the amount it has invested in its community

investment activities, as well as the social impacts that have been delivered, in its

Annual Report and Accounts. This is done using the B4SI (Business for Social Impact)

Framework so that the Group can understand the differences its contributions make

to business and society. The Group’s colleague surveys are also used to understand

colleagues’ understanding of, and engagement with, the Group’s community investment

programme (page 16).

Pages 14-18

Page 65

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Pages

Respect for human rights

The Group is committed to supporting and respecting human rights and, as such, is

opposed to slavery and human trafficking in both its direct operations and in the indirect

operations of its supply chains. As such, the Group will not knowingly support or do

business with any organisation involved in slavery or human trafficking.

Supporting policies: Human Rights and Modern Slavery Policy, Procurement Policy,

Diversity Policy and Whistleblowing Policy.

Due diligence: The Group has well-established supplier due diligence processes and

procedures to manage supply chain-based risks and ensure suppliers comply with the

Group’s policy requirements and meet legislative requirements, including those that

relate to the Modern Slavery Act 2015. Across the Group, all new suppliers are assessed

for the types of potential risks they pose and are sent questionnaires covering issues

such as financial stability, data protection, information security, business continuity,

regulatory compliance, and corporate responsibility.

Risks and risk management: Regulatory risk (page 47), people risk (page 50) and

customer risk (page 46).

Measurement: Pursuant to section 54(1) of the UK Modern

Slavery Act 2015, we produce a Modern Slavery Statement, see

www.vanquisbankinggroup.com/modern-slavery-statement/. Also, as a

signatory to the United Nations Global Compact, the Group is aligned with its

human rights and labour standards and reports on its progress annually, see

https://unglobalcompact.org/what-is-gc/participants/148181-Vanquis-Banking-Group.

Pages 14-18

Anti-corruption and

bribery measures

Supporting policies: Anti-Bribery and Corruption Policy, Corporate Hospitality Policy,

Whistleblowing Policy.

Due diligence: The Group has a zero-tolerance approach to bribery and corruption

and all colleagues undertake mandatory training. The Audit Committee oversees

compliance with the Corporate Hospitality Policy and the Board oversees the

Whistleblowing Policy.

Risks and risk management: Customer risk (page 46) and regulatory risk (page 47).

Measurement: Completion of mandatory training is monitored; whistleblowing reports

are overseen by the Board; and any matters relating to corporate hospitality are

monitored by the Audit Committee.

Pages 90-91

Climate-related financial

disclosures

Task Force on Climate-related Financial Disclosures (TCFD).

In line with the FCA’s Listing Rule 9.8.6R(8) and requirements of the Climate-related

Financial Disclosure (CFD) Regulations 2022, we have included a statement in the

strategic review of this report which is consistent with the four recommendations and 11

recommended disclosures of the Task Force on Climate-related Financial Disclosures

(TCFD). Our disclosures are in line with the four core elements (or pillars) of the TCFD

(governance, strategy, risk management, and metrics and targets).

Page 15

Pages 19-28

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Risk management and principal risks

Embedding an effective Risk Management

Framework and culture

“ In 2023, we focused on embedding the

Group’s risk strategy and Risk Harmonisation

programme. This helped us to successfully

navigatethroughayearofsignificantchange

and stabilise our business as we look to explore

and refresh our strategic opportunities. Our Risk

Management Framework is focused on insight,

support and challenge to ensure the Group

grows in a safe and sustainable manner. We

continue to embed a strong risk awareness

culture and control environment.”

Gareth Cronin

Group Chief Risk Officer

Our Purpose

To deliver caring banking so our customers can make the most of life’s opportunities.

The Risk Management Framework (RMF) creates a clear link between our Purpose and strategic risk objectives:

Our strategy

1. Customer

centricity

2. Insightful risk

management

3. Efficient

organisation

4. Digital, tech, data

and analytics

5. A great people

proposition

Strategic risk objectives

Supporting the realisation of our strategy and ensuring positive outcomes for our customers and key stakeholders.

Maintaining a secure and efficient

capital and funding structure

Delivering sustainable growth and

returns to our shareholders

Optimising our reputation and

becoming the trusted bank for our

target customers

Establishing a strong risk and

customer-centric culture

Maintaining operational resilience

and business capabilities

Managing execution risk associated

with strategic and operational

change activity

Risk pillars

Our four risk pillars underpin the delivery of our strategic risk objectives.

Customer and

conduct

We deliver fair customer

outcomes and meet

the expectations of our

regulators.

Financial

We manage our

credit risk exposures,

supported by financial

strength and liquidity

in normal and stressed

conditions.

Operational

We ensure operational

risk is minimised

through effective

people, processes and

systems aligned to our

strategic goals.

Strategic

We seek new business

opportunities which are

aligned to our customer,

regulatory and

commercial objectives.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Three Lines of Defence model

Vanquis Banking Group operates a Three Lines of Defence model to articulate key

accountabilities and responsibilities for managing risk and to support effective embedding of

risk management across the Group.

The First Line of Defence

– line management

Owns the risk and is responsible

for identifying, assessing,

monitoring and reporting risk

within its respective areas,

whilst ensuring that appropriate

internal controls, processes and

systems are in place to deliver

against business strategy and

objectives.

The Second Line of

Defence – Risk function

Establishes the RMF and

policies and supports the First

Line of Defence in developing

minimum control standards and

expectations to manage risk.

Provides independent oversight

of governance, risk management

and controls across the Group

to ensure risks are identified,

measured, managed and

reported appropriately.

The Third Line of Defence

– Internal Audit

Provides independent and

objective assurance on

the design adequacy and

operational effectiveness of

internal controls, and overall

effectiveness of Vanquis Banking

Group’s risk governance and risk

management practices, and

provides assurance on whether

the First and Second Lines of

Defence fulfil their respective

responsibilities.

Overview

During 2023, the Group continued to strengthen its risk

management capabilities through the completion and

embedding of the Risk Harmonisation programme. The

transformation made has been validated through an

independent external quality assessment, which confirmed

significant improvements in the overall risk maturity across

the Group and the business’s approach to managing risks

collaboratively.

The Risk function has been integral to the strategic

opportunities undertaken throughout the year. The function

provided oversight of the governance, risk management and

controls to the plans in place for the offshoring of aspects of

customer services, the reduction in the Group’s total capital

requirement (TCR), transformation programmes across our

product lines and the emerging strategy development. This

has been on the backdrop of significant changes to the

composition of the Board and executive management.

Group approach to risk management

Our RMF provides a comprehensive approach to the

consistent management of risks across the Group. It supports

the aggregated reporting and escalation of material risks to

the Group’s Board and executive management.

Managing risk is an integral part to the management of

the business, its strategy and corporate governance. It is

critical to enable us to optimise our shareholder return whilst

maximising our business opportunities and positive outcomes

for all our key stakeholders, which include shareholders,

customers, colleagues and regulators.

The RMF adopts an enterprise approach, enabling a single

view of all the current and emerging risks and consistent

management of those risks across the Group. Fundamental to

the application of an effective RMF are the following attributes:

– Risk culture: We promote a risk culture that supports

appropriate risk awareness, behaviours and judgements

in the level of risk we are willing to take. Our culture is

underpinned by an appropriate balance between risk and

reward, with accountabilities reinforced through the Senior

Managers and Certification Regime (SMCR). Risk objectives

are included in the executive non-financial scorecard:

the Risk Adjustment Framework for the Group’s senior

management functions and material risk-takers;

and, in 2023, we implemented a mandatory risk objective

for all colleagues irrespective of role type and level of

seniority. Risk culture was further promoted during the year

with extensive levels of training provided by the Enterprise

Risk team.

– Risk appetite: The Group defines its risk appetite as

the amount and type of risk the Group is prepared to

seek, accept or tolerate at any point in time. We have

risk appetite statements and preferences for all 12 of

our principal risks, which are reviewed annually and

approved by the Board. These statements are cascaded

into the sub-risk categories and supported by metrics,

thresholds and key risk indicators. Risk appetite measures

are reported and monitored on a monthly basis, with

actions taken where agreed thresholds are breached.

Risk appetite will be an integral part of the Group’s

strategic and business planning process for 2024, which

encompasses our philosophy to economic, regulatory,

commercial and customer outcomes.

– Risk governance: The Group has defined its risk

governance structure to strengthen its ability to identify,

assess, manage and report risks, while supporting the

Group in responding to the changing internal, external and

regulatory environments. The Board is responsible for the

effective management of risk and ensures the RMF is fit

for purpose and aligns to our risk appetite and strategy.

The Risk Committee and Executive Committee are the

committees most directly involved with risk management

governance and oversight activities (further details of

the Risk Committee’s remit can be found on pages 84 to

86). Below these, there are several committees across

the business that have been established to monitor the

principal and emerging risks, including the oversight of

a robust control environment and escalation of matters

through the risk governance structure.

– Three Lines of Defence: The Group operates a Three Lines

of Defence model to promote clear responsibilities and

accountabilities for risk management activities and to

support effective embedding. We apply an integrated

assurance approach, which combines the planning,

execution and issue management activities of assurance

teams operating across the Three Lines of Defence and

seeks to complement each other’s assurance activities.

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Risk management and principal risks continued

Recent developments

– A reduction in the Group’s TCR from the PRA to 11.9%

(previously 18.3%) in March 2023. The overall capital

requirement (OCR) reduced from 21.8% to 15.4%, which

included the regulatory combined buffer prevailing at the

time of 3.5% but excludes confidential buffers set by the

PRA and additional internal management buffers.

– Successful delivery of requirements to meet the FCA’s

Consumer Duty regulations in July 2023.

– Completed the Risk Harmonisation programme across the

Group, resulting in a more efficient and effective approach

to enterprise risk.

– Full implementation of the automated Group risk

management system.

– Enhanced our operational risk and control self-

assessment (RCSA) process.

– Enhanced our IFRS 9 models and the efficiency

of impairment provisioning process.

Future opportunities

– Recognising that credit risk is key to the achievement

of our strategic objectives, we will be investing in our

processes and people to enhance our capabilities.

– Following the completion of the Risk Harmonisation

programme, and with solid foundations for risk

management in place, we will lead a programme of

work during 2024 to further enhance our risk culture and

maturity and transfer full accountability to the First Line

of Defence.

– We will look to streamline our risk governance activities

between the Board and operational management as we

move from individual product management to a joined-

up customer proposition.

– We continue to progress with our Operational Resilience

programme to provide additional safeguarding to the

operation of our business and meet future regulatory

requirements.

– Technical debt will continue to be closely monitored and

addressed/upgraded where it is deemed essential or

beneficial to do so as focus remains on delivering the

new strategic platform for the Group.

Principal risks

Principal risks are risks which are most significant to Vanquis Banking Group’s strategy and business model and have formally

been articulated as part of its risk appetite framework. Principal risk categories and associated risk appetite statements are

reviewed and approved by the Board on an annual basis, effectively defining the Group’s overall risk appetite and recognising

changes to our risk profile.

The principal risks have been updated for 2024, recognising the evolution of the breadth and types of risks that the Group is

exposed to and reflective of the environment we currently operate in. Our principal risks and how we manage them are set out

below. In summary, our principal risks have remained largely stable year on year, albeit with volatility during H2 2023 following

the half-year results and actions taken in response.

Risk Pillar 1: Customer and conduct

We deliver fair customer outcomes and meet the expectations of our regulators.

Principal risk

Customer

The risk of poor customer

outcomes due to poor

design, distribution

and execution of

products and services

or poor governance

and processes.

Key considerations

Our target customer cohorts require robust practices to support responsible lending for borrowers under financial

pressure and provide appropriate solutions to meet our customers’ needs. We continually seek improvement to our

product governance processes and customer outcome monitoring activity across the First and Second Lines of Defence,

and proactively provide compliance advice and guidance on key matters.

We continue to see a high volume of complaints driven by Claims Management Companies (CMCs), with one such

CMC accounting for 80% of the volume. CMCs are regulated by the Solicitors Regulation Authority and therefore do not

follow FCA guidelines. Due to this, we are witnessing poor practices, such as lack of customer due diligence on their

part, and the level of upheld complaints has been consistently low for both the Group and the Financial Ombudsman

Service (FOS).

Mitigating actions

– Customer, Culture and Ethics Committee oversaw the development, embedding and monitoring of the Group’s

customer objectives.

– The Group successfully delivered the requirements to meet the FCA’s Consumer Duty regulations in July 2023.

– Board-approved conduct risk framework and supporting metrics are embedded across the Group to ensure

delivery of good customer outcomes across all high-risk interactions, such as lending, forbearance, vulnerability

and complaints.

– A rigorous customer outcomes assurance activity programme is in place.

– A complaints methodology and forum have been established to identify and learn from complaints trends and FOS

referral outcomes.

– In November 2023, the FCA confirmed receipt of our update on queries relating to Borrowers in Financial Difficulty (BiFD)

action and acknowledged our ongoing progress to deliver the BiFD action plan.

Links to strategic

themes

21 54

Strategic themes

Customer centricity

Insightful risk

management

Efficient organisation

Digital, tech, data

and analytics

A great people

proposition

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Risk Pillar 1: Customer and conduct continued

We deliver fair customer outcomes and meet the expectations of our regulators.

Principal risk

Regulatory

The risk that our

systems and controls

do not support effective

regulatory compliance

and we fail to meet the

expectations of our

regulators.

Key considerations

As a dual regulated firm, we need to adapt to the regulatory environment as it continues to develop to ensure our

lending is sustainable, suitable and affordable. The PRA/FCA published ‘The Regulatory Initiatives Grid’ in November 2023

and it highlights a number of key initiatives that are being proposed for 2024/25. The current initiatives do not pose a risk

at this stage to the Group.

The FCA announced in January 2024 that it intends to review how motor finance firms have implemented a ban,

originally introduced back in 2021, on discretionary (variable) commission levels. The announcement does not impact

the Group directly as we do not pay discretionary commission currently or historically, only fixed, on our vehicle

finance products.

Mitigating actions

– SMCR responsibilities are aligned to the RMF and Group Delegated Authorities Manual (GDAM) providing a complete

and clear view of accountability, risk and control ownership and clarity around delegations and mandates for

approval. Senior management functions are required to attest to their understanding and agreement of these.

– Conduct and regulatory policies and procedures are in place to ensure the Group has appropriate controls and

processes to deliver fair customer outcomes.

– A compliance monitoring plan is in place, supported by a robust methodology, to independently assess the adequacy

and effectiveness of the control frameworks in place to drive fair customer outcomes and regulatory compliance.

– Strong and proactive regulatory relationships with regular lines of communication are in place with both the FCA

and PRA, who have been kept abreast of our strategic initiatives, key risk management activities and responses to

regulatory developments e.g. Consumer Duty implementation and BiFD action plan.

– Following the PRA’s Periodic Summary Meeting in March 2023, we have successfully completed all actions due for

delivery in 2023, with a small number to deliver in Q1 2024.

Links to strategic

themes

21 54

Financial

crime

The risk that the Group’s

products and services

are used to facilitate

financial crime against

the Group, customers or

third parties.

Key considerations

Financial crime includes anti-money laundering (AML), counter terrorist financing (CTF), financial sanctions, external and

internal fraud and anti-bribery and corruption (ABC).

On average, we monitor 11 million transactions and 1.75 million customers each month for signs of financial crime. The

banking industry continues to suffer from organised crime groups socially coercing individuals into providing security

information, exposing them to fraud. In addition, the Group’s fraud exposure has increased as a result of the Group’s

changing risk profile due to an increase in brand prominence, the launch of digital wallets and higher average credit

limits/loan values offered to customers. Further technology developments are ongoing in support of our detection and

prevention objectives.

Mitigating actions

– Financial crime oversight has been consolidated across all products, implementing consistent risk oversight

supported by Group-wide AML, CTF, sanctions, fraud and bribery policies, overseen by a Group Money Laundering

Reporting Officer (MLRO).

– The Financial Crime Risk Forum provides oversight and challenge on the Group’s financial crime risk systems and

controls. The Group MLRO provides twice-annual updates to the Risk Committee.

– Industry-standard prevention and detection systems are in place covering fraudulent transactions, suspicious activity,

customer screening and application fraud. These are regularly reviewed and refined to ensure effectiveness.

– A Group-wide Fraud Strategy and Analytics team is in place within the First Line of Defence, which focuses on fraud

prevention, consistent and fair customer outcomes and loss mitigation.

– A detailed business-wide financial crime risk assessment is in place to measure financial crime risk consistently and

effectively. This is now being extended to cover the vehicle finance product.

– Oversight of our outsourced operations administering our savings products has been enhanced and the articulation

of the financial crime controls. All new products are subject to a financial crime risk assessment.

Links to strategic

themes

21 54

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Risk management and principal risks continued

Risk Pillar 2: Financial

We manage our credit risk exposures, supported by financial strength and liquidity in normal and stressed conditions.

Principal risk

Capital

The risk that the Group

fails to maintain the

minimum regulatory

capital requirements,

management buffer on

a consolidated basis

to cover risk exposures

and withstand a

severe stress.

Key considerations

The Group and Bank maintain sufficient capital resources, both in terms of amount and quality, to support the business

strategy and provide a buffer for stress events. Throughout the year, the Group and Bank have maintained capital ratios

in excess of regulatory requirements (see capital risk management section on page 140 for the Group’s capital position).

In assessing the adequacy of capital resources, the Group and Bank consider the material risk to which they are exposed

and the appropriate strategies required to manage those risks.

The ‘Strong and Simple’ regulatory initiative will be monitored for any impacts on the Group’s and Bank’s management

of capital risk. The PRA is expected to begin consultation on capital requirements for simpler regime firms in Q2 2024.

The implementation of Basel 3.1 is expected to have limited impact on the capital position.

Mitigating actions

– The capital framework is reviewed by the Board as part of the annual Internal Capital Adequacy Assessment

Process (ICAAP).

– Capital risk appetite metrics are monitored by the Board, Risk Committee and Assets and Liabilities Committee (ALCO).

– Capital is held to meet Pillar 1 requirements, the most significant elements for the Group and Bank being credit and

operational risks.

– In addition, the PRA requires firms to hold capital to meet Pillar 2A requirements, as assessed in the ICAAP. This confirms

the amount of capital required to be held to meet risk partially covered by Pillar 1 and risk not covered by Pillar 1. The

combination of Pillar 1 and Pillar 2A requirements forms the TCR.

– To protect against consuming its TCR, firms are also subject to regulatory capital buffers and the PRA may set an

additional firm-specific PRA buffer, forming the OCR.

– In March 2023, the Group announced a reduction to its TCR from the PRA to 11.9% (previously 18.3%). The OCR reduced

from 21.8% to 15.4%, which included the regulatory combined buffer prevailing at the time of 3.5% but excluded

confidential buffers set by the PRA and additional internal management buffers.

– The Group’s Pillar 3 disclosures for the year ended 31 December 2023 are published separately on the Group’s website.

Pillar 3 complements Basel’s Pillar 1 and 2 framework and seeks to encourage market discipline by developing a set of

disclosure requirements, which would allow market participants to assess key pieces of information on a firm’s capital,

risk exposures, risk management processes, leverage and remuneration.

Links to strategic

themes

Funding and

liquidity

The risk that the Group

has insufficient financial

resources to meet its

obligations (cash or

collateral requirements)

as they fall due, resulting

in the failure to meet

regulatory liquidity

requirements, or is

only able to secure

such resources at

excessive cost.

Key considerations

The Group and the Bank maintain sufficient liquid assets both in terms of amount and quality, to meet daily cash flow

needs and stressed scenarios driven by the Group’s own risk assessment and regulatory requirements. Throughout the

year, the Group and Bank have maintained funding and liquidity ratios in excess of regulatory requirements. Liquid assets

solely comprise of reserves held with the Bank of England (see liquidity risk management section on pages 136 to 138).

The ‘Strong and Simple’ regulatory initiative will be monitored for any impacts on the Group’s and Bank’s management

of funding and liquidity risk. Changes announced to date have limited impact on the management of this risk, which are

due to go live throughout H1 2024.

Mitigating actions

– The funding and liquidity framework is reviewed by the Board as part of the annual Internal Liquidity Adequacy Assessment

Process (ILAAP). ALCO is responsible for managing the balance sheet structure, including the funding plan and its risks.

– To ensure that there is no significant risk that liabilities cannot be met as they fall due, business cash flows are managed

and stress tested. The Group and Bank maintain liquid asset buffers of at least 100% of the anticipated outflows seen under

internal stress test scenarios (90-day stress) and the regulatory prescribed liquidity coverage ratio (30-day stress).

– Funding and liquidity metrics are monitored through daily liquidity reporting, reported monthly at ALCO meetings and

quarterly to the Risk Committee and Board.

– Throughout the year, the Group has moved to a more retail deposit source of funds, having successfully repaid maturing

wholesale funding sources. Additionally, the Bank has demonstrated that it continues to have access to the retail deposit

market through fixed-rate deposits. The Group has worked closely with our third-party provider, Newcastle Strategic

Solutions Limited, to make operational improvements and has broadened the range of retail products it offers to include

30-day and 90-day notice accounts. The Bank will continue to ensure it has sufficient and diverse access to retail

deposit markets.

Links to strategic

themes

Market

The risk that the net

value of or net income

arising from assets and

liabilities are impacted

as a result of changes in

market prices or rates,

specifically interest

rates, currency rates or

equity prices.

Key considerations

The Group and the Bank do not take significant unmatched positions and do not operate trading books. Some financial

assets and liabilities are linked to an underlying index, such as Sterling Overnight Index Average (SONIA) or Bank of

England base rate. The principal market risks the Group and Bank are exposed to are interest rate risk and basis risk

(see market risk management section on pages 138 and 139).

Mitigating actions

– The Group and the Bank use interest rate sensitivity gap analysis to inform them of any significant unmatched

positions.

– The increased quality of interest rate risk in the banking book (IRRBB) management and the capability to transact

external and internal interest rate swaps have significantly enhanced the monitoring and management of market risk.

– The market risk position is reported monthly to ALCO and includes risk appetite metrics set for earnings at risk, market

value sensitivity, economic value of equity and basis risk. This includes the risk under different interest rate risk scenarios

as prescribed by regulation.

– The Group and the Bank have limited appetite for market risk, which is only taken if essential to core business activities.

Links to strategic

themes

Principal risks continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Risk Pillar 2: Financial continued

We manage our credit risk exposures, supported by financial strength and liquidity in normal and stressed conditions.

Principal risk

Credit

The risk of unexpected

credit losses due to

customers failing to

meet their contractual

obligations.

Key considerations

The Group is exposed to credit risk at all stages in the customer lifecycle, which can fluctuate from the point of application

and various stages through the agreement. Credit risk is impacted by a number of factors outside of the Group’s control,

including wider economic conditions.

The Group’s credit quality has progressively and materially improved over the year, partly due to the strategy

enhancements, improvements in credit decisioning and processes, and targeted credit tightening in response to market

and regulatory changes. As a result, overall average customer quality has improved and unit delinquency rates are lower

than pre-Covid-19 (see credit risk management section on page 136).

Mitigating actions

– Credit risk is managed within a formal credit risk management framework, consisting of Board-approved risk appetite,

credit policies and RCSA.

– The Group Credit Committee assists the Chief Risk Officer in execution of their delegated authorities in overseeing the

credit risk management of our portfolios.

– Main credit scorecards continue to be redeveloped based on enhanced modelling approaches and upgraded data sets.

– Credit and affordability strategies continue to be adjusted according to the changing market and economic

conditions and tightened where appropriate.

– Portfolio performance monitoring continues to be enhanced to capture newly emerging risks.

– Credit data and management information continue to be augmented by newly available data sources, including the

most up-to-date credit reference data and open banking insights sourced through Snoop.

– IFRS 9 models and impairment provisioning processes have been redeveloped with enhanced oversight from the

Model Governance Committee.

Links to strategic

themes

21 4

Risk Pillar 3: Operational

We ensure operational risk is minimised through effective people, processes and systems aligned to our strategic goals.

Principal risk

Operational

The risk of loss resulting

from inadequate or

failed internal processes,

people and systems or

from external events.

Key considerations

Operational risk is inherent to our Group’s activities and can crystallise in the form of interruption or degradation in the

performance or capacity of our technology applications and operational infrastructure. Our inherent operational risk is

heightened as we deliver our activities through a multi-site and hybrid colleague working approach, utilising in-house

capability, third-party and offshore business support. During 2023, we increased customer operation activity with our

existing offshore partners.

Whilst it is not possible, nor cost effective, to fully eliminate operational risk, failure to build resilience and recovery

capabilities into business processes can result in customer detriment, loss and reputational damage.

Mitigating actions

– The Group’s Three Lines of Defence model ensures there are clear lines of accountability between management

which owns the risks, oversight by the Risk function and independent assurance provided by Internal Audit. The model

provides continuous integrated assurance over the effectiveness of key controls and swift response and remediation

to issues if they arise, supported by an automated and integrated risk management system.

– Operational risk is overseen by the monthly Operations Risk Forum, with clear lines of escalation.

– The RMF has been enhanced to drive improvement of operational risk management assurance activity e.g. RCSA,

controls testing programme, risk event management and key risk indicators.

– An Operational Resilience programme is established and on track for regulatory deadlines and continues to test

against important business services impacting scenarios.

– A fully implemented supplier management model is in place with a supporting third-party risk management

framework being embedded throughout 2024.

Links to strategic

themes

21 43

Technology

and

information

security

The risk arising from

compromised or

inadequate technology,

security and data

that could affect the

confidentiality, integrity

or availability of the

Group’s data or systems.

Key considerations

The Group continues to operate on legacy IT architecture, which is being addressed by a strategic IT transformation

programme. The Group is also progressing its delivery of key security improvement initiatives against the overall cyber

security strategy, with a budgeted plan to continually improve its overall security posture.

Mitigating actions

– Technology and change operating model has been revised into a leaner state to reflect the Group’s reprioritisation of

strategic initiatives, which will utilise the Gateway single technology platform and address key areas of technical debt.

– Technology and information security risk is overseen by the Technology and Change Management Committee, which

also monitors and addresses the IT services provision and performance for continuous improvement.

– A Zero Trust/E5 Programme has been initiated, which is designed to deploy protection and defence against our

endpoints, mobile devices and servers, whilst generating a consistent security logging and event alerts for analysis

and response.

– Cyber initiatives are currently focused on improving areas identified from the voluntary Red Test exercise carried out in

H2 2023. Conducting a threat intelligence-led Red Team Test is a recommended action that the Bank of England and

the PRA have within the CBEST supervisory tool kit to assess the cyber resilience of firms’ important business services.

– IT control effectiveness and risk maturity have been significantly improved following the completion of the IT First Line

Control Review and the transition of risk and control ownership into business as usual activity via the use of the Group’s

risk management system.

Links to strategic

themes

Vanquis Banking Group plc Annual Report and Accounts 2023

Strategic Report

Risk management and principal risks continued

Risk Pillar 3: Operational continued

We ensure operational risk is minimised through effective people, processes and systems aligned to our strategic goals.

Principal risk

P10

People

There is a risk that

we have insufficient

operational capacity

and colleagues with the

right skills in meeting

our financial, customer

and regulatory

responsibilities.

Key considerations

The Group has undergone a significant centralisation programme and extension of our offshore capability, which

has led to a reduction in overall headcount as we seek to become leaner, more efficient and effective in serving our

customers. It is essential we have effective leadership to manage colleague resources, effective talent and succession

management and promote colleague engagement and wellbeing.

A colleague survey was conducted on our behalf by Great Place to Work in December 2023. We scored 56% for our

overall colleague engagement score, which is reflective of the extent of change in Q4 2023. Further details can be found

on page 16.

Mitigating actions

– Changes to our operating model are subject to a structured programme of risk management and governance

to minimise operational disruption and promote colleague wellbeing.

– We have partnered with Great Place to Work to support our colleague engagement and culture agenda.

– We have and maintain management responsibilities maps and succession plans, which are in place for executive

management and senior colleagues.

– Consistent frameworks have been embedded for Group reward, performance management and talent

management.

Links to strategic

themes

21 53

Risk Pillar 4: Strategic

We seek new business opportunities, which are aligned to our customer, regulatory and commercial objectives.

Principal risk

P11

Strategic

performance

The risk of making and/

or executing poor

strategic decisions

related to acquisitions,

products, distribution

etc. as a result of

ineffective governance

arrangements,

processes and controls.

Key considerations

The Group is initiating a strategic redirection, which seeks to strengthen and grow the business in an effective and

sustainable manner, meeting the needs of all our stakeholders. Effective risk management is critical to both the

delivery of strategy and maintaining our existing commitments in a safe and controlled way.

Mitigating actions

– The Board and its sub-committees make risk-based decisions in the formulation of their business strategy, in line

with the GDAM and risk appetite framework and subject to independent oversight from the Risk function.

– Strategic and emerging risks are reported to the Risk Committee and Board. Throughout the year, the CRO has

highlighted a significantly high level of change across the Group to both its strategic objectives and operating

model, and the broader plans in place to stabilise the business, which has increased strategic performance risk and

thus remained a key focus.

– The Risk function has had an active role providing oversight, challenge and support to the range of strategic

initiatives that have been implemented during the year, which encompass the offshoring of aspects of customer

services, the reduction in the Group’s TCR, the delivery of Gateway across the Group and, more recently, the strategy

development.

– The Group continues to quantify the actual and potential impacts of climate-related risks and opportunities on our

business, strategy and financial planning. ICAAP activity takes account of material climate-related financial impacts,

meeting PRA requirements. Further detail of the governance and management of the climate-related risks and

opportunities and our TCFD disclosure can be found in the sustainability section from page 19.

Links to strategic

themes

P12

Model

The risk of financial

losses where models fail

to perform as expected

due to poor governance

(including design and

operation).

Key considerations

Models are widely used across the Group and play an important role in helping achieve key business decisions, risk

management and strategic objectives. The use of models carries inherent risk to the Group due to their underlying

assumptions, methodologies and complexities. Effective model governance, oversight and validation of models are

key in mitigating model risk across the Group.

Mitigating actions

– A model risk management framework, policies and standards are in place and align with the PRA’s Model Risk

Management Principles.

– A Model Risk Committee has been established to provide model risk oversight with supporting technical forums

created to review model developments and model performance monitoring across the Group.

– A model inventory is in place and reviewed on a regular basis.

– Material models are independently validated and corresponding validation findings and actions are

regularly tracked.

– Planned enhancements to existing IFRS 9 models and the model monitoring framework have been completed.

Links to strategic

themes

Principal risks continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Viability statement

In accordance with the 2018 FRC Corporate Governance Code,

the directors confirm that they have a reasonable expectation

that the Group will be able to continue to operate and meet

its liabilities as they fall due over the next three years to

31 December 2026 (the Viability Period). The Viability Period

represents the period over which the Board has a reasonable

degree of confidence over anticipated events, including

prospects for the macroeconomy, and also provides an

appropriate outlook over the medium to long term.

In making the Group viability statement, the directors have

made an assessment of the Group’s current financial position

and prospects, as outlined within the Strategic Report,

together with the principal risks and other factors likely to

affect the Group’s future performance and development. This

assessment is made following consideration of a wide range

of information, including:

– the Group’s corporate plan, updated in 1Q24 to capture

latest outer year projections, which sets out financial,

capital, liquidity and funding projections, together with an

overview of relevant risks;

– the principal and emerging risks which could impact the

performance of the Group;

– a severe but plausible stress testing scenario, which

is designed to assess the potential impact of certain

underlying risks on the Group’s capital and funding

resources, together with the availability and effectiveness

of mitigating actions; and

– reverse stress testing analysis, which is designed to assess

the point at which the Group is no longer a viable concern.

The Group’s corporate plan was approved by the Board in

March 2024. In doing so, the Board has reviewed detailed

forecasts for the three-year period to December 2026 and

also considered less detailed forecasts for 2027 and 2028.

These higher-level, outer year forecasts do not contain any

information which would cause different conclusions to be

reached over the longer-term viability of the Group.

The Group’s annual planning process takes into account

the Group’s strategic objectives and business model. The

business model focuses on relatively short-term lending

to consumers and operates conservative underwriting.

The plan makes certain assumptions about the regulatory

environment, future economic conditions and anticipated

changes within the markets in which the Group operates and

also makes an assessment of the Group’s ability to fund new

business growth.

The Board obtains independent assurance from Group Risk

over the alignment of the corporate plan with the Group’s

strategy and the Board’s risk appetite. Specific focus is

placed on capital risk as well as liquidity and funding risk. The

assessment also considers the key risks which may impact

delivery of the Group’s operating plan. The Group’s principal

risks are included on pages 46 to 50.

The corporate plan is based on a macroeconomic scenario

which was in line with market consensus estimates and which

assumes that the UK economy would remain weak, with

expectations of relatively flat GDP through 2024 driven by a

sustained elevated UK Bank Rate and a higher tax burden.

Inflation is expected to remain at ~4% in early 2024 before

subsequently falling through the second half of 2024 and

beyond. The plan assumes that the UK unemployment rate

rises in 2024 and 2025, peaking above 5% in 2026.

The Board conducts a number of specific reviews of the

corporate plan provided by Group and divisional management,

alongside other regular briefings on and discussion of new

strategies, business developments and current financial

performance. These reviews consider a range of market

opportunities and developments, together with associated

risks from within the Board’s risk appetite framework.

The Group manages its liquidity to meet the Overall Liquidity

Adequacy Rule (OLAR) and to ensure that it can meet its

liabilities as they fall due. The level of liquidity required by

the OLAR is determined by the Internal Liquidity Adequacy

Process Assessment (ILAAP) and is based on an analysis of

the Group’s business as usual forecast cash requirements

but also considers their predicted behaviour in stressed

conditions. In recognition of the waiver received in November

2022, which allows Vanquis Bank Limited to fund the vehicle

finance business, the ILAAP also includes an assessment

of the liquidity needs of the wider Non-Bank Group. The

Group has sufficient access to liquidity resources, including

retail deposits, secured funding on its assets and access to

wholesale markets. Furthermore, the Group has plausible

options available to it, should the need arise, to either reduce

the liquidity requirements or increase the amount of liquidity it

has (or can raise).

The corporate plan has been stress tested using a severe

macroeconomic scenario which is broadly consistent with

the “rates-up” scenario published by the PRA on 14 October

2022. The stress test scenario envisages that the UK economy

enters a period of stagflation in 2023 with inflation rising to

approximately 8.6% and the UK Bank Rate rising to 6.75%. As a

result, the UK unemployment rate rises to approximately 8.1%.

The stress test scenario takes into account the availability

and effectiveness of mitigating actions which could be

taken by management to avoid or reduce the impact of

the macroeconomic stress. These management actions

could include but are not restricted to restricting variable

pay, reducing lending growth, and/or changing the dividend

payout. The corporate plan has also been reverse stress

tested to the point of non-viability after reflecting available

mitigating actions. The viability assessment concluded

that the Group’s viability only comes into question under an

unprecedented macroeconomic scenario.

The directors also considered it appropriate to prepare the

financial statements on the going concern basis, as set out

on page 92 and page 129.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Chairman’s introduction to governance

Dear Shareholder

I am pleased to introduce the Corporate Governance Report

for 2023 on behalf of the Board, my first as Chairman, having

joined the Board as a non-executive director in April 2023 and

taking over as Chairman in September 2023. I am delighted

to have joined Vanquis Banking Group and look forward to

working with, and supporting Ian, the executive team and our

colleagues to deliver on our Purpose.

I have spent time getting to know people across the business,

and have been greatly impressed by the calibre of our

employees and the collegiate culture as we set out to achieve

our refreshed strategic ambitions. You can read in detail

about our story and our strategy in our Strategic Report on

pages 1 to 31. 2023 has been a challenging year for the Board

and executive team. Externally with economic uncertainty,

including a steep rise in interest rates, we were, and remain,

mindful of the challenges these factors pose for our

customers. The rise, particularly in the fourth quarter of 2023,

of speculative complaints from CMCs has created additional

headwinds. Nevertheless, we remain focused on supporting

our customers well and providing products and services that

deliver good customer outcomes. Alongside this, we have

sought to re-instil an appropriate operating discipline. We are

not a social enterprise, but a commercial organisation with

the ‘S’ in ESG at the core of our business.

The following pages explain the Group’s governance structure

and key activities undertaken by the Board and its committees

during the year in order to ensure effective decision making

and oversight of our strategy, business model and performance.

The report also describes how we have applied and complied

with the UK Corporate Governance Code 2018 (the Code)

during the year.

Our Purpose and culture

At the heart of everything we do is our Purpose, to deliver

caring banking so our customers can make the most of life’s

opportunities. In late 2023 we announced we were conducting a

strategy review and would inform stakeholders of the outcome

of the review as part of our results process in March 2024.

The strategy review looked at our Purpose, and it has been

refreshed to reflect the changes we have made, and will now be

embedded in the Group, and its culture, as we start to implement

our strategy in 2024.

I am pleased to report that we delivered our Consumer Duty

Programme including the Governance workstream which

delivered enhancements to our reporting to ensure that

the customer and customer outcomes are ever present in

This report explains the main aspects of the Company’s

governance structure to give a greater understanding of how

the Company has applied the principles and complied with the

provisions of the Code. The Corporate Governance Statement

also explains compliance with the FCA’s Disclosure Guidance

and Transparency Sourcebook. The UK Corporate Governance

Code is published by the Financial Reporting Council (FRC) and is

available on its website, www.frc.org.uk. The Board considers that

for the year ended 31 December 2023 the Company complied

in full with the provisions of the 2018 UK Corporate Governance

Code (the Code). Further information on the Company’s corporate

governance arrangements and compliance with the Code can be

found as follows:

Page

Code

principles

Board leadership and Company Purpose 52

Chairman’s introduction to governance 52

Our Board 54 A

Setting our strategy 57 C

Promoting long-term sustainable success:

Board focus areas during 2023 59 A

The Board: our culture 61 B

Stakeholders and decision making 63

Stakeholder engagement

and decision making 63 D, E

Effective engagement with shareholders

and stakeholders: investor relations 67 D

Division of responsibilities 68 F, G, H, I

Composition, succession and evaluation 70

Board composition 70 J, K

Director induction and training 71

Assessing Board performance - annual

Board evaluation 71 L

Nomination Committee Report 73 J, K

Customer, Culture and Ethics

Committee Report 78 B, D

Audit, risk and internal control 80

Audit Committee Report 80 M, N

Risk Committee Report 84 O

Directors’ Report 87

Directors’ Remuneration Report 93 P, Q, R

“

It has been a year of change and

challenge. As I commence my

tenure as Chair, I am encouraged

by the focus on strategic clarity and

operational discipline, supported by our

governance and culture, which aims to

deliversustainablesuccessforthebenefit

of all stakeholders.”

Sir Peter Estlin

Chairman

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

our decision making. The Group has been working towards

better integrating its businesses for some time and this year

we took a major step toward this with the appointment of

a Chief Customer Officer. Jill Armstrong joined the Group in

this role in early 2024 to support the development of a clear

and consistent customer proposition across all our products.

You can read more about how we support our customers on

pages 9 to 11 and 29 to 31 of our Strategic Report.

Our inclusion and diversity ambition remains to build and

sustain an inclusive culture and diverse workforce which

will help us to respond to the needs of our diverse customer

base and support our Purpose. I have been impressed by

the Group’s now well-established inclusion and diversity

framework; the high levels of colleague engagement with the

Affinity Groups encourage open conversations and sharing

of ideas.

You can read more about the Board’s role in shaping and

overseeing our culture during 2023 on pages 61 and 62 and

in our CCE Committee Report on page 78. You can also

read about the Board’s activities in relation to the oversight

of inclusion and diversity in our leadership team and

wider workforce in our Nomination Committee Report on

pages 73 to 77.

Board composition, succession and

effectiveness

There were a number of Board changes in 2023 in addition to

my appointment. In August 2023, Ian McLaughlin joined the

Board as Chief Executive Officer and member of the Board.

Ian is a highly experienced banking CEO and has a strong

track record of delivering growth through improving customer

service and enhancing distribution throughout his extensive

financial services career in consumer finance. Dave Watts

joined as Chief Financial Officer in November 2023 and is an

experienced CFO with extensive banking knowledge. Michele

Greene joined as non-executive director in March 2023 and is a

member of the Nomination and Risk Committees. You can read

more about Ian’s and my appointments and the Nomination

Committee’s work on pages 73 to 77.

Andrea Blance, our Senior Independent Director (SID), stepped

down at the end of January 2024 after seven years of service

and Angela Knight, a valued member of the Board and Chair

of the Risk Committee, has taken on the role of SID. I would like

to thank Andrea for her dedicated service to the Group since

her appointment and for leading the recent Chair succession

and appointment process. A number of our non-executive

directors are approaching the end of their second three-year

terms in 2024 and as such the Nomination Committee has

been taking actions to ensure proactive and robust plans are

in place for succession. At its meeting held on 26 March 2024,

the Board noted that Elizabeth Chambers and Margot James

had decided to step down from the Board with effect from

15 May 2024 and would accordingly not submit themselves

for re-election at the 2024 AGM. I wish to thank them for their

valued contribution to the Board during their tenures. At their

26 March 2024 meetings, the Nomination Committee and

Board approved the appointments of Karen Briggs, Oliver Laird

and Jackie Noakes as non-executive directors with effect from

27 March 2024. Karen, Oliver and Jackie will submit themselves

for election at the 2024 AGM. You can read their biographies on

our website and in the 2024 AGM Notice when published, and we

will report on their appointment processes in next year’s report.

Diversity and inclusion also continues to be a focus area for our

Nomination Committee when reviewing our Board composition,

talent and succession plans. You can read more about both

these activities in the Nomination Committee Report.

This year the Board undertook an internally facilitated

performance review, the results of which are discussed on

pages 71 and 72 alongside progress that we have made

to address our 2022 review actions. Several strengths were

noted in the report, including that of the Board committees,

which continue to remain fit for purpose. The Board is keen

to ensure that a simple, purposeful and efficient governance

structure is maintained and agreed to reduce the size of the

Board to nine members over time, whilst ensuring the Board

has the appropriate balance of skills, experience and diversity.

Following the positive progress made by the Customer Culture

and Ethics (CEE) Committee, oversight of the areas within the

CCE Committee’s remit have been moved to the Board and

other Board committee agendas. Our new NEDs bring strong

technology, operations, risk and audit skills as identified in our

Board Skills Matrix.

Effective risk management and governance

The Board, through its Risk Committee, has paid particularly

close attention to strategic performance risk as a result of

significant changes taking place in the Group during the

year. The Risk Committee received enhanced risk reports

throughout the year and will continue to be mindful of the

financial challenges facing our customers. With strategic

performance risk top of mind, the Risk Committee has

requested specific second and third line assurance over

prominent projects.

Our principal risks were updated during 2023 recognising

the evolution of the breadth and types of risks the Group is

exposed to and its operating environment. A description of the

Group’s principal risks and mitigating actions can be found on

pages 44 to 50.

The Group’s Risk Harmonisation programme concluded in

December 2023 and is delivering on its objective to provide an

integrated and stable approach to risk management across

the Group. You can read more about risk management and

our principal and emerging risks and mitigations, on pages

44 to 50. The report from our Risk Committee can be found on

pages 84 to 86.

Growth and sustainability

The Board continues to provide oversight and challenge to the

executive team to ensure the Group’s strategy is truly purpose

driven, achievable and ultimately delivered. You can read

more about how we have overseen strategy on pages 57 to 58

and about our principal decision on the acquisition of Snoop

on page 41.

Stakeholders and section 172 of the

Companies Act 2006

Effective engagement with our stakeholders, employees

and wider stakeholders is key to sustainable success. Under

section 172 of the Companies Act 2006, directors must act in

a way they consider in good faith, would be likely to promote

the success of the Company for the benefit of its shareholders

as a whole. In its decision making, the Board also considers

wider stakeholder interests. Our Section 172 Statement,

which explains how the directors have discharged their

responsibilities during the year under review, can be found

on pages 40 and 41.

For further information on environmental, social and

governance (ESG) matters, please see our Sustainability Report

and Task Force on Climate-related Financial Disclosures (TCFD)

on pages 14 to 28.

Annual General Meeting

Our AGM will be held at 3.30pm on 15 May 2024 at the offices

of Clifford Chance LLP, 10 Upper Bank Street, Canary Wharf,

London, E14 5JJ. I look forward to meeting shareholders at

the AGM, together with my fellow directors.

Sir Peter Estlin

Chairman

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Our Board

Sir Peter Estlin

Chairman

Appointed as Chairman: 15 September 2023

Joined the Board: 19 April 2023

Tenure: Less than 1 year

Career and experience:

Peter is a senior finance professional with a

35-year career in banking and finance with PwC,

Citigroup and Barclays. Peter was knighted in

2020 for his services to international business,

skills and inclusion, he also served as the 691st

Lord Mayor of the City of London from 2018

to 2019. In 2013, Peter stood for election as an

Alderman for the City of London, a role he

still holds today. He qualified as a Chartered

Accountant with Coopers & Lybrand in 1993,

where he later became a Partner, before joining

Citigroup where he held the role of CFO for the

Asia Pacific and, latterly, the Global Corporate

and Investment Bank businesses. From 2008

Peter held senior roles at Barclays plc including

Group Financial Controller, CFO of the Retail and

Business banking division and acting Group CFO.

Peter’s contribution to the Board, key

strengths, skills and reasons for election:

Peter is a commercially and strategically

astute CFO and non-executive director who

brings both breadth and depth of banking

experience, including retail banking, and is an

experienced Chair.

– A strong leader with significant finance and

accounting experience gained in professional

services and banking, further complemented

by expertise across systems management,

financial reporting and accounting, investor

relations, treasury management, and

mergers and acquisitions.

– Extensive governance experience having

served on the boards of commercial

companies, government bodies and

numerous charitable foundations.

– Wealth of knowledge of the financial markets

and experience implementing strategy,

including significant corporate transaction

work and execution of transformation projects.

– Experienced non-executive director and chair.

Current external appointments:

– Non-Executive Director of Rothschild & Co,

NM Rothschild and WAM Co Rothschild.

– Chair of FutureDotNow.

– Non-Executive Director of the Institute

for Apprenticeships and Technical

Education (IfATE).

– Trustee at Ironmongers Trust Company.

– Chair of Association of Apprentices.

– Alderman for City of London Corporation.

Ian McLaughlin

Chief Executive Officer

Appointed: 1 August 2023

Tenure: Less than 1 year

Career and experience:

Ian has extensive banking experience across

mortgages, wealth management, savings,

insurance and motor finance. From 2019,

Ian was the CEO of Bank of Ireland UK Plc. He

has served as a non-executive director on

bank and technology company boards and

from 2012, held senior retail banking roles at

Royal Bank of Scotland (now NatWest Group)

including developing specialist consumer and

commercial financial services propositions.

Ian spent his earlier career at Lloyds Banking

Group and Zurich Financial Services.

Ian’s contribution to the Board, key strengths,

skills and reasons for election:

Ian is a highly experienced Chief Executive

Officer and board director with extensive

experience in banking and investment

management. He has a strong track record of

delivering growth through improving customer

service and enhancing distribution volumes

and channels.

– A deep knowledge of the financial services

industry and regulatory environment.

– Experience in managing complex

transformation programmes, providing

clarity on strategy, Purpose and culture, whilst

overseeing successful operational delivery.

– Delivering market leading customer

propositions that provide excellent

customer outcomes.

– Leading brand, product and proposition

development.

– In-depth understanding of UK and European

regulatory landscape.

– Non-executive director experience.

Current external appointments:

– None.

Dave Watts

Chief Financial Officer

Appointed: 1 November 2023

Tenure: Less than 1 year

Career and experience:

Dave is a highly experienced banking CFO who

worked for HSBC for nearly 30 years in a variety

of roles at global, regional and business level.

He notably established the finance function

for the UK ring fence bank of HSBC and was

subsequently the UK CFO and an Executive

Director of HSBC UK Bank plc from 2017-2021.

Most recently, Dave served as CFO and Executive

Director of HSBC Bank plc, which managed

HSBC’s business in Europe (ex. UK). Between

2015 and 2018, he was the CFO of HSBC Bank

plc. Dave’s prior roles were outside of personal

banking and wealth, including global CFO

roles for commercial banking, global banking,

operations and technology. Dave qualified as

a Chartered Accountant with KPMG and is also

a qualified treasurer.

Dave’s contribution to the Board, key

strengths, skills and reasons for election:

Dave has over 35 years of financial services

experience. He has a proven track record

executing strategy while supporting both the

business and support functions, delivering

on significant challenging multi-year

transformations and projects while enhancing

engagement with all stakeholders.

– A highly experienced finance leader with

extensive banking experience.

– A strong treasury background with

experience in challenging liquidity, funding

and capital matters, in entities with differing

regulatory requirements.

– A proven track record of enhancing

engagement and relationships with various

external stakeholders, including regulators.

– A strong cost management capability

having led numerous cost management

and reporting initiatives.

– Non-executive director experience.

Current external appointments:

– Non-Executive Director of CAF Bank.

Board of Directors

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Committee key:

Audit Committee

Customer, Culture and Ethics Committee

Disclosure Committee

Nomination Committee

Remuneration Committee

Risk Committee

Committee Chair

Elizabeth Chambers

Independent Non-Executive Director

Appointed: 31 July 2018 (to stand down on

15 May 2024)

Tenure: 5 years

Career and experience:

Elizabeth is an experienced board director,

senior financial services executive, strategist

and marketing leader in the UK and globally.

Her previous board experience includes being

a Non-Executive Director at Hastings Group

plc, Dollar Financial Group, Hibu plc (formerly

Yell Group) and The Home and Savings Bank.

Elizabeth served on the board of Western Union

International Bank as Chief Strategy, Product

and Marketing Officer and boards relating

to consumer finance joint ventures between

Barclaycard and other brands, such as Argos

and Thomas Cook. She has extensive executive

experience through roles including Chief

Marketing Officer at Barclays and Barclaycard,

Enterprise Marketing Executive at Bank of

America and Partner at McKinsey & Company.

Elizabeth’s contribution to the Board, key

strengths, skills:

Elizabeth brings more than 30 years of experience

in strategy, marketing and product development

across a range of financial services. As an

executive, she has a long track record of driving

revenue growth and solving complex business

challenges at major global financial institutions.

In various roles she has led businesses through

brand and reputation transformations,

strengthened customer acquisition and

engagement, built innovative digital businesses,

and led major business turnarounds.

– C-suite marketing and communications

executive, board director and strategist.

– Proven people leader.

– Broad and deep knowledge of financial

services, including credit cards and

payments products, a wide range of

customer loan segments and marketing

in a regulated environment.

– Substantial expertise in turnarounds, as well

as M&A and cultural change.

– Wide exposure to international operations

and the unique challenges of leading them.

Current external appointments:

– Non-Executive Director of Wise Plc.

– Non-Executive Director of TSB Bank Plc.

– Non-Executive Director at Evelyn Partners and

its subsidiaries.

– Non-Executive Director at Currensea Limited.

– Operating Partner for Searchlight Capital and

its portfolio companies.

– Non-Executive Director of University of

Colorado Health Authority (non-profit).

Paul Hewitt

Independent Non-Executive Director

Appointed: 31 July 2018

Tenure: 5 years

Career and experience:

Paul is an experienced chief financial

officer, chairman, non-executive director

and audit committee chair who operates

in a number of different sectors. Paul’s past

non-executive director roles include chairing

the audit committees of Tokio Marine, Kiln,

NEST Corporation, Tesco Bank, Collins Stewart

Hawkpoint and Charles Taylor Plc. He began

his executive career in finance, working for

over 20 years as a finance director of various

companies, culminating in becoming

Deputy Group Chief Executive and CFO of the

Co-operative Group between 2003 and 2007.

Paul’s contribution to the Board, key

strengths, skills and reasons for re-election:

Paul’s varied and wide-ranging career is built

on a successful career in finance. He has a

track record of creating and realising value

for shareholders and has worked across a

number of sectors including financial services,

technology, healthcare, retail and business

services. Through his non-executive roles

he has helped several management teams

adapt their business models to respond to,

and anticipate, changes in their competitive

and regulatory environments. In both his

executive and non-executive career he has

had extensive experience of transactions and

ensuring that businesses have an appropriate

financial structure.

– Experienced non-executive director,

chairman and chief financial officer.

– Broad experience of the financial services

industry and the regulatory environment.

– Strong track record in delivering good returns

for shareholders.

– Extensive experience of transactions.

– Broad experience as both an executive

and a non-executive of developing and

challenging business strategies.

– Has helped several management teams

adapt business models in anticipation of

changes in their environments and markets.

Current external appointments:

– Non-Executive Director of Trust Alliance Group

Limited.

– Non-Executive Director of ICNH Limited

(trading as DrDoctor).

– Non-Executive Director of Optalitix Limited.

– Non-Executive Director of Previsico Limited.

Angela Knight

Senior Independent Non-Executive Director

Appointed: 31 July 2018

Tenure: 5 years

Career and experience:

Angela has extensive experience in both the

public and private sectors. Prior to joining the

Board, Angela was CEO at Energy UK, the British

Bankers Association (BBA, now UK Finance) and

APCIMS (now Personal Investment Management

and Financial Advice Association). She was

previously a Member of Parliament and Treasury

Minister between 1992 and 1997 and was the

Chairman of the Office of Tax Simplification from

December 2015 to March 2019. Previously Angela

was also a Non-Executive Director at Taylor

Wimpey plc and Senior Independent Director

at TP ICAP plc.

Angela’s contribution to the Board, key

strengths, skills and reasons for re-election:

Her experience in the public sector means

Angela has a strong understanding of the

expectations of regulators and other public

stakeholders. This combination means

she is a skilled director who knows how to

manage organisations and how to challenge

management to deliver. Angela’s thought

leadership, and technical and policy skills, as

well as a deep understanding of the financial

sector, are demonstrated through her leadership

of the repositioning of Energy UK in the energy

sector and of the BBA through the banking crisis.

– Experienced Government Minister, CEO, chair

and non-executive director.

– Wealth of knowledge of the financial

services sector.

– Deep knowledge of regulated industries.

– Adept at solving difficult problems with

effective solutions.

– Understanding of public presentation, in

particular as a proficient public speaker.

Current external appointments:

– Non-Executive Director at Arbuthnot Latham

& Co.

– Non-Executive Director at Encore Capital

Group, Inc.

– Chair at Pool Reinsurance Company Limited.

* Biographies show Committee membership at the point the Committee was stood down at the end of 2023.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Board of Directors continued

Graham Lindsay

Independent

Non-Executive Director

Appointed: 1 April 2019

Tenure: 4 years

Career and experience:

Graham has held a number of senior executive

roles, including responsibility for the Lloyds

branch network and as Corporate Responsibility

Director. Graham joined the Wonga UK board

in 2016 as part of the new leadership team

engaged to improve the business and deliver

change. Graham sat on the board of the

Institute of Banking & Financial Services and on

the Professional Standards Board. He is Senior

Independent Director at One Family, a mutual

life assurance business.

Graham’s contribution to the Board, key

strengths, skills and reasons for re-election:

Graham brings to the Board extensive

experience in commercial and retail banking

following a 40-year career at Lloyds Banking

Group and a deep understanding across

all distribution channels. Graham has had

demonstrable success in focusing organisations

on their customers, ensuring they are at the

heart of decision making and product design.

Graham also has a strong appreciation of the

Group’s regulatory environment.

– Extensive customer knowledge, strong

customer focus and a track record of

enabling and overseeing businesses

to ensure that they put the customer

at the heart of what they do.

– Significant stakeholder

engagement experience.

Current external appointments:

– Senior Independent Director at OneFamily.

– Chair of the Remuneration Committee and

the Pension Trustee Board.

– Emeritus Trustee of The Brain Tumour Charity.

Margot James

Independent

Non-Executive Director

Appointed: 27 July 2020 (to stand down on

15 May 2024)

Tenure: 3 years

Career and experience:

Margot served as a Member of Parliament

between 2010 and 2019 and has held a number

of ministerial offices, latterly as Minister of State

for the Department of Digital, Culture, Media &

Sport, where she championed the interests of

both industry and consumers in the digital world.

In her role as Parliamentary Under-Secretary

of State at the Department for Business, Energy

& Industrial Strategy, Margot had responsibility

for small businesses, consumers and corporate

governance, including labour markets and the

retail sector.

Margot’s contribution to the Board, key

strengths, skills:

Margot has a wide-ranging successful career

in both the public and private sectors. Her

public sector experience provides Margot with

a strong understanding of the expectations of

regulators and other public stakeholders, as well

as strong knowledge of corporate governance,

labour markets and the UK’s technology and

retail sectors. She has a track record of driving

value for shareholders and has a demonstrable

record as a successful entrepreneur and CEO.

– Experienced Government Minister and

Member of Parliament.

– Results-focused entrepreneurial

business owner.

– Strong track record as a CEO and

business leader.

– Non-executive director and chair experience.

– Deep governance knowledge.

– Strong relationships with wider stakeholders

in a variety of sectors.

Current external appointments:

– Executive Chair WMG at the University

of Warwick.

– Emeritus Governor of the London School

of Economics.

– Non-Executive Chair at Taso Advisory.

Michele Greene

Independent

Non-Executive Director

Appointed: 9 March 2023

Tenure: 1 year

Career and experience:

Michele is a highly experienced finance

professional at executive and board level. She

has held senior roles at Virgin Money and MBNA

Europe Bank and, prior to that, she worked

across various finance functions at Goldman

Sachs, Credit Lyonnais and KPMG Dublin. At

Virgin Money, Michele was Director of Strategic

Development, where she was responsible

for establishing a credit card business on a

newly built IT platform and was subsequently

appointed as the Managing Director of the

Virgin Money Digital Bank. Prior to that she was

the Chief Financial Officer of MBNA Europe

Bank between 2005 and 2013. In 2018 Michele

co-founded Mololo Limited, a boutique advisory

company specialising in helping companies in

the payments and unsecured lending space.

Michele’s contribution to the Board, key

strengths, skills and reasons for re-election:

Michele has over 25 years’ experience of

financial services and retail banking, particularly

in the areas of payments and digital innovation.

Michele has built significant experience in the

development and growth of successful banking

businesses.

– Extensive experience of financial services

and retail banking, particularly in the areas

of payments and digital innovation.

– Chartered Accountant and experienced

business executive and finance professional

with a strong track record as a CFO and MD.

– Deep knowledge within the consumer credit,

card payments and digital banking sector.

– Proven ability to build effective working

relationships with key stakeholders, including

regulators, investors and analysts.

– Non-executive director and chair experience.

Current external appointments:

– Executive Director and co-founder of

Mololo Limited.

– Non-Executive Director of Bank of Ireland

Group plc.

– Non-Executive Director with J&E Davy

Unlimited.

– Non-Executive Director of East End Fair

Finance Limited.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

The Board is the principal decision-making body of the Group and is committed to promoting the

long-term success for the Group whilst maintaining a high standard of corporate governance.

Setting our strategy

In October 2023 the Group announced the initiation of a full

review of its strategy and its strategic ambition to become

the outstanding customer champion in our target market

segment. Following review and approval by the Board, the

Group’s strategy and strategic drivers were reset, as detailed

on pages 9, 57 and 58. The Board reviewed and discussed

the Group’s strategic refresh across a number of meetings,

including the outcome of a bottom-up assessment of the

Group’s customer and customer segmentation strategy, and

approved the strategy in March 2024. The Board will continue

to work closely with the Executive team to provide guidance,

support and oversight as the strategy is implemented. On

pages 59 and 60 you can see a review of the Boards activities

during the year and how these link to the Group’s strategy

and on pages 41, 58, 60, 65 and 74, we report on some of the

key strategic decisions made by the Board during the year,

including the strategy refresh as set out below. The Group

recognises the importance of fostering an inclusive culture to

execute our strategy in a sustainable manner. Reflecting this,

management sought to make the strategy setting as inclusive

as possible, with colleague representatives from across the

Group attending delivery committee meetings and over 160

colleague volunteers contributing to the workshops. Further

details on the alignment of our culture with our strategy are on

pages 9 to 11.

As part of the strategic refresh, it is important to ensure our

Purpose continues to clearly align with the changes to our

strategy, in order to guide our decision-making. To support

this, a review of our Purpose was undertaken alongside

the review of our strategy, which you can read more about

on page 58.

Effective governance supporting delivery

of strategic aims

The Board is responsible for approving the Group’s strategy,

as detailed in the Matters Reserved for the Board, and for

reviewing its implementation.

In carrying out their roles, the Board has established

committees who each have their own roles to support the

delivery of our strategy. The role, remit and activities of each

of the committees of the Board are summarised in the

committee reports on pages 73 to 86.

With this in mind and responding to the Board’s own

effectiveness evaluation and with a view to heightening the

Board’s focus and attention on our customers, the Board has

decided to cease the CCE Committee in 2024 and embed

most of its Customer-related responsibilities into the Board

thus , enabling the Board to directly oversee all customer

aspects of the implementation of the strategy. In support

of good governance we have a Group Delegated Authorities

Manual which clearly indicates which forum key strategic

decisions can be made and is available to all colleagues

on our intranet. We have formally documented the division

of responsibilities between our Chairman and CEO supporting

both to execute their responsibilities regarding the design,

execution and oversight of the strategy.

Examining performance and implementation

Strategic KPIs are regularly reported to the Board, through

management reports, to monitor the implementation of our

strategy. The Group CEO and CFO each report to the Board on

the Groups operational and financial performance against

budget and strategy. The Committee Chairs report to the

Board at each meeting on the work of their committee and

escalate any concerns or risks for the Board’s attention. The

CEO and Executive Committee are responsible for developing,

proposing and implementing the Board approved strategy

in line with the Culture, Purpose and Values of the Group.

In doing so, it is responsible for managing the Group’s risks

alongside the Risk Committee where these risks are overseen

in greater detail.

A transformation programme has been established to deliver

the new strategic direction and our customer-centric strategy

will be implemented over the next coming years and will be

delivered by a dedicated central transformation office.

The components of our strategy are supported by our

strategic objectives. To deliver our Purpose, we will serve our

customers with differentiated solutions that meet their needs,

current, emerging and future, across lending, Snoop (money

management insights) and savings; supported by insightful

risk management; operational efficiency and effectiveness

through our exiting platforms supported by technology

enhancements; and people and culture.

Efficient

organisation

People

and culture

Customer

centricity

Insightful risk

management

Digital, tech,

data and analytics

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Setting our strategy continued

Principal decision: H2 2023 performance reset plan and strategy review

The Board approved the performance reset programme and oversaw the Group’s strategic review, which sought to establish a customer-

centric strategy for the Group to deliver sustainable returns.

Decision making process

In September 2023 the Board considered a recommendation

to change the Group’s short-term strategy. The Board supported

a performance reset plan (the Reset) which articulated the swift

management actions required to return the Group to a path of

sustainable, profitable growth. The Board also supported a proposal

to initiate a wider strategic review that would seek to redefine the

Group’s medium and long-term strategy and which has been titled

‘North Star’.

To remain agile in the execution of the Reset proposals and considering

the relevant expertise of its members, the Board established a sub-

committee of the Board to oversee and support its implementation.

The Board and sub-committee received detailed reports from the

second line and third line providing assurance over the significant

change and possible risks arising from the simplification of the

operating model and resulting redundancy programme.

In its consideration of the medium and long-term strategy in

December 2023 and January 2024 the Board received updates

on the strategic review, including progress made in relation to our

customer strategy and regarding the 14 other workstreams subject

to the review. The Board discussed the developing customer strategy

and the competitive environment, noting the review sought to refocus

and orientate the Group’s strategy on its customers, as opposed to

being based on its products, in order to deliver a compelling customer

proposition and deliver attractive, sustainable returns for shareholders.

The Board considered how the Group would focus on making customer

journeys as intuitive and accessible as possible and on the Group’s

distribution strategy. The Board also received an update on how

insightful risk management and empowered colleagues would enable

delivery of our customer-focused strategy. Management progressed

to refresh the Purpose and further develop the strategy during the first

quarter of 2024 which was approved by the Board on 26 March 2024.

You can read details of the strategy on page 9.

Long-term consequences

Whilst naturally having a short timeframe for execution, the Reset

plan was considered by the Board as fundamental and critical

to the long-term stability of the Group, contributing to its overall

efficiency and sustainable value creation. The Board oversaw that the

redundancy programme undertaken in 2023 had been completed

sympathetically and compliantly. The work of the Colleague Forums,

at some of which the Designated Non-Executive Colleague Champion

had been present, had been instrumental in delivering this outcome

and a number of colleagues’ counter-proposals had been accepted.

The Board recognised that structuring as a customer-centric

organisation allowed future flexibility from a product and services

perspective and drove efficiency and alignment across the

organisation. The wider strategy review had the longer-term interests

of the Group at its heart, with the purpose of the review being to build

and drive a sustainable, customer obsessed business. The review

of the Group’s Purpose, which has been operated in parallel with

the strategy review, underlined the long-term approach taken.

Balancing stakeholder interests

The Board oversaw management developing the strategy having

sought suitable professional and independent advice and in

collaboration with its stakeholders, corporate brokers, colleagues

and customers. The Board had encouraged the collaboration

with colleagues and was heartened by the participation of more

than 160 colleagues in the workshops and roadshows throughout

the organisation to help define the strategy and refresh the

Group’s Purpose, demonstrating the colleagues’ passion for its

customers and the business. Senior leaders were also significantly

involved in the review of our Purpose. Qualitative and quantitative

customer research had been completed and presented to the

Board to identify the Group’s target customer segments. Delivering

sustainable returns for shareholders is at the heart of the strategic

planning process. The Board noted that management had

maintained proactive dialogue with its regulators and considered

carefully how colleagues were impacted by its Reset plan and the

proposed strategy, and how people and culture were enablers of

the delivery of the new strategy.

Challenges

The Board recognised that there had been a large amount of

change in the Group and that the Reset and customer-centric

strategy required collaboration and support from all stakeholders,

particularly colleagues and shareholders. The Board noted the

actions taken by the refreshed executive management team to

unify and inspire colleagues through an engaging, open and

accountable communication style. The Board also recognised the

efforts to connect with shareholders and that a comprehensive

Strategy Seminar had been arranged for 27 March 2024.

Links to stakeholders Links to strategic themes

21 43 5

Links to risks

Links to s.172

P10

P11

Strategic themes

Find our key risks on

page 44 to 50

Links to risks

Customer Centricity

Insightful Risk Management

Efficient Organisation

Digital, Tech, Data

and Analytics

A great people proposition

Links to s.172Links to stakeholders

Customers

Colleagues

Regulators and

Government

Shareholders

Communities

Suppliers

The need to act fairly as between

members of the Company

The likely consequences of any

decision in the long term

The interests of the

Company’s employees

The need to foster the Company’s

business relationships with suppliers,

customers and others

The impact of the Company’s

operations on the community and

the environment

The desirability of the Company

maintaining a reputation for high

standards of business conduct

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Promoting long-term sustainable success: Board focus areas during 2023

Board meetings follow a carefully considered agenda that is agreed by the Chairman, in conjunction with the CEO and General

Counsel and Company Secretary. Board meetings comprise the matters required to ensure effective performance and

governance of the Group, including operational and financial performance, governance matters and chosen deep dives into

areas of strategic importance. The following pages provide examples of key Board activities during the year.

Strategy

Links to s.172

Links to

stakeholders

The Board oversaw the review of our strategy and approved the updated strategy in

March 2024. See page 58.

Approved the acquisition of Snoop. See page 41.

Reviewed progress of the Group’s second charge mortgage business and its future

strategy, providing approval to implement the necessary next steps to develop

the business. The Board discussed the risk control environment and processes

implemented for the second charge mortgage business.

Reviewed how the Group was perceived externally and the approach to further

developing the Group’s reputation following its repositioning as a specialist

banking group. The Board discussed its engagement approach with key

external stakeholders.

Budget, financing and performance

Links to s.172

Links to

stakeholders

Approved the 2024 Budget.

Approved a final ordinary dividend for recommendation to shareholders and the

payment of an interim dividend.

Reviewed and approved changes to the Group’s intra-group funding arrangements

in order to support effective implementation of the Group’s funding strategy.

IT, cyber and resilience

Links to s.172

Links to

stakeholders

Reviewed the progress of the development and implementation of the Group’s

technology strategy, including benefit realisation, alignment with the Group’s

strategy and customer goals, risk management, areas for enhancement and the

associated people strategy.

Received updates on our technology and change teams and portfolios and how

they supported delivery of the Group’s strategic priorities and objectives. The

Board was updated on the impact of IT system outages, information security and

data strategy.

Reviewed the Group’s operational resilience self-assessment and reviewed the

implementation of the action plan to enhance operational resilience. Reviewed the

Group’s business continuity management arrangements and preparedness.

Governance and risk

Links to s.172

Links to

stakeholders

Approved a retail shareholder engagement programme and a programme to

trace gone-away shareholders and reunite them with their shares and unclaimed

dividends.

Received an investor update, including feedback on investor views and priorities,

and discussed the Group’s investor engagement strategy.

Regularly reviewed the Group’s principal risks and considered the annual

assessment of the effectiveness of our risk and internal control framework.

People and culture

Links to s.172

Links to

stakeholders

Oversight of the outsourcing of activities, including consideration of the benefits

case, customer needs and any impact of outsourcing on them and on colleagues.

Reviewed the results of the Colleague Survey and Culture Survey. The Board considered

the themes and insights from the results and discussed the action planning approach

in relation to opportunity areas, including in relation to culture and values.

Received a whistleblowing update, considering whistleblowing activity and

proposed enhancements to the whistleblowing process for 2023 and provided

approval of changes to the Whistleblowing Policy.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Promoting long-term sustainable success: Board focus areas during 2023 continued

Customer and regulatory

Links to s.172

Links to

stakeholders

Received an update on customer complaint performance and resolution, including

progress on root cause analysis and how this was being used to improve the

customer journey.

Reviewed progress on the Group’s response to the implementation of the FCA’s

Consumer Duty. The Board was updated on what changes had been made to align

with the Consumer Duty and how oversight would be in place to ensure continued

alignment.

As part of its oversight of the review of the Group’s strategy, the Board considered

the Group’s customer strategy. See page 58.

Reviewed progress following the launch of a new vehicle finance personal contract

hire product, including project product performance, key risks and mitigations and

customer outcomes and feedback.

Looking forward to 2024, focus areas are expected to include:

– overseeing the implementation of our strategy, including the development of compelling propositions for all target

customer cohorts;

– enhancing shareholder engagement; and

– considering longer-term industry issues, such as knowing our customers in a digital world.

Principal decision: launch of new savings products

The Board approved the broadening of the range of savings products the Group offered customers to include 90 and 120-day notice

accounts to complement its existing range of one to five-year fixed rate accounts and improve customer choice.

Product governance

As part of our Product Management Framework (PMF), Board

approval is required to approve the launch of new products.

The PMF enables a consistent approach to managing

existing products and developing new products, including

design, delivery and ongoing monitoring.

Decision making process

The Board considered the risks and benefits to both the

Group and to its customers of VBL introducing notice

accounts. It was noted that Notice Accounts support the

diversification of the Group’s product offering, diversifying

the Group away from the competitive environment and

concentration risk of fixed-term deposits. The Board also

considered how Notice Accounts supported the Group’s

funding strategy and formed part of its retail banking

strategy, noting that the Group’s stable and contractual

funding mix created some capacity for behavioural-based

deposits while also reducing some of the refinancing risks

of fixed-term deposits. The risks and benefits case for the

Notice Accounts also considered the impact of introducing

the products on the Group’s liquidity.

The Board reviewed the benefit to customers of Notice

Account products in the context of the customer saving

needs identified by the FCA in its research, which would

provide customers with more choice and enable the

Group to attract and meet the saving needs of more

customers, so increasing the pool of available funds

to the Group, but that required prudent management

for the risk of unexpected outflows. The Notice Account

proposal presented to the Board set out how the product

was aligned with the Consumer Duty and included a fair

value assessment. The Board considered how the product

would be operated in conjunction with an external service

provider and discussed and challenged management

on the required capabilities of that supplier to ensure

customers could be provided with the necessary service

levels. The Board also noted the capabilities and process

changes required for colleagues to introduce the

new product.

The Board was provided an assessment of the risks

associated with the launch of the Notice Account products,

including funding, liquidity, market, legal and operational

risk. Risk parameters were agreed as appropriate to

the product.

Approval

Following due consideration, the Board approved the

introduction of a 90-day and 120-day Notice Account into

the VBL savings product portfolio.

Links to stakeholders Links to strategic themes

Links to risks

P11

Links to s.172

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Refreshing our business values to underpin

the culture we want to create –

The Vanquis Way

We know that culture is an important strategic differentiator

and fundamental to our success to deliver our Purpose,

mission and strategic priorities.

As reported on page 9, our strategy review has led us to

review and re-articulate our Group Purpose: ‘to deliver

caring banking so our customers can make the most of life’s

opportunities.’ The Board has overseen the review of our

strategy and reviewed and agreed the re-articulation of the

Group’s Purpose.

During the year we also launched The Vanquis Way,

recognising that a big part of coming together as Vanquis

Banking Group and evolving the way we do things was the

need to establish collective cultural standards and agree

expectations for this new phase of our journey. The Vanquis

Way articulates how we come together to achieve long-term

success and make our business a great place to work and

you can read more about this on pages 61 and 62. As reported

on page 62, during the year a Culture Survey was undertaken

to help us understand where we were getting it right with

fostering our desired culture and where we need to do better.

As the Board committee is responsible for overseeing our

culture, the CCE Committee reviewed the results of this survey,

as set out on pages 61 and 62.

Leading by example

The Board and its members play a key role in supporting

the embedding of the desired culture through leading by

example. Our governance framework reflects the key role the

Board plays in culture, with the Board and its committees

each having responsibility for areas where culture can be

monitored, as described further below. This is underpinned

by an appropriate flow of information, enabling the Board

and its committees to oversee management and challenge

performance, culture and strategy. Our Board understands

that a strong culture, supported by good governance, enables

long-term growth and generates sustainable value for our

stakeholders. You can also read about how the Board has

had regard to the interests of our stakeholders and their

s.172 responsibilities to deliver long-term growth on pages

40 and 41.

We have a Designated Non-Executive Colleague Champion,

who is also the Consumer Duty Champion. This is a key role

in facilitating the Board’s oversight of our customer-focused

culture. The Board recognises the importance of colleague

feedback to embedding our culture and taking action when

needed. Our Designated Non-Executive Colleague Champion

attends Colleague Forum meetings and undertakes other

colleague engagement, feeding back colleague views in

order to shape Board discussion and consideration. You

can read more about this on page 67. Feedback is collated

through various other mechanisms such as the Colleague and

Pulse Surveys, Colleague Forums, policies and whistleblowing

tools, the output of which is reported through various Board

committees. This year we have seen a shift in the role that the

Colleague Forum Chairperson plays, taking a more active role

in leading the agenda and driving the actions. We have also

seen more guest speakers including Board directors invited to

the sessions to enhance exposure of the Colleague Forum.

The Board: our culture

Feedback taken from last year has ensured that this year

there has been earlier engagement with the Colleague Forum

to utilise its views and feedback as we continue to focus on

building our culture. We saw this come to life through the

development of The Vanquis Way and the launch earlier this

year where the Colleague Forum representatives played an

important role together with other members of the Executive

Committee to shape The Vanquis Way.

Our inclusion and diversity ambition remains to build and

sustain an inclusive culture and diverse workforce which

will help us to respond to the needs of our diverse customer

base and support our Purpose, to deliver caring banking

so our customers can make the most of life’s opportunities.

During the year, we improved our ability to benchmark our

I&D performance, and we have become members of LGBT

Great and Investing in Ethnicity. Our Nomination Committee

oversees our performance in relation to diversity and

inclusion, and further details can be found on pages 73 to

75. Our non-executive directors play an important role in

supporting our diversity ambitions, including attending key

internal events as set out below.

Embedding our culture

Since joining the Group, Sir Peter Estlin has visited all Vanquis

office locations, and has met informally with many of our

colleagues. Michele Greene joined Peter for his visit to

Petersfield in July where they met the senior leadership team.

Peter visited both Bradford and Chatham offices in August,

where he and the Chief Operations Officer hosted a town hall

at which colleagues were encouraged to share key priorities

within their functions. Peter plans to make regular visits to

Petersfield and Chatham in the future.

Margot James also attended several of our inclusion and

wellbeing calls and events, playing an active part to support

our inclusion and diversity agenda. On International Women’s

Day, Margot was part of a panel of speakers who shared their

own experiences to celebrate all the different types of women

we have in VBG, and to highlight the theme of 2023, Embrace

Equity. More recently, Margot attended a call on financial

wellbeing and during Black History Month, a time to talk

session, where the CEO and Founder of Investing in Ethnicity

joined us to share her experiences with colleagues.

As noted above, Graham Lindsay, our Designated Non-

Executive Colleague Champion, has continued to attend

regular Colleague Forum sessions during this year. Paul

Hewitt, Chair of the Audit Committee, and Margot James,

have also attended Colleague Forum meetings to receive

direct colleague feedback and engagement. At each event,

time has been given on the agenda for our Board members

to introduce themselves and also for there to be a good two-

way conversation and sharing of views on different colleague

matters. This has been well received by colleagues.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Refreshing our business values to underpin

the culture we want to create –

The Vanquis Way continued

Assessing and monitoring our culture

In addition to the colleague engagement reported above,

the Board and its committees monitor the alignment of the

Group’s culture with our Purpose, values and strategy, through

a variety of mechanisms, cultural indicators and reporting

lines including those summarised below:

– feedback via the Colleague Forum and Designated Non-

Executive Colleague and Customer Champion;

– feedback on our colleague and cultural surveys;

– monitoring our Conduct Dashboard;

– monitoring whistleblowing cases;

– risk adjustment assessment of remuneration outcomes;

– monitoring of our control environment, including internal

and external audit actions;

– our risk framework and risk culture are overseen by the Risk

Committee; and

– gender pay gap disclosures.

You can read more about our colleague engagement initiatives

on page 63 and find the results of our surveys on page 16.

Actions are identified based on the lowest scored questions

and tracked by the Board in order to improve engagement

and make the Group a healthier place to work. You can also

read more about the work undertaken by our Nomination

Committee around I&D activities on pages 75 to 77.

The results of the culture survey carried in May 2023, the first

carried out by the Group, showed that 67% of colleagues

agreed “We cared about people”; 66% felt “We pull together

as a team” and 63% felt “We get the right things done. 180

colleagues across the business met with Executive Committee

members at our four offices to explore insights from the

culture survey and discuss how we can collectively live The

Vanquis Way. The roadshows proved highly valuable as they

allowed Executive Committee members to demonstrate their

commitment to The Vanquis Way and engage directly with

colleagues at all levels. A full colleague survey was carried out

in December 2023, the results of which reflected the extent of

changes in the Group in the fourth quarter, which you can read

about on pages 12 and 16. Roadshow feedback and insights

from local team culture sessions will inform our ongoing

culture campaign.

Aligning culture and incentives

Our Reward Framework and incentives play a key role in

driving the desired behaviours and culture. We invest in our

colleagues through recognition, reward, development and

wellbeing. Colleagues are recognised through our ‘Better

Everyday’ recognition platform and our ‘Perks at Work’ scheme,

which offers colleagues in-store and online rewards and

discounts, online training courses and mental wellbeing courses.

In May, we launched ‘Way to Go!’ which is our new and refreshed

Group-wide recognition approach that will help us celebrate

and thank colleagues who are living and demonstrating our new

values. This has landed very positively, and we had more than

250 recognition awards sent in the first two weeks. In July 2023

we introduced our new performance management behaviours

which are aligned to The Vanquis Way. The Remuneration

Committee reviews workforce remuneration policies and

practices and assesses their alignment with the culture and

strategy of the Company. Gender pay gap disclosures are also

considered annually to ensure practices are consistent with the

Company’s values. Further work of the Remuneration Committee

can be found on pages 93 to 95.

During the year, our Designated Non-Executive Colleague

Champion, together with our Reward team, engaged the

Colleague Forum on our Reward Framework and how executive

director remuneration aligns with the wider colleague population.

The conclusion of this engagement was that executive

remuneration aligns with the wider Company pay policy and

there were no anomalies specific to the executive directors.

Colleague wellbeing

We recognise the importance of promoting a positive culture of

mental health and wellbeing, where all colleagues, regardless

of their backgrounds and experiences, feel respected and

supported. We believe that everyone can contribute to their own

mental health and wellbeing, as well as support others in taking

care of their wellbeing. To achieve this, all colleagues and their

families have access to a confidential Employee Assistance

Programme (EAP) provided by Health Assured. This 24/7 service

offers compassionate support to our colleagues, helping them

navigate any challenges they may face at home or at work.

Additionally, we collaborate with the Bank Workers Charity to

deliver a series of webinars throughout the year that explore

wellbeing and inclusion topics. These webinars aim to raise

awareness and empathy, providing guidance and advice,

and signposting for further support. We encourage colleagues

to utilise the Wellbeing Risk Assessments and Wellness

Action Plans to proactively manage their wellbeing. We also

encourage them to work with their managers to ensure they

have the necessary support and adjustments in the workplace.

Furthermore, colleagues have access to Mental Health First

Aiders. We are proud members of Hospice UK’s Compassionate

Employers programme which aims to provide support to

colleagues during times of grief, dying and caregiving. For more

information, please see our ESG Report on pages 14 to 31.

We understand that the process of leaving the business due

to redundancy can be challenging and stressful. To support

colleagues during this transition when colleagues left the

business during 2023, we provided access to a professional

outplacement service with support from a personal career

coach. Internal workshops were arranged to support with

essential skills such as CV writing and interviewing techniques.

Additionally, we offered wellbeing support to help colleagues

build resilience and navigate uncertainty.

The Board: our culture continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Our customers are central to our Purpose. For more

information about who our customers are and the

products we provide, please refer to pages 10 and 11.

What are their interests and our areas of focus?

– Access to suitable and affordable financial products that

meet their needs.

– Reliable and high-quality service.

– Financial education, budgeting tools and value for money.

– Building trusted financial relationships to help them manage

through significant life events and mental or physical

health challenges.

Board and Company engagement

– Board has overseen the development of the Group’s strategy

which has been based on direct and indirect customer

research providing both qualitative and quantitative insights.

– Board Risk Committee and CCE Committee have overseen

the implementation of the FCA’s Consumer Duty regulations

including management’s plans to ensure good customer

outcomes.

– CCE Committee has monitored customer KPIs (see pages

12 and 13) and has listened to customer calls to review the

quality and outcome of customer service.

– Board has received enhanced management reports

to understand the impact of the cost-of-living crisis on

our customers.

– Customer discovery research conducted in August 2023 has

been used to receive feedback from customers including

testing prototype blueprint customer journeys.

Outcomes and impact on decision making

– Acquisition of Snoop to provide pathway towards digital

integration of deal finding features for customers.

– Zest partnership launched to provide access to electric

vehicles for Moneybarn customers.

– Continued development of digital features including the

launch of Apple Pay and View PIN.

– Regular customer obsession webinars held for all colleagues

to deepen customer knowledge throughout the business.

– Customer Hub for colleagues on the intranet.

– Consumer Duty review of all customer communications

and terms and conditions and a Customer Outcomes

Dashboard created.

We greatly value our colleagues who are essential to

the success of our business. Please see page 16 for more

information.

What are their interests and our areas of focus?

– Career development, remuneration and benefits.

– Company culture, wellbeing, inclusion and diversity, work-

life balance.

– Tools and resources and supporting our customers.

Board and Company engagement

– CEO records and publishes a weekly video blog (vlog) focused

on answering colleague questions.

– Chairman and CEO recorded a vlog for colleagues shortly

after the Chairman joined the business and have visited all

office locations in person to meet directly with colleagues.

– Monthly live ‘Stay Connected’ webinars have been well attended

by colleagues with business performance updates and real time

question and answer sessions with the CEO and broader ExCo.

Recordings and transcripts of these events are made available

for those colleagues unable to attend.

– All colleagues were invited to attend sessions regarding The

Vanquis Way with more than 180 colleagues attending.

– All colleagues were invited to attend sessions regarding the

strategy with more than 160 colleagues participating.

– Graham Lindsay, the Designated Non-Executive Colleague

Champion, has visited offices and attended regular

Colleague Forums and reported verbally to the Board.

– Colleague Forums meet regularly to discuss key topics and

feed back to senior management and the Board.

– Two colleague surveys have been issued during the year: a

culture survey and a Great Place to Work survey to gather

valuable colleague insights (see page 16).

Outcomes and impact on decision making

– Colleague survey results fed back to the Board, action plans

developed and focus sessions held (see page 79).

– Colleague insights and voice have been factored into the

Group’s strategy.

– Colleague feedback from The Vanquis Way culture sessions was

built into the management and colleague guides available on

the Group’s intranet.

– Colleague Forum was active during the collective consultation

on the Group’s restructure and a number of colleagues’ counter-

proposals were accepted.

– Colleague development centre launched on the intranet with

tools for career

planning, skill development, apprenticeships

and mentoring.

Customers Colleagues

Stakeholder engagement and decision making

Meaningful and effective stakeholder communication is critical to ensure the

long-term success of the Group.

We have a stakeholder engagement strategy that underpins effective stakeholder communication and supports the Board to

ensure the methods and mechanisms of engagement are appropriate and generate balanced decisions. Each year we review

and re-confirm who our stakeholders are and we prioritise our stakeholder engagement objectives accordingly.

Our S.172 Statement, which describes the impact of stakeholder engagement on the Board’s decision making, can be found on

pages 40 and 41 and has been incorporated throughout our Strategic and Governance Reports. You can read more about our

Purpose, and the evolution of our mission and strategy in the Strategic Report.

Links to strategic themes

Links to s.172

Links to strategic themes

Links to s.172

Effective stakeholder communication

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

We are committed to managing our impact on the

environment and understanding and assessing the

risks associated with climate change. Our climate risk

disclosures are consistent with the recommended

disclosures of the Task Force on Climate-related

Financial Disclosures (TCFD) and meet the requirements

of the Climate-related Financial Disclosure Regulations

2022. Please see pages 19 to 28 for more information.

What are their interests and our areas of focus?

– Sustainable business practices, supporting initiatives to manage

climate change risks and opportunities and climate-related targets.

Board and Company engagement

– Board and Audit Committee approved the Group’s TCFD

content in the Annual Report and Accounts.

– Setting of climate risk key risk indicators and performance

against them is overseen by the Risk Committee.

– E-learning module was rolled out to all colleagues on the

Group’s climate risk.

– Climate risk content and performance information included in

the Group’s ICAAP.

– CCE approved the submission of the science-based targets

to the Science Based Targets initiative (SBTi).

Outcomes and impact on decision making

– Continued certification of the Group’s environmental

management system to ISO 14001.

– Climate risk management and reporting that are consistent

with UK regulatory requirements.

– The continued development of the Group’s carbon approach

moving from carbon offsetting to carbon capture.

– Named by the Financial Times in its 2023 Europe Climate

Leaders index.

– Submitted two science-based targets to the SBTi which were

approved on 30 January 2024.

We want to do the best we can for our customers and

stakeholders. Our strategy, Purpose and values promote

a conduct focused risk culture and we are committed to

maintaining an open and honest relationship with our

regulators. Please see page 47 for more information.

What are their interests and our areas of focus?

– Conduct, compliance and fair treatment of stakeholders.

Board and Company engagement

– Regulatory engagement to introduce the CEO, CFO and

Chairman who all joined during the year.

– Ongoing regular engagement meetings have been held with

the CRO, CFO and CEO and the Group’s regulators, including

about capital management.

– Key regulatory interactions, insights and areas of regulatory

focus are reported to the Board via the Chief Risk Officer Report.

– Risk Committee has scrutinised and recommended to the

Board the 2023 ILAAP and ICAAP for approval (see page 84).

– Membership of the UK Finance and Leasing Association and

National Numeracy Leadership Council.

Outcomes and impact on decision making

– Regulatory approval granted for the Group’s Chairman,

CEO and CFO.

– In March, following the PRA’s Capital Supervisory Review

and Evaluation Process (C-SREP) the Group’s Total Capital

Requirement was reduced.

Environment Regulators and Government

Links to strategic themes

Links to s.172

Links to strategic themes

Links to s.172

Investing and rewarding our workforce

This year we launched The Vanquis Way, our cultural change plan that we believe will help us best support our colleagues

to serve our customers and achieve our strategic objectives. The Vanquis Way is defined by four clear values that our

colleagues can connect with and incorporate into their work every day. We have updated our performance management

framework to support colleagues’ set objectives that align to The Vanquis Way values and assess ‘what’ and ‘how’ they have

achieved them. Our colleagues have access our comprehensive Development Centre which has free access to tools and

resources to help them with career planning, skills development, apprenticeships, work experience and our management

programmes. You can read more about the ways in which we invest in and reward our workforce on page 90.

Stakeholder engagement and decision making continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Communities

We are committed to aiding financial inclusion and

support social mobility in the communities we serve.

To read more about our Foundation please see

www.vanquisbankinggroup.com/our-foundation.

What are their interests and our areas of focus?

– Financial education, social mobility and inclusion and addressing

the root causes of social or financial exclusion.

Board and Company engagement

– Board received updates on the investment made in the Group’s

community initiatives (see page 79).

– CCE received updates on community engagement objectives.

– Colleague paid volunteering time is supported for one day per year

and a range of opportunities to volunteer are provided for colleagues.

Outcomes and impact on decision making

– Partnered with Plain Numbers during the year in addition to

continued partnership with National Numeracy.

– School Uniform Project to provide uniforms to those in need via

School-Home Support and the Dixons Academies Trust.

– £1.4m has been invested in our community support programmes.

– Official delivery partner for Bradford UK City of Culture 2025.

– Introduced team community challenges to our London and

Petersfield offices which saw 64 colleagues supporting three

community organisations with much-needed resource.

– Team community challenges across the business have increased

with 256 colleagues giving 1,696 hours of paid volunteering time.

Communities

Principal decision: Outsourcing operations to deliver efficient and effective services for our customers

The Board approved the transition of part of the Group’s operations to two outsourced partners based in South Africa.

Decision making process

A review of the efficiency and effectiveness of the Group’s operations

was undertaken by the Group’s Chief Operating Officer (COO). The

COO recommended that the Group expand its operations with two

of its existing strategic outsourced partners to deliver a cost saving

of over £3m per annum whilst maintaining high levels of customer

care and regulatory compliance. The Board considered the initial

proposal to transfer approximately 360 colleagues by TUPE, upon

which it provided feedback and direction to management, followed

by a full and final proposal and associated supplier contracts which

it approved in May 2023. The Board, its Risk Committee and its CCE

Committee have received subsequent updates on the progress of

the execution of the outsourcing programme following its approval,

including the impact on colleagues and quality and continuity of

service for customers.

Strategy and Purpose

The Board considered that the proposal, which delivered cost savings,

also provided an opportunity to restructure the UK Operations teams

to further enhance the service delivered to customers. By filtering

low complexity queries and collections to outsourced partners the

Group had the opportunity to create highly skilled roles in the UK that

supported vulnerable and sensitive customers and their complex

needs and provided development opportunities to colleagues in

Operations in the UK.

The Board noted that, where comparison was available, the

outsourced providers’ customer satisfaction scores were consistent

with the UK and operations were to be run parallel for a set period of

time to provide continuity and an opportunity to develop skill levels.

Furthermore, the Group’s values would be embedded into training

plans by the outsourced providers in order to maintain the Group’s

customer-centric focus.

Challenges

The Board recognised the people risk for those impacted colleagues

in Operations and more widely the impact on morale of uncertainty

for all colleagues across the Group. There was potential for

reputation risk which was addressed through development of a clear

communications plan and by ensuring fair treatment of colleagues.

The Board noted that management had developed a sophisticated

communications plan for colleagues and had engaged the

Colleague Forum to ensure colleague voices and concerns were

being heard and escalated appropriately. The Board oversaw that

management had provided support to colleagues which was

easily accessible through the Company’s intranet and included the

Employee Assistance Programme. The Group had also engaged

with local employers which had active vacancies on behalf of those

colleagues at risk.

In response to there being a risk of disruption to customer service

quality and responsiveness the Board received assurance from

management that plans were in place for an orderly transition

including running services in parallel for a set period to help

maintain customer service quality. Enhanced monitoring of

customer satisfaction and service KPIs was performed.

The Board noted that both outsourced partners had regulatory

approval and were already classified as material outsourcing

partners for the Group under SYSC 8. Furthermore, the outsourced

partners had undergone comprehensive due diligence that had

covered the requirements of the Modern Slavery Act. The Board

oversaw that remuneration for those employed by the outsourced

partners was above the Real Living Wage and both the CEO and

COO visited the office locations in South Africa to meet with senior

management and employees who would be working for the Group.

Balancing stakeholder interests

The Board acknowledged the decision as complex from a

stakeholder perspective. In giving consideration to the long-

term success of the business the Board recognised as positive

for stakeholders as a whole the careful and proportionate

management of the cost of the Group’s operations. The Board

carefully considered the impact on colleagues arising from the

decision. Redundancies, whilst regrettable, were balanced by the

improvements in efficiency and effectiveness and the creation of

highly skilled roles in Operations in the UK.

The Board appreciated that to manage risks to customers

appropriately management had structured its recommendation

accordingly with customers’ needs in mind and had made suitable

arrangements to support them.

The Board noted the open and considerate style of engagement

with its regulators, which had been informed of the proposal and

recognised that customer data would remain hosted in the UK

under the UK GDPR regulation.

Links to strategic themes

Links to s.172

Links to strategic themes

Links to s.172

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Our shareholders provide capital that enables growth

and for the Group to deliver our Purpose and invest for

future success. Please see page 67 for more information.

What are their interests and our areas of focus?

– Sustainable growth, return on investment, and social and

environmental impact.

Board and Company engagement

– Our AGM was held on 25 May 2023 at which investors were

invited to be present and free to ask questions directly, in

addition to casting votes on the resolutions.

– Chairman, CEO, CFO and Interim Head of Investor Relations

have written to and met with investors and analysts and

reported back to the Board.

– Trading updates were provided via the London Stock

Exchange on the Group’s performance and strategy and

followed by roadshows with investors.

– Feedback from our corporate brokers was distributed to the

Board and senior management after updates were made to

the market.

Outcomes and impact on decision making

– The Q3 trading update on 17 October 2023 updated the market

on financial performance and key initiatives, and included a

profit forecast for FY23 to align market expectations with ours.

– A strategy seminar day was announced for 27 March 2024.

– We received votes representing approximately 84% of our

issued share capital at our 2023 AGM.

Suppliers support us to deliver quality services to our

stakeholders. We are committed to developing strong

relationships with our suppliers that are supported by

robust procurement policies.

What are their interests and our areas of focus?

– Sustainable business, contract performance, customer

service, risk management, prompt payment and commitment

to tackling climate change.

Board and Company engagement

– CEO and COO visited two of the Group’s outsourced providers

in South Africa. Please see the principal decision on page 65

for more information.

– Board approved the broadening and extension of contracts

with the two major outsourced partners.

– Board reviewed and approved the Group’s corporate

procurement policy and the 2023 Modern Slavery Statement.

– Procurement created a Third-Party Risk Management Policy

and Framework.

– CCE Committee noted feedback from the 80 suppliers which

had responded to a questionnaire issued to 320 suppliers.

Outcomes and impact on decision making

– Suppliers responding to the questionnaire indicated that the

Group was performing well in the majority of areas.

– Consistent engagement delivered through application of the

Group’s Supplier Relationship Management Framework.

– Our standard payment terms align to the Prompt Payment

Code (30 days).

– Increased director-level direct engagement with our most

critical suppliers.

Links to strategic themes

Links to s.172

Links to strategic themes

Links to s.172

Suppliers Shareholders

Stakeholder engagement and decision making continued

Listen

Executive Committee held

roadshows regarding the Group’s

culture and values.

Learn

Colleague feedback identified

eight key areas for the Group to

focus on to make the ideal culture

a reality.

Listen

Direct customer research

undertaken as part of the

strategy review.

Learn

Customer priorities and their focus

were tested in four key areas: on-

boarding, everyday interactions,

support and account closure/

future life goals.

Respond

Copy changes were made to

customer SMS, emails, and

FAQs and IVR instructions were

made clearer. An introduction to

financial management tools was

provided through the Snoop app.

Listen

The CEO engaged with investors

directly following the negative

market reaction to the Group’s first

half results on 28 July 2023.

Learn

Investor feedback showed that

analyst earnings estimates had

differed substantially from the

Group’s results and investors

were confused about the Group’s

strategy and prospects.

Respond

The Vanquis Way launched in April

2023 accompanied by the Way

to Go recognition mechanism.

New performance management

behaviours were introduced in July

2023 aligned to The Vanquis Way.

Respond

The Group’s Q3 trading statement

on 17 October 2023 provided the

market with additional information

including a full-year profit forecast

for 2023 and trend information

to model 2024. The Group also

announced a strategy seminar

day for 27 March 2024.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

What and who? The role of Designated Non-Executive

Colleague Champion is responsible for engaging with our

colleagues on behalf of the Board and representing their voice

in the Board’s decision making. I am a member of the Group

Board, Chair of the Remuneration Committee and passionate

about people, colleagues and customers.

When and where? I regularly visit our offices and attend the

Colleague Forum both in person and remotely where I listen

and talk to colleagues.

Why and how? I discuss with colleagues the work of the Board

in areas of common interest. I report to the Board verbally

on my colleague engagement work and use the unique

colleague insights I have when providing my input to Board

decisions. Directly engaging with our colleagues promotes

transparency and openness and fosters trusted relationships

between colleagues and the Group’s senior leadership team.

2023 highlights

I am continually impressed by how our colleagues work

together to support each other through difficult times and

the Colleague Forum was exceptional this year in supporting

colleagues impacted as part of the reorganisation with a

number of colleague counter-proposals being accepted and

very comprehensive communications and support services

being put in place.

I am encouraged by the high numbers of colleagues

who have volunteered and participated in the Group’s

strategy work and the important cultural conversations that

established The Vanquis Way values. The enthusiasm that

our colleagues have for our customers and for each other

is profound.

This has been the second year I have discussed with

colleagues the alignment of executive remuneration

with wider colleague remuneration, which has been well

received. An open conversation was had about all elements

of executive reward and I intend to hold another session,

supported by the Head of Reward, at the mid-year point.

Priorities for 2024

I look forward to seeing the input of so many of our colleagues

come to life in the strategy – a true collaborative effort. I am

heartened that the efforts of the Customer, Culture and Ethics

Committee have paid off and we are now in a positive position

to combine its duties and responsibilities back into the Board,

and Remuneration, Nomination and Risk Committees. I will

keep a keen eye out for the reports from our Chief People

Officer regarding the Group’s culture and colleague survey.

I shall continue to meet regularly with our colleagues through

the Colleague Forum and through regular site visits as

I believe this direct engagement is essential to perform the

role of Designated Non-Executive Colleague Champion.

Effective engagement with shareholders and stakeholders: investor relations

Investor relations

This has been a difficult year for the Group’s relationships

with its shareholders. The publication of the Group’s interim

results on 28 July 2023 caused a 29% on the day fall in the

Company’s share price. Furthermore, personnel in key roles

with responsibility for regular shareholder engagement –

the Chairman, Chief Executive, Chief Financial Officer and

Head of Investor Relations – have all changed.

Starting immediately after the interim results, the new Chief

Executive met with key shareholders to understand their

positions. Channels of communication remained open with

ad hoc meetings, introductory letters from the new Chairman

and a formal round of meetings after the Q3 trading update.

Shareholder reaction to the Q3 update characterised it

as a first step towards greater strategic clarity and better

business performance.

Since appointment, the new Chairman and CEO have met with

investors responsible for over two-thirds of our share capital.

Engagement has become more systematic with the seven

sell-side analysts who publish regular research, specifically

the collation of consensus estimates. The Company’s financial

advisor and corporate brokers presented a new shareholder

engagement strategy to the Board in November 2023, which

was reviewed and supported by the Board.

This Annual Report providing our full-year results and our

strategy seminar day to be held on 27 March 2024 will mark

the formal reset of shareholder relations and will be followed

by comprehensive roadshows to meet investors in London,

Edinburgh and New York.

The Board is committed to maintaining effective engagement

and active dialogue with its shareholders. In addition to the

ongoing investor meetings and conferences, the following

methods of engagement and materials are available

to shareholders:

The Annual Report

The Annual Report provides a comprehensive overview of the

Company’s Purpose, strategy and progress against objectives

and is complemented by regular market updates, including

quarterly trading updates.

The Annual General Meeting (AGM)

Shareholders have the opportunity to further engage with and

directly question the Board at the AGM. They are encouraged

to participate in the AGM process and vote on all resolutions

on an individual basis or by proxies. This year our AGM will be

held in London.

The Group website and shareholder correspondence

The Group website provides comprehensive information

about the Company, its divisions and product offerings, and

Board members. Our dedicated ‘Shareholder Hub’ provides

up to date information on our strategy, the latest results

presentations, RNS announcements and our investment case.

Graham Lindsay, Designated

Non-Executive Colleague Champion

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Division of responsibilities

Our governance framework facilitates effective decision making and is formally documented

in the Group’s Delegated Authorities Manual, Board Governance Manual, Board and Committee

terms of reference, and matters reserved for the Board.

The governance framework is reviewed annually by the Board to ensure it remains effective and fit for purpose. Following

feedback from the 2023 Board effectiveness review (see page 71), the Board decided to dissolve the CCE Committee and

embed its responsibilities under the Board and its other committees.

The Board

The Board is primarily responsible for setting the Group’s strategy for delivering long-term value to our

shareholders and other stakeholders, providing effective challenge to management concerning the

execution of the strategy and ensuring the Group maintains an effective risk management and internal

control system.

Executive directors

The Board delegates the execution of the Company’s strategy and the day-to-day management of the

business to the executive directors, assisted by other members of the Executive Committee.

The Board delegates certain matters to its committees

Our strategy

see page 9

See page 80

for the

Committee’s

role and

responsibilities

See page 84

for the

Committee’s

role and

responsibilities

See page 78

for the

Committee’s

role and

responsibilities

See page 93

for the

Committee’s

role and

responsibilities

See page 73

for the

Committee’s

role and

responsibilities

Managing risks

see page 44

Board composition

see page 70

Section 172(1)

Statement

see page 40

Board activities

see page 59

Audit

Committee

Risk

Committee

CCE

Committee

Remuneration

Committee

Nomination

Committee

Disclosure

Committee

Shareholder and other stakeholders

Governance framework

Independence of the NEDs and conflicts

of interest

The Board and Nomination Committee review the independence

and time commitment of NEDs on appointment and thereafter

annually, taking into consideration the factors in the Code

which might impair independence and any other relevant

circumstances when considering independence, including

their length of service as well as those directors who were

also directors of Vanquis Bank Limited. Time commitment is

also reviewed where an additional external appointment for

a director is proposed. During the year the Board reviewed

and approved the appointment of Elizabeth Chambers to Wise

plc, agreeing that there was no conflict of interest and that

Elizabeth would continue to have sufficient time to carry out

her role on the Board. This year the Nomination Committee

determined that all NEDs continued to demonstrate independence

and all continued to have sufficient time to undertake their

roles effectively. The Board concurred with this conclusion

and recommends all directors for election or re-election by

shareholders at the 2024 AGM, except Elizabeth Chambers

and Margot James as reported on page 53. All directors are

required to disclose to the Board any outside interests which

may pose a conflict with their duty to act in the best interests

of the Group. Further details on conflicts of interest can be

found in the Directors’ Report on page 88.

Independence of the Board

(excluding the Chair) (as at 26 March 2024)

75%

of our Board (excluding the

Chair) are independent

non-executive directors

Independent 75%

Executive 25%

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Clearly defined roles and responsibilities

There is clear division between executive and non-executive responsibilities to ensure

accountability and oversight.

We define the separate roles and responsibilities of our Chair, CEO and SID in writing and they are available on our website,

www.vanquisbankinggroup.com.

Chair, Sir Peter Estlin

– Leads the Board to deliver strategic objectives and

increase shareholder value.

– Promotes effective decision making, critical

discussion and constructive challenge.

– Safeguards corporate governance.

– Engages with stakeholders to inform Board decision.

Senior Independent Non-Executive Director,

Angela Knight

– Acts as sounding board for the Chair.

– Intermediary for other NEDs to express their views.

– Leads the performance review of the Chairman.

– Available to shareholders outside the normal

communication channels.

Non-executive directors

– Provide independent and constructive challenge.

– Scrutinise the performance of management.

– Develop strategy using their experience and

expertise from other sectors.

– Chair the Remuneration, Nomination, Risk, Audit

and CCE Committees.

General Counsel and Company Secretary,

Melanie Barnett

– Provides legal and governance support to the Board

and executive management.

– Ensures that Board-level information is fit for purpose.

– Facilitates effective discussion between

management and the Board.

– Communicates with shareholders on

governance matters.

Chief Executive Officer, Ian McLaughlin

– Recommends the Group’s strategy and long-term

objectives.

– Leads and manages executive management.

– Manages the day-to-day management of the Group.

– Promotes a healthy culture of accountability

and transparency.

– Ensures that risk management and internal controls

are in place.

Chief Financial Officer, Dave Watts

– Leads the Group Finance function.

– Manages capital management and effective

financial reporting, processes and controls.

– Liaises with investors alongside the CEO.

– Supports the CEO to develop and deliver the

Group’s strategy.

Designated Non-Executive Colleague Champion,

Graham Lindsay

– Seeks to understands the views of colleagues.

– Attends Colleague Forums and other colleague

engagement events.

– Articulates the views of colleagues at Board meetings.

Executive leadership team

– Supports the CEO in developing and

implementing strategy.

– Together with the CEO and CFO, form the

Executive Committee.

– Oversees the day-to-day activities and

performance of the Group.

– Manages the workforce and promotes a healthy culture.

– Implements policies and procedures set by the Board.

Governance

Vanquis Banking Group plc Annual Report and Accounts 2023

Composition, succession and evaluation

Board composition (as at 31 December 2023)

Member attendance at Board and committee meetings in 2023

The table below sets out the Board and committee attendance during the year. Attendance is shown as the number of meetings attended

out of the total number of meetings possible for each individual director. Attendance was very strong during the year at both scheduled

and additional meetings. The Board continues to be satisfied that each director is able to allocate sufficient time to the Company. This is

reflected in the very high levels of meeting attendance. The Chair of each committee reports regularly to the Board on how that committee

has discharged its responsibilities. The absences shown below were a result of an urgent personal matter or a pre-arranged commitment.

Board

member Board Ad hoc

Audit

Committee Ad hoc

Nomination

Committee Ad hoc

Remuneration

Committee Ad hoc

Risk

Committee Ad hoc

Customer,

Culture

and Ethics

Committee Ad hoc

Total number

of meetings 9 1 6 1 4 4 4 6 5 1 3 —

Sir Peter Estlin

6/6 — 2/2 1/1 3/3 2/3 * 1/1 3/3 — — — —

Ian McLaughlin

3/3 — — — — — — — — — — —

Dave Watts

2/2 — — — — — — — — — — —

Andrea Blance

8/9 1/1 6/6 1/1 4/4 3/4 4/4 6/6 — — — —

Graham Lindsay 9/9 1/1 — — 4/4 4/4 4/4 6/6 — — 3/3 —

Paul Hewitt

9/9 1/1 6/6 1/1 4/4 4/4 — — 5/5 1/1 — —

Elizabeth

Chambers 9/9 1/1 — — 4/4 4/4 — — 5/5 0/1 3/3 —

Angela Knight

9/9 1/1 6/6 1/1 4/4 4/4 — — 5/5 1/1 — —

Margot James

9/9 1/1 — — 4/4 3/4 4/4 6/6 — — 3/3 —

Michele Greene

5/7 — — — 2/3 3/3 — — 3/4 1/1 2/2 —

1 Sir Peter Estlin was appointed on 19 April 2023, *recused due

to being in nomination.

2 Ian McLaughlin was appointed on 1 August 2023.

3 Dave Watts was appointed on 1 November 2023.

4 Michele Greene was appointed on 9 March 2023.

Malcolm Le May (stepped down on 01.08.2023) attended 6/6 Board meetings and

1/1 ad hoc Board meetings during 2023. Neeraj Kapur (stepped down on 07.08.2023)

attended 6/6 Board meetings and 1/1 ad hoc Board meetings during 2023.”

Board gender

diversity

Board ethnic

diversity

Board

tenure

Executive Committee

and direct reports

Male 5

Female 5

White 100% 0-2 years 4

2-5 years 5

5-9 years 1

Male 63%

Female 37%

Board Skills Matrix

This Board Skills Matrix represents the number of directors with core or supplemental

capability in areas that are relevant to the Group’s business model and strategy. A

core capability is one of the strongest areas of a director’s skill and expertise, where

they bring significant value to Board discussions. A supplemental capability is an

area where the director has enough knowledge and experience to carry out their role.

This Board Skills Matrix, together with the biographies on pages 54 to 56, shows the

combined strength of our Board in areas central to delivering the Group’s strategy.

Category

1. Leadership: culture and ethics

2. Strategy

3. Audit and financial reporting

4. Customers

5. Product development

6. Banking

7. UK banking regulation

8. Shareholder engagement

9. Change management

10. Secured loans

11. Cards (near to sub-prime)

12. HR, talent and employee engagement

13. IT and digital initiatives

14. Capital management and treasury

15. Risk management

16. M&A transactions

17. Regulatory landscape

and engagement

18. Cyber crime

19. Environmental impact

Core capability Supplemental capability

6 3

6 1

5 3

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Director induction and training

Director induction process

In 2023 four new directors joined the business, the Chairman, a

non-executive director, the Chief Executive Officer and the Chief

Financial Officer; each director went through a comprehensive

and tailored induction plan which was developed to suit

the requirements of their roles. Our induction programme is

designed to give directors an in-depth understanding of the

business, Purpose, culture and values. The programme includes

meetings with members of the Group Executive Committee and

other key stakeholders, which may include the Group auditor,

external advisors, our brokers, and representatives from the

FCA and PRA.

In November 2023, Dave Watts was appointed as our new Chief

Financial Officer. As part of his induction, Dave was provided with

an induction schedule, which included key reading materials

and a webinar on directors’ duties. Dave was also appointed as

a director to some of the Group’s operating subsidiaries and he

received business-specific induction for these.

All new directors are provided with full access to our secure

electronic reading room within our Board meeting software,

which provides induction materials such as Group policies,

structure charts, terms of reference, Delegated Authorities

Manual, broker notes, and past Board and committee meeting

papers and minutes.

Director training schedule 2024

Examples of the training expected to form part of the 2024

training programme include:

– Snoop Deep Dive; and,

– Vanquis Assist - Forbearance Overview.

Ongoing director training

It is important that our directors are made aware of any

upcoming developments and receive training tailored to their

roles at the Company, given the ever-changing economic and

regulatory environment.

Directors undertake training both as a Board as a

whole and based on individual requirements to assist

them in carrying out their duties and responsibilities.

At least annually, the Chairman discusses with each director

his or her contribution to the work of the Board and personal

development needs.

During 2023, the directors were provided with deep dives,

teach-ins, briefings and presentations on a range of key

subjects, including the following:

– Market Abuse Regulation training;

– Consumer Duty;

– RemCo NED refresher training; and

– Group reward structure and mechanisms.

Members of the Board also visited our Chatham, Petersfield

and Bradford offices.

The director training is overseen by the Company Secretary and

can be internally or externally facilitated, with sessions typically

originating from technical Board discussions or an identified

training opportunity. Directors are requested to refresh their

understanding of current obligations and recent developments

in areas pertinent to their role; they are also given access to an

external online academy tool which provides a wide array of

briefings, education and bespoke training.

Each year management carries out a fit and proper

assessment for all senior managers and certified colleagues

under the SMCR process. This process involves requesting

annual learning and development plans which are forward

looking for our executive team members. The Talent team is

also engaged in the process to ensure all annual mandatory

training has also been completed.

In July, Sir Peter Estlin and Michele Greene visited the Moneybarn

office in Petersfield and received an overview of the vehicle

finance business, which included updates on financial models and

budget. They also met with the Chief Risk Officer and Chief Credit

Officer and topics of discussion included business priorities, credit

risk trends and a strategic projects update.

Peter then visited Bradford in August and had some informal

discussions with colleagues. Peter also made a further visit to the

Chatham office in August and met with management; a broader

Q&A session took place where colleagues took the opportunity

to ask questions.

Assessing Board performance – annual Board review

Continuous improvement of the Board’s effectiveness

2021 2022 2023

Internal evaluation facilitated by Chair and

Company Secretary

External evaluation facilitated by

Independent Audit

Internal evaluation facilitated by Chair and

Company Secretary

The Board seeks to continually improve its performance by undergoing a formal annual review and reviewing the focus areas

and actions arising from this formal review during the year to ensure their effectiveness is subject to ongoing review rather than

a point in time exercise. In accordance with best practice and the UK Corporate Governance Code, the Board’s formal annual

effectiveness review is conducted by an external facilitator every three years as part of a three-year review cycle.

2023 review process Stakeholders input

Scope, objectives and design: The Chair and Company Secretary agreed the scope of the review, its objectives and

design. The approach took into consideration the short tenure of the Chair. Detailed questionnaires were designed, agreed

and issued in respect of the following areas: Board and committee effectiveness, Chair effectiveness, individual director

effectiveness and management feedback on Board effectiveness.

– Chair

– Board

– Company

Secretary

– Management

Data collation and analysis: Responses to the questionnaires were collated and analysed by Company Secretariat and anonymised

reports were prepared summarising the effectiveness of the Board and its committees, the Chair and the individual directors.

Review of results: The draft report on Board and committee effectiveness was reviewed by the Chair and a final report

shared with the wider Board. The Committee Chairs received a committee effectiveness report which was discussed by the

committees. The Senior Independent Director received the Chair’s effectiveness report. The individual directors’ effectiveness

reports were shared with the Chair to inform individual performance reviews.

– Board

– Committees

– SID

– Group CPO

Board discussions, actions and ongoing monitoring: The Nomination Committee and Board discussed the results of the Board and

committee effectiveness report. Focus areas and actions arising from the review were agreed and owners assigned for each action.

Led by the Senior Independent Director, the Board members (excluding the Chair) met to appraise the Chair’s performance. The

Board will consider the progress made against the focus areas and actions arising from the 2023 review during 2024.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Board and committee effectiveness review

The Board was regarded as being highly skilled and

experienced with regards to the financial services industry

and the effective collaboration, challenge and relations

between members made the Board an effective team with

good diversity of thought. It was identified that the Board’s

skillset in technology and experience in retail banking and its

ethnic diversity could be improved and these requirements

would be prioritised in future succession planning and Board

appointments. The size and composition of the Board required

ongoing assessment by the Nomination Committee to ensure

it continued to reflect the needs of the business. While the

committees continued to operate effectively, it was felt

that it should be considered whether the responsibilities of

the CCE Committee would now be better placed through

embedding them in the responsibilities of the Board and/

or other committees. Management feedback indicated

a positive working relationship between the Board and

Management overall.

Individual director effectiveness review

Individual director performance was assessed with individual

performance discussions held with the Chair. The Nomination

Committee conducted its annual review of the Board and

committee composition. Having considered the skills,

experience and time commitment of each director, and

the independence of the NEDs, the Nomination Committee

concluded that all directors should stand for re-election at the

2024 AGM except Elizabeth Chambers and Margot James who

will not stand for re-election as set out on page 53.

Chair effectiveness review

Whilst the Chair had only been in this role since September,

the initial impressions and performance of the Chair were

positive. The Chair was recognised as having effective

communication skills, and being candid, supportive and an

attentive listener. Directors felt that in 2024 the Chair should

focus on maintaining the Board’s effective team dynamic,

ensuring sufficient time for debate is given to strategic

discussions in meetings, and providing clear feedback

on investor expectations.

Strengths identified from the 2023 review Agreed actions/focus areas for 2024

– Highly skilled and experienced Board with good gender diversity

and diversity of thought. The Board was considered an effective

team with strong collaboration.

– Review the approach and oversight of NED and senior

management succession planning.

– Feedback from management indicated a good working

relationship between the Board and senior management.

– Keep under review the appropriate size, composition, skills and

experience and diversity on the Board as part of succession

planning and Board appointment processes. To include a focus

on technology skills as part of proactive succession planning.

– Committees effectively carry out their oversight role and

responsibilities and Committee Chairs regularly update the Board

on its committees’ activities.

– Consider whether the CCE Committee’s work would be

better placed under the Board and/or other committees

to enhance oversight.

– Strong relationship and engagement with the Group’s regulators

and a good understanding of the macropolitical environment.

– More site visits and focus on engagement with the Executive

Committee and wider management and workforce.

– Improved oversight and reporting of risk to the Board following

feedback from previous Board effectiveness reviews.

– Review the Board meeting agendas and management reporting

to improve the Board’s oversight and discussions on areas of

strategic importance.

Focus areas identified from the 2022 evaluation

Focus area Progress update

Review the Board’s approach to monitoring

strategy delivery, including strategic

milestones and KPIs.

A new CEO Dashboard which tracks KPIs aligned to the Group’s strategic pillars was developed

and implemented and was reported to the Executive Committee and Board.

Review the Board’s approach of overseeing

the Group’s technology strategy and its

implementation.

The Board reviewed its oversight of the Group’s technology change programme and agreed an

approach that provided both internal and external updates and validation to the Board of the

Group’s technology strategy. The Group CIO also provides regular updates to the Board on IT,

digital and change.

Keep under review the key priorities for

the skills required in new non-executive

directors as part of succession planning

and Board appointment processes.

The Nomination Committee reviewed the results of the 2022 Board review relating to the

composition of the Board as well as the results of the 2023 Board Skills Matrix to identify skills

and experience gaps to inform our proactive succession planning process. The Nomination

Committee added two new skills criteria to the Board Skills Matrix to reflect the skills and

experience required on the Board to deliver the Group’s strategic objectives.

Review the regularity of Board updates

from Product Managing Directors and wider

Executive Committee team.

The Board and committees’ Agenda Planners were reviewed and updated to give the Product

Managing Directors and wider Executive Committee team sufficient exposure to the Board.

All Product Directors and Executive Committee members presented to the Board and/or

committees during 2023.

Review Board committee meeting

attendees to ensure the Board committees

continue to have access to the information

and expertise needed to undertake

their responsibilities.

The Company Secretariat facilitated a review of committee attendees with senior

management, the CEO and Committee Chairs. The attendees that were required to attend

each meeting and the attendees that would be invited to present certain business items were

agreed for each committee.

Outcome of the 2023 Board and committee effectiveness review

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Role of the Committee

The Nomination Committee is responsible for

overseeing:

– the evaluation of the Board and its Committees which

includes overseeing the Board’s composition, size and

structure, including the Board committees, so that it remains

appropriate and effective in order to deliver the Company’s

strategy;

– the Board appointment and succession planning processes;

– the Group’s talent management framework and senior

management succession planning to ensure the Group’s

leadership needs are met now and in the future; and

– the diversity of the Board and the Group’s talent pipeline

to meet the Group’s diversity objectives and to increase

the percentage of roles held by women and other

underrepresented groups across the Group.

Allocation of time

Sir Peter Estlin

Nomination Committee Chair

Nomination Committee Report

Ensuring effective leadership

now and in the future

Dear Shareholder

I am pleased to present the important work undertaken by

the Nomination Committee during 2023 in my first Nomination

Committee Report as Chair. The Committee continues to be

comprised of all the non-executive directors: their biographies

are on pages 54 to 56 and meeting attendance on page 70.

Following Ian McLaughlin’s appointment as CEO, reported in

last year’s report, the Group’s strategy and leadership are

evolving to meet our customers’ needs and to deliver the best

results for our stakeholders. As part of succession planning

and in alignment with our evolving strategy, the Committee

has focused on succession planning for the Board and

senior management and on Board composition. During the

year, in addition to the appointment of Ian McLaughlin and

Michele Greene, which we reported on in last year’s report,

the Committee recommended to the Board my appointment

first as non-executive director and then as Chair and the

appointment of Dave Watts as CFO, with more details below.

The annual formal Board effectiveness review and Board Skills

Matrix are valuable tools that have been used by the Committee

during 2023. The Committee considered the results of the 2022

Board effectiveness review as it related to areas within the

Committee’s remit. The Committee also considered the results

of the 2023 Board effectiveness review, including impact on

composition, and recommended to the Board the focus areas

and actions for 2024. You can read more about our formal Board

review on page 71. Furthermore, the Committee updated the

Board Skills Matrix to reflect the skills and experience required

on the Board to support delivery of the Group’s strategy. The

Board members completed the updated Board Skills Matrix

which helped inform the Committee’s discussions around

succession planning and Board effectiveness. Membership

of each Board committee has been considered as part of the

2023 Board effectiveness review and the succession planning

overseen by the Committee, in addition to our annual review of

Board and committee composition. This led to Graham Lindsay

being appointed as Chair of the Remuneration Committee and

consideration given to whether the responsibilities of the CCE

Committee would be better placed through embedding them

in the responsibilities of the Board and/or other committees in

order to heighten our focus and attention on our customers.

Overseeing the Group’s diversity targets to ensure a diverse

leadership and workforce was another focus area of the

Committee during the year. This will continue to be a focus

area in 2024 to monitor progress made against our diversity

targets. Succession planning for senior management and for

non-executive directors will also continue to be focus areas

for the Committee in 2024.

Diversity 16%

Succession and talent 25%

Board composition and

appointments

44%

Governance 15%

The Committee’s Terms of

Reference are available at:

www.vanquisbankinggroup.com

“ The Committee has taken the leading

role in evolving the Board’s composition

as it looks to champion Vanquis’ long-

term success through its focus on our

leadership and talent.”

Sir Peter Estlin

Nomination Committee Chair

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Chief Financial Officer (CFO) appointment

Following the announcement on 7 August 2023 that

Neeraj Kapur was stepping down as Chief Finance

Officer (CFO), RRA was engaged to commence a rigorous

search to identify potential successors. As part of the

Group’s talent management and proactive succession

planning approach, succession to the CFO role had

been considered and planned for, which included the

Group remaining informed of internal and external

talent. This proactive succession planning approach

enabled the Group to promptly effect a thorough search

and appointment process, overseen by the Nomination

Committee, to identify suitable internal and external

candidates for the Nomination Committee to consider and

recommend an appointment to the Board.

A job specification and desirable skills and experience for

candidates were agreed for the role. The search process

for candidates used objective criteria covering experience

and skills, personal qualities including alignment with

the Group’s social Purpose and culture, and took into

account the benefits of diversity in its widest sense to

provide a longlist of internal and external candidates.

From an initial potential candidate list of 16 candidates

(with 31% female representation), the Committee

reviewed an external shortlist of five candidates (with

40% female representation). The shortlisted candidate

underwent rigorous evaluation and assessment

by RRA and three external shortlisted candidates

progressed to be interviewed by Board members. The

Nomination Committee, after considering the results

of the assessment and interview and the impact on

Board composition, including gender ethnic diversity,

identified Dave Watts as the strongest candidate and

recommended his appointment as CFO which the Board

approved. Dave Watts is a highly experienced banking CFO

who is a proven strategic partner and has worked across

complex regulatory regimes and entity structures. You can

read more about Dave Watts in his biography on page 54.

Nomination Committee Report continued

Principal decision: Appointment of Chair

The Board approved the re-naming of the Company to Vanquis Banking Group plc.

As announced on 30 June 2023, the Board approved the appointment

of Sir Peter Estlin as Chair of the Board following a thorough search

process overseen by the Nomination Committee, and supported

by Russell Reynolds Associates (RRA), which led the Committee

to recommend to the Board that Sir Peter be selected for the role.

This was an internal appointment as Sir Peter joined the Board as a

non-executive director in April 2023 following an extensive, rigorous

and transparent search process supported by Korn Ferry which

led the Nomination Committee to recommend his appointment

to the Board after consideration was given to his skills, experience,

leadership style, alignment with the Group’s social Purpose,

time commitments and independence. In relation to Sir Peter’s

appointment as a non-executive director, a role specification

was agreed which sought to identify candidates with skill and

experience areas which would enhance the Board’s effectiveness

as it sought to deliver its banking strategy. As part of his appointment

as non-executive director, Sir Peter was interviewed by the Board

members. A key aspect of our non-executive candidate requirements

was cultural fit and a natural affinity and empathy with the Group’s

Purpose and our customers. The candidate specification was

prepared to clearly recognise the value of diversity and inclusion

and to reflect that diversity in its broadest sense was a key priority

for our search.

Chair’s succession planning

Following the announcement on 19 May 2023 of Patrick Snowball’s

intention to step down as Chair from the Board, the Nomination

Committee, chaired by Andrea Blance, Senior Independent Director

(SID), met to determine the process for the search for a successor

and to engage Russell Reynolds Associates to support the process.

The Nomination Committee, led by the SID supported by the Chief

People Officer and General Counsel and Company Secretary, worked

with Russell Reynolds Associates to develop a person specification

for the Chair’s role and agree on the skills and criteria for the role,

which included the following: experience and competence as a PLC

Chair; sectorial experience in retail banking; track record of building

strong stakeholder engagement; excellent business acumen and

experience; leadership style and alignment to the culture and values

of the Group; and skills in mentorship and people development.

Throughout the succession planning process, the SID kept the Board

and investors updated on the succession process.

The search process

Sir Peter Estlin had been identified as an internal candidate

fitting the criteria in the role specification. An external search was

conducted by RRA to identify a long list of external candidates

before a benchmarking exercise was completed, using the firm’s

market knowledge gained from other Chair searches to benchmark

Sir Peter Estlin against the external candidates. This external long-

list comprised nine candidates, with 44% female representation.

Given the importance of the CEO and Chair’s working relationship,

the incoming CEO (Ian McLaughlin) was engaged to provide his

view on the longlist of candidates. The Group’s regulators were

kept updated throughout the succession process by the Chief Risk

Officer and Sir Peter Estlin met with the FCA before his appointment

was recommended to the Board.

Selection of the new Chair

The Board, led by the SID, established a sub-committee to oversee,

finalise and agree the terms of the Chair’s succession based on the

recommendations of the Nomination Committee, and to facilitate

the Chair’s appointment and announcement to the market. The

Nomination Committee, having carefully considered the findings

of RRA, identified Sir Peter Estlin as the strongest candidate and

recommended his appointment as Chair to the Board, which was

subsequently approved by the Board’s sub-committee, chaired by

the SID. The following factors were some of those key in the decision

made to appoint Sir Peter: his outstanding sectorial experience

in retail banking and his financial and strategic capabilities; his

strong cultural fit and alignment with the Group’s customer-focused

Purpose; his stakeholder engagement experience and his credibility

with regulators; his position as champion of digital innovation and

skills; and the incoming CEO’s positive reception to the proposition

of working with Sir Peter Estlin.

Our Board Diversity Policy supports the engagement of executive

search firms which have signed up to the Voluntary Code of

Conduct for Executive Search Firms on gender diversity and best

practice. Other than for recruitment and related talent advisory

services, RRA and Korn Ferry have no other connection to the

Company or individual directors. RRA and Korn Ferry are signatories

of the Enhanced Voluntary Code of Conduct for Executive Search

Firms, which specifically acknowledges those firms with a strong

track record in and promotion of gender diversity in FTSE 350

companies against the scope of the Davies Review.

Links to stakeholders Links to strategic themes

Links to risks

P10

P11

Links to s.172

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Talent management and succession

The updated Group-wide talent management framework

rolled out last year has improved the visibility of talent which

supported the Committee’s role in talent identification and

succession planning for senior management during the year.

Leadership changes were made in the second half of 2023

under the new CEO to align with the Group’s evolving strategy

and ensure that the right roles and capabilities were in place

to deliver this strategy. We successfully used our internal

talent pipeline to fill vacancies at Executive Committee level,

including the role of Chief Technology Officer and interim

positions of Chief Financial Officer, Chief Customer Officer and

Chief Digital, Data and Analytics Officer. We also attracted

high-quality external hires such as Jillian Anderson as Chief

Customer Officer and Abigail Whittaker as Chief of Staff, who

both joined the Group in 2024. Gender balance and broader

diversity continues to be a key priority on the talent agenda

and in all search processes.

As part of its review of talent and succession planning,

the Committee considered the impact of operating model

changes on the retention of talent, the succession of key

roles, individual development plans, and the diversity of

senior management. Succession plans for key Executive

Committee roles, including the executive directors, were

discussed, including the diversity of our talent pipeline, and

the development and aspirations of senior management. The

Committee was updated on the actions in place to improve

the diversity of the talent pipeline. The Committee considered

retention risk and our colleague training and development

proposition as part of its talent management review. Following

review and feedback by the Committee, during 2024 the

Group CPO and Executive Committee will continue to work

together to enhance succession and development plans for

senior management and the layers below to support internal

succession, reduce retention risk and further build a pipeline

of diverse talent.

The Committee has continued to oversee non-executive

director succession plans to ensure that the Board

membership is appropriately refreshed, reflecting director

tenure. During 2023 it remained key to take a proactive

approach in order to stagger succession in the future, thus

retaining the balance of skills, experience and diversity the

Board needs to enable delivery of its responsibilities and

the Group’s strategy. The Committee considered what skills

and experience were required on the Board now and into

the future, the progress made during 2023 in identifying

non-executive talent for future Board appointments and

how our recruitment process would enable us to identify

the best candidates with varied transferable skills to support

achievement of Board diversity objectives including skills,

gender, age and ethnicity. Non-executive director succession

remains a priority area for the Committee during 2024 as the

tenure of the Board members lengthens.

At its meeting in January 2024, the Committee reviewed

and confirmed its support for a proposal to recruit a Board

Observer. This programme seeks to support the wider

development of the talent pool of experienced executives

who, although interested in non-executive roles, do not have

experience in such roles. This programme will also support

our Board’s skills and experience in technology and also our

priority of ensuring broad diversity around the Board table. We

appointed Kate Rosenshine, a serving executive at Microsoft,

as a Board Observer from March 2024 for one year. Kate brings

a wide range of experience in technology, AI and native digital

partnerships.

Inclusion and diversity

You can read about our approach to diversity and inclusion

on pages 14 to 16. Our Inclusion and Diversity (I&D) Policy,

which includes our Board Diversity Policy, is designed to

promote equality, diversity and inclusion across all parts

of the Group and aims to ensure that we have an inclusive

and positive working culture that supports equality, inclusion

and diversity and to create an environment where everyone

feels included and valued. Our I&D Policy covers a range of

protected characteristics including age, gender, ethnicity,

sexual orientation, disability or educational, professional and

socio-economic backgrounds. The policy seeks to enable all

colleagues to reach their full potential and contribute fully to

the success of the business. By delivering our I&D and Board

Diversity Policies’ key aims, we believe that we can support

the delivery of our strategy through leveraging the benefit

of a wider range of perspectives and ideas, contributing to a

high-performing and effective leadership team which brings

greater diversity of thought to better respond to our diverse

customer base and stakeholder views. By having a diverse

Board, and Board committees, we believe the Board is better

placed to challenge management, consider stakeholder

views, make better decisions and deliver the Group’s

strategic aims.

Our Board Diversity Policy ensures that the selection process for

Board appointments is based on merit and requires the Board’s

standing sub-committees to be appropriately composed in

order to undertake their duties effectively, including appropriate

balance of diversity, whilst also ensuring diverse shortlists for

Board roles. When reviewing Board appointments during the

year, the Board considered the impact of such appointments

on the diversity of the Board standing sub-committees. Our

policy, which was reviewed by the Committee during the year,

confirms our commitment to measurable objectives and you

can read about the objectives of our Board Diversity Policy, and

our progress against these, below.

The Committee has received updates on progress made

against the Group’s diversity and inclusion strategy, including

improving our diversity data and supporting initiatives, such

as the Group’s Inclusion Community and Affinity Groups, to

help create a diverse and inclusive pipeline of talent. During

the year, the Committee reviewed our progress against our

diversity objectives and our compliance with the diversity

requirements set out in Listing Rule 9.8.6. The Group is a

signatory to the Women in Finance Charter and is committed

to achieve 40% female representation in senior management

by 31 December 2026.

This year we decided to extend our target date from 2024 to

2026 following the Group’s operating model restructure and

business transformation that took place at the end of this

year, which included senior management changes being

made to align leadership with the capabilities required to

deliver the Group’s strategy. For the purposes of this target we

have identified roles at our Level 14 and above as the relevant

population and female representation in this population was

34% as at 31 December 2023. Female representation in our

Executive Committee and direct reports population was 37%

as at 31 December 2023, demonstrating positive progress

on the position reported in last year’s report.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Inclusion and diversity continued

Board diversity objectives Progress and implementation

To maintain a minimum of 40% women (including those self-

identifying as women) on the Board.

During the year the Nomination Committee agreed to amend this

objective to increase the targeted female representation on the

Board from one-third to 40%. As at 31 December 2023, 50% of the

individuals on the Board of Directors were women, with 44% female

representation as at the date of this report. As reported above,

diversity remains a key focus for Board appointment processes.

To maintain for at least one of the senior Board positions (Chair,

CEO, SID or CFO) to be a woman (including those self-identifying

as a woman).

As reported below, we meet this objective.

To maintain a minimum of one Board director from an ethnically

diverse background in support of the Parker Review target.

Whilst the Group is not currently captured by the targets set by the

Parker Review, we remain focused on ensuring we meet this target.

Although during the year this target was met, following Board

membership changes, as at 31 December 2023 and as at the date

of the report we no longer meet this target. However, following the

Board changes that will take effect on 27 March 2024, as reported

in the Chair’s Governance statement on page 53, the Company will

again meet this target with effect from that date. Diversity, including

ethnic diversity, remains a key focus of our Board appointment

process as described above. We continue to work with our external

recruitment partners to drive diverse candidate shortlists. One of our

focus areas is to formally establish our Race at Work Charter action

plan and to work within the scope of the Parker Review requirements

to define and set a percentage target for ethnically diverse leaders

in job positions at Level 14 and above.

The Board will support and monitor Group activities undertaken to

meet its diversity objectives and to increase the percentage of senior

management roles held by women and other underrepresented

groups across the Group.

Continued review of the Group’s inclusion and diversity strategy and

initiatives. When reviewing talent management and succession, the

Committee has reviewed the diversity of our talent pipeline.

To ensure Board appointment ‘long-lists’ reflect the Board’s diversity

commitments.

Our Board Diversity Policy confirms our commitment that all shortlists

for our Board and senior management positions are balanced from

a gender perspective. This remained a key focus for the Chairman

and Nomination Committee as part of recruitment process

during 2023.

To ensure a rounded and diverse Board and Executive Committee,

appointments will be made on merit, taking into account different

backgrounds, diverse experience, perspectives, personalities, skills

and knowledge, and alignment with the Group’s culture.

As required by our I&D Policy, including the Board Diversity Policy,

appointments are made on merit, taking into account diversity

and alignment with the Group’s culture. Diversity forms a key

consideration of Board appointment and succession planning

processes. You can read more about our Board appointment

processes on page 74.

Nomination Committee Report continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Explanation against LR 9.8.6(9) and data under LR 9.8.6(10)

As at the Company’s chosen reference date, 31 December 2023, and in line with FCA Listing Rule 9.8.6(9), the Group confirms

it has met the targets for at least 40% female representation on the Board and one of the senior positions of Chair, SID, Chief

Executive or Finance Director to be held by a woman, with Andrea Blance appointed as SID. The Company has not met the

target as at the reference date for one director to be from an ethnic minority background. The Company did meet this target

during the year until 7 August 2023; however as a result of Board changes during the year we no longer meet this objective as

at 31 December 2023. However, following the Board changes that will take effect on 27 March 2024, as reported in the Chair’s

Governance statement on page 53, the Company will again become compliant with each of the Board diversity targets set out

in LR 9.8.6(9) with effect from that date. Diversity, including ethnic diversity, remains a key focus for future Board appointments

and our succession planning, as described throughout this report, and meeting this target remains one of our Board diversity

objectives. Our approach to collecting gender and ethnic diversity data was consistent and carefully implemented. Using a

survey issued by a secure platform to collect the data and working closely with our Data Protection team, ensuring that we met

all data protection regulations. Prior to the survey being issued, we provided a briefing to assist in everyone understanding the

purpose and importance of collecting this information. The survey included questions related to sex at birth, gender identity

(whether it remained the same as at birth), and ethnicity. To deliver a comprehensive understanding of the diversity within

our Board and senior management, while also respecting individuals’ privacy, we provided the option for Board members to

choose ‘prefer not to say’ for any of these questions. Since the reference date, Andrea Blance has stepped down as SID. With the

appointment of Angela Knight as SID we remain in compliance with the requirement that one of the senior positions of Chair,

SID, Chief Executive or Finance Director should be held by a woman. Following this change, as at the date of the report we also

remain in compliance with the requirement for at least 40% female representation on the Board.

Gender representation as at 31 December 2023

Board Executive Committee

Number of Board

members

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO, SID

and Chair)

Number in

executive

management

Percentage of

executive

management

Men 5 50% 3 7 70%

Women 5 50% 1 3 30%

Prefer not to say/other/unspecified — — — — —

Ethnic representation as at 31 December 2023

Board Executive Committee

Number of Board

members

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO, SID

and Chair)

Number in

executive

management

Percentage of

executive

management

White British or other White

(including minority-White groups) 10 100% 4 10 100%

Mixed/multiple ethnic groups — — — — —

Asian/Asian British — — — — —

Black/African/Caribbean/Black British — — — — —

Other ethnic group, including Arab — — — — —

Not specified/prefer not to say — — — — —

Sir Peter Estlin

Nomination Committee Chair

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Customer, Culture and Ethics Committee Report

Role of the Committee

The Committee is responsible for:

– reviewing the design and performance of the Group’s

products and specifically testing for their market fit, suitability

for our target customers, and good customer outcomes;

– overseeing the development, embedding and monitoring

by management of the Group’s Purpose, values, customer

objectives, culture and ethics;

– overseeing the Group’s efforts to ensure that its policies, business

practices, procedures, systems and behaviours are consistent

with improving the customer experience;

– reviewing and providing guidance for external communications

and the Group’s public posture on key reputational issues, e.g.,

financial inclusion, diversity and sustainability (ESG agenda:

environment, social, governance);

– ensuring that appropriate arrangements are in place to

support compliance with the 2018 UK Corporate Governance

Code; and

– ensuring that appropriate stakeholder and employee

engagement mechanisms in relation to the Group’s Purpose,

culture and ethics, are in place.

Allocation of time

Elizabeth Chambers

Customer, Culture and Ethics Committee Chair

Overseeing our

people and culture

Dear Shareholder

I am pleased to present an overview of the Committee’s

work during 2023.

This year, the Committee focused on regular review of our

Customer Conduct Dashboard. We also undertook a review

of the new loans product and its suitability for our target

customer audience. Other priorities included a review of the

Group’s move of its operational processes and resources to

outsourced partners based in South Africa, through the lens of

our continuing commitment to customer-centric service and

support. We provided input to and oversight of the launch of

the Group’s refreshed values, The Vanquis Way. These values

set out how we work together with each other, our customers

and our communities. They reflect the things we believe are

most important in delivering our Purpose, and they underline

the way we come together to make our business a great place

to work. You can find our values alongside our Purpose on the

inside front cover.

The Committee had four independent non-executive directors

during 2023 following Michele Greene’s appointment.

The biographies of the members, Graham Lindsay,

Michele Greene, Margot James and me, are available on

pages 55 to 56.

Our customers

The Committee continued to embed a KPI and evidence-

based approach to its work, and supported management’s

efforts in this regard. During 2023 the Committee received

regular updates on the Conduct Risk Dashboard and discussed

improving trends, as well as any areas of concern identified in

its metrics. The Dashboard enables the Committee to monitor

the metrics in each of the product lines. As an example, the

Committee noted that the ‘dormant accounts’ metric on

the Cards Dashboard had become outside tolerance and

members explored the reasons for the decline. We supported

the expansion of a dormancy programme which included

more proactive strategies to engage and retain or eventually

close accounts for dormant customers if re-engagement didn’t

happen. These efforts target an improvement in the related

metrics to ‘Green’ by the end of the first quarter of 2024.

The Committee received ongoing updates on the Consumer

Duty programme and was comfortable that the programme

was on track for delivery and critically that our management

information and the above referenced Dashboards would

support sustained delivery of our obligations under the Duty.

“ In 2023 the CCE Committee actively

supported the development and launch

of The Vanquis Way, which embodies the

core values that guide how we serve and

support customers in every product and

channel. Colleagues embraced these

enthusiastically and felt they were directly

supportive of both our Purpose, and our

Consumer Duty obligations.”

Elizabeth Chambers

Customer, Culture and Ethics Committee Chair

KPI tracking and

Customer Call Listening

30%

Reviewing policies to ensure

they support the Group’s

culture

20%

Monitoring governance,

ESG commitments and

CR reporting

30%

Monitoring stakeholder

expectations

20%

The Committee’s Terms of

Reference are available at:

www.vanquisbankinggroup.com

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

During April 2023, the Committee reviewed and fully supported

vehicle finance’s new product proposition, lending to customers

who choose a personal contract hire. The vehicle finance

business has now entered into a Master Services Agreement with

Zest Leasing Limited to offer non-prime customers access to new

cars by way of a contract hire leasing agreement.

In 2021 the Group exited the high-cost credit market and

closed its home credit division, which meant the Group’s

name and brand were linked to a market it no longer served

and a business that no longer existed within the Group.

We therefore decided to rename and rebrand, as the old

name and brand no longer accurately represented what

the Group had become, a digital bank offering credit cards,

vehicle finance and loans. The Group therefore became

Vanquis Banking Group, linking our corporate entity to its

biggest consumer brand, Vanquis. The corporate rebrand

and name change was completed successfully in the

first quarter of 2023, with the change being well received

by shareholders, colleagues and customers.

At the November meeting the Committee reviewed the

loans product range, and specifically the loans customer

journeys. It was clear from research that most of the new

loans customers borrowed money for the purpose of debt

consolidation and home improvements, which aligns with

our goal of responsible lending and helping people improve

their financial lives.

The Committee regularly listened to a selection of customer

calls. At each meeting the Committee discussed the calls and

agreed that, generally, the quality of service provided by the

customer facing colleagues was of a high standard. Listening

to these calls offers insight for the Board into the day-to-day

operations and our customers. The Committee noted that

the areas of improvement that had been identified had been

taken forward by management. The Committee also had full

oversight of the whistleblowing activity during the year.

Values – The Vanquis Way

We believe that our culture is shaped and changed through

our everyday actions - actions that apply to all of us, no

matter where we are in the business. In April 2023 we officially

launched our new values. The values are easy to both

remember and build into our daily lives as they are all about

how we get the best job done. Our values are designed to

guide decision making and the way we work together with

customers, communities and each other. Fully embedding

The Vanquis Way will take time and effort from all. We’ll need

to focus on our daily habits, recognising and highlighting

colleagues who get it right, and challenging any behaviours

that are not in keeping with The Vanquis Way.

The Committee reviewed the results of the latest Colleague

Survey and also an additional Culture Survey which was

undertaken during the year. We considered how insights

from the Culture Survey would be used to guide colleague

engagement by executive leadership and also supported

team culture sessions, where management explored results

and gathered further insights from colleagues.

Vanquis Banking Group Foundation

The Vanquis Banking Group Foundation supports our

customers and communities across the UK. During the year

we launched our new Vanquis Banking Group Foundation

programme. Our Foundation aids financial inclusion and

social mobility, supporting children and young people in the

communities we’ve served since 1880. It’s aligned with our

Purpose, to deliver caring banking so our customers can make

the most of life’s opportunities.

The Foundation has an annual budget of £2.5m and builds on

our sustainability programmes to further support social and

financial inclusion for children and young people.This includes

the Vanquis free school uniform fund which will be doubled,

helping hundreds more pupils, and continued partnerships

with community foundations from Bradford to London. The

Foundation is another way in which we can support people

to become more financially and socially included in society.

Our work helps those people we are able to reach achieve

their full potential at school and access better employment

opportunities and reduces inequalities. All of this is closely tied

to our Purpose.

Environmental considerations

During the year, the Committee received updates on how

the climate risk agenda was being governed and managed

across the Group. This included an update on the Group’s

environmental and climate change strategy and the science-

based targets. The Committee supported the Group in its

contribution to the movement towards a low carbon economy

and in setting our targets. The progress being made by

management in setting carbon reduction targets which

align with current climate science-based targets can be

found in the Group’s TCFD/Climate Report on pages 19 to 28.

Throughout the year, we have engaged with colleagues via

the intranet site on a range of issues such as why we measure

and report our carbon footprint. For more information see our

ESG Report on pages 14 to 31.

Following this year’s Board effectiveness evaluation and

recent changes in Board and executive leadership, we

agreed that the time is now right to ensure that oversight

of the matters within the Committee’s remit would receive

even more focus by embedding them within the main Board

agenda, with some of the responsibility areas also being

assigned to other committees. Accordingly, this will be our

final Committee report and each of the Committee members

look forward to further strengthening the Board’s essential role

in overseeing our duties to customers, colleagues, our culture

and the communities we serve.

Elizabeth Chambers

Customer, Culture and Ethics Committee Chair

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Audit Committee Report

Role of the Committee

The Committee assists the Board and is responsible for

overseeing the following:

Financial reporting

– monitoring the integrity of the financial statements, and any

other published financial information, and reviewing the

significant financial reporting judgements therein;

– advising the Board on the Annual Report and Accounts,

including whether it is fair, balanced and understandable;

– assisting the Board in assessing the Company’s going

concern status and ongoing viability;

External audit

– conducting the tender process and recommending to

the Board the appointment, remuneration and terms of

engagement of the external auditor;

– reviewing and monitoring the independence and objectivity

of the external auditor;

– assessing the effectiveness of the external auditor;

– implementing and monitoring the Group’s policy on non-audit

services;

Internal audit

– assessing and monitoring the effectiveness of the Group’s

Internal Audit function, including approving the annual

Internal Audit Plan; and

Internal controls and processes

– reviewing and monitoring the effectiveness of the Group’s

system of internal financial and operational controls.

Allocation of time

Paul Hewitt

Audit Committee Chair

Dear Shareholder

On behalf of the Committee, I am pleased to present the Audit

Committee Report for the year ended 31 December 2023.

The report details how the Committee has discharged its role

and duties during the year, and provides you with an overview

of the Committee’s key activities and areas of focus for 2023.

The report also confirms compliance with the Competition

and Markets Authority Statutory Audit Services Order.

The Committee’s membership remained unchanged as at

31 December 2023, comprised of non-executive directors

with me as Chair, Andrea Blance and Angela Knight, who is

also Chair of the Risk Committee. Andrea Blance stepped

down from the Committee on 1 February 2024. Members’

meeting attendance and number of meetings held can be

viewed on page 70 and details of their qualifications, skills

and experience set out in the ‘Our Board’ section on pages 54

to 56 of the Governance Report. As a whole, the Committee

is experienced and has competence and relevant financial

services sector experience, meeting the experience and

expertise criteria set out in the 2018 UK Corporate Governance

Code and the FCA Disclosure Guidance and Transparency

Rules (DTRs).

The Committee undertakes a review of its effectiveness

annually as part of the Board evaluation. More information

can be found in the Composition, succession and evaluation

section on page 70.

The Committee continued to monitor the output of the

Department for Business and Trade (DBT) review of audit

and corporate governance reform. In late January 2024 the

Financial Reporting Council (FRC) published the updated

the UK Corporate Governance Code. There are a number

of principal changes relating to internal controls and the

new Principle O which asks boards to make a declaration

in relation to the effectiveness of their material internal

controls. A number of provisions related to audit committees

have been removed and are now captured within the Audit

Committees and the External Audit: Minimum Standard. In

parallel, the implementation of the Integrated Assurance

Framework remained on track.

I look forward to reporting directly to shareholders at the

Annual General Meeting on 15 May 2024.

Audit, assurance and

internal control

Governance 13%

Financial reporting 36%

External audit 15%

Internal audit 22%

Management reporting 14%

The Committee’s Terms of

Reference are available at:

www.vanquisbankinggroup.com

“ During the year, the Committee

continued to focus its oversight

on the enhancement of internal

controlsandassuranceandfinancial

reporting which we continue to evolve

and strengthen.”

Paul Hewitt

Audit Committee Chair

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Fair, balanced and understandable

In support of the Board, having regard to Provision 25 of the

Code, the Committee considered whether the 2023 Annual

Report and Financial Statements, when taken as a whole,

was fair, balanced and understandable. The Committee

adopted the same robust process as in prior years to justify

the statement. This included:

– reviews to provide input, and feedback incorporated

into subsequent drafts;

– oversight of the process, evaluation and verification by

Group senior management;

– external evaluations of the Remuneration and

Governance Reports respectively; and

– private sessions with the external auditor.

As part of the year-end processes, the Committee

considered management’s areas of significant

judgements, estimation, and uncertainty and emerging

issues as set out in the financial statements on pages

116 to 192, and with the external auditor, scrutinised and

challenged the going concern assumptions.

In assessing compliance with the Code, the Committee

considered the following criteria:

Is the Report fair?

– Is it a full reflection of events throughout the year

and consistent with messages communicated

throughout the year?

Is the Report balanced?

– Is the narrative reporting consistent with the financial

reporting?

– Are the statutory and adjusted measures

appropriately balanced?

Is the Report understandable?

– Is it presented in a logical order and using

clear language?

– Are important messages clearly highlighted as such?

– Is information shown in tabular or graphic form where

this would assist the reader?

Conclusion: The Committee concluded that, in its opinion,

the 2023 Annual Report and Financial Statements, when

taken as a whole, was fair, balanced, and understandable

and recommended this assessment to the Board.

Key Committee activities in 2023 Committee priorities in 2024

– Reviewed and recommended for approval the half-year

and full-year financial statements.

– Reviewed and approved the non-audit fees Policy;

external auditor interim review; external audit fees;

external auditor interim review; and external auditor

proposed 2023 plan.

– Reviewed and approved the Internal Audit Charter;

statement of independence and objectivity and

effectiveness; self-assessment; and 2024 Internal

Audit Plan.

– Continue to oversee and challenge the IFRS 9 model

rebuild and resulting financial impact.

– Reviewed and approved the internal statement of

governance, risk management and internal control,

including Group’s risk assessment processes and

preventative measures to prevent tax evasion.

– Confirmed sufficient distributable reserves and

recommended payment of the 2022 final dividend

(paid July 2023) and the 2023 interim dividend

(paid September 2023) to the Board.

– Oversaw transformation of the Group Finance function.

– Oversaw implementation of the Integrated

Assurance Framework.

– Board committee effectiveness evaluation outcomes;

reviewed and approved the Committee’s terms

of reference, 2024 forward agenda planner and

adherence with its terms of reference during 2023.

– Discussions with Head of Internal Audit or external

auditor following each Committee meeting.

– Continued embedding of the Integrated Assurance

Framework across the three lines of defence.

– Continued monitoring of the legislative and

regulatory landscape in relation to audit reform

and controls enhancements.

– Continued focus on enhancing the control environment

across the Group.

– Oversee transition of the IFRS 9 models. The Committee

will continue to independently oversee IFRS9 model

development, monitoring and calibration, and will monitor

progress against all internal and external audit findings

raised. Please see page 82.

– Further development of data analytics in the Internal

Audit function.

– Oversight of the new global internal audit

standards implementation.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

In March 2024, Internal Audit confirmed that the Group’s

control environment has remained stable during 2023. The

known control issues within the legacy IT estates, including

access management, remain unchanged and will be fixed

strategically through the IT platform modernisation referenced

above. The Enterprise Risk Management Framework has

continued to embed throughout 2023. Finance controls are

documented in the Group-wide risk system, Riskonnect. These

are reviewed at regular intervals by control owners and/or

delegates to evaluate the efficacy and confirm that these

remain appropriate and effective.

The IFRS9 models have undergone significant development in

2023. Assurance from across the three lines of defence, and

External Audit has identified that further control improvements

are needed in the development, implementation and

oversight of the IFRS9 models. This is being prioritised in

2024. The Committee will continue to independently oversee

IFRS9 model development, monitoring and calibration, and

will monitor progress against all internal and external audit

findings raised.

Annually, Deloitte LLP provided a management letter which

identifies significant internal controls matters and the

management response.

Internal Audit

The Group operates an in-house Group Internal Audit (GIA)

function, managed by the Group Chief Internal Auditor who

reports to the Committee at each meeting. Specialist services

are provided by third-party consultants where necessary and

are subject to the Group policy for non-audit work. During

the year, the Group Internal Audit function executed the

approved annual audit plan. The plan is developed through

a risk assessment against each of the Group’s principal risks

(pages 45 to 50) and the methodology for its development

continues to be refined to ensure optimal risk coverage. The

audit conclusions for 2023 demonstrated a stable control

environment on the prior year. The Committee is satisfied that

the Group Internal Audit function is both independent and

effective, as detailed below.

Independence As required under the Institute of Internal

Auditors Code of Practice, the Group Chief Internal Auditor has

no responsibilities outside of oversight of the Internal Audit

function, and reports directly to the Chair of the Committee, with

an administrative reporting line to the Group Chief Executive.

The Committee holds regular private sessions with the Group

Chief Internal Auditor and the Chair also meets with the Group

Chief Internal Auditor at least quarterly or upon request.

Independence of the Internal Audit function is confirmed by the

Group Chief Internal Auditor through an annual attestation.

Effectiveness The Internal Audit Charter is approved annually

and the Committee regularly monitors progress against

the plan. Confirmation is also provided that the function is

appropriately resourced and has sufficient expertise to carry

out its mandate.

External Audit

Appointment and tenure

In accordance with Group policy, a formal tender process for

the position of external auditor was conducted in 2020 and

Deloitte LLP was selected for a further period of 10 years.

The Committee has the authority to commission a formal tender

process at any time it is deemed in the Group’s best interest.

The Committee concluded that Deloitte LLP continued to

perform in line with expectations and remained independent

of the Group, and will recommend to shareholders

reappointment at the 2024 AGM.

Effectiveness The Committee continues to hold private sessions

with the external auditor, in the absence of executive directors

or management. Four sessions were held during the year.

The sessions facilitate open and forthright discussions, and

for Deloitte to raise any concerns. In addition to this, the Chair

meets with the audit partner at least quarterly or upon request.

During the year, the Committee carefully considered the

risks associated with the Group control framework. Work

undertaken by GIA during the year, as part of the annual audit

cycle, has satisfied the Committee that the overall control

framework remains stable. Work undertaken by Deloitte IT

specialists identified some deficiencies in respect of user

access reviews; the Committee will ensure that the robust

remediation plan is implemented to address this during 2024.

Throughout the year, the external auditor challenged

management and demonstrated professional scepticism,

notably, debating with management the appropriateness of

the IFRS 9 and expected credit loss model rebuilds, controls

and governance processes.

The external auditor and audit quality is assessed annually

using scores and feedback from the Committee and

Group and Divisional Heads of Finance. Feedback and

scores were shared with the external auditor as part of the

commencement of the half-year review, and an action

plan developed for remediation requirements allowing

improvements to be incorporated.

The main remediation need identified in relation to the

2022 audit was for improving project management of

audit requests. The overall conclusion was that Deloitte LLP

remained effective.

Financial reporting process, internal control and risk management systems

Internal Audit and the Group Risk functions provide regular reports to the Committee in respect of the effectiveness of risk

management systems and internal controls. Where recommendations for improvement are made, these are agreed with

management and progress is monitored by the Committee at each meeting. The Group has been working on two long-term

improvement programmes, with progress as described below.

Area for improvement previously identified Progress to date

Implementation of a Group-wide integrated

risk system

The Integrated Assurance Framework is now embedded and supported by the Group-

wide risk system, Riskonnect, which facilitates a view of risks and issues across the Group

from all assurance activities. The system enhances the data available to the Committee

to monitor the effectiveness of the Groups internal controls. You can read more about our

risk harmonisation activity on pages 44 to 50.

The IT platform modernisation

A transformation programme is being executed which, over the next two years, will see

all products on a unified, modern cloud-based technology platform. The transformation

activity continues at pace and control issues within the legacy IT estates will be fixed

strategically through the transformation. The platform modernisation will also support the

automation of many controls. Control will be built into the platform by design, continuing

to enhance the overall system of internal controls.

Audit Committee Report continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Independence and objectivity

The Committee ensures adequate safeguards are in place to ensure the independence and objectivity of external audit.

These include:

– a policy that restricts the recruitment of individuals employed by the external auditor into positions that provide financial

reporting oversight or exercise influence over financial and regulatory statements;

– non-audit work is subject to the policy detailed below and the non-audit team does not prepare anything which would be

relied upon in the Group audit;

– work performed is subject to an independent professional standards review and Engagement Quality Control Review process;

– the Committee considers the reappointment of the external auditor, including the rotation of the audit partner, annually.

The review considers both independence and effectiveness, primarily using a scorecard system. The lead Audit Partner,

Kieren Cooper, has been in place since May 2022 following a smooth transition period; and

– the external auditor attests its independence and objectivity to the Committee on an annual basis.

Non-audit work

A formal policy on the use of the external auditor for non-audit work, is in place and reviewed annually and adheres to the EU Audit

Directive and Regulations. The policy stipulates that non-audit work should only be awarded to the external auditor when there is

clear reason to prefer it over alternative suppliers, following a rigorous procurement process. All awards of non-audit work to the

external auditor are monitored to ensure that their independence, and perceived independence, are not compromised. The Chair

of the Audit Committee must approve in advance, any single award of non-audit work which has a value in excess of £50,000

per annum, or a programme of non-audit work with an aggregated value in excess of £50,000 per annum. Where the value is in

excess of £250,000, the approval by a quorum of the Audit Committee is required in addition to the Chair’s approval. Approvals

are also be subject to the cap on non-audit services as outlined in the policy. Deloitte LLP’s fees for non-audit work during the

year was £0.3m (2022: £0.7m) The ratio of audit to non-audit fees was 6.7:1.

Significant issues and areas of judgement

The critical accounting assumptions and key sources of estimation uncertainty considered by the Committee in relation to

the Annual Report and Financial Statements 2023 are outlined on pages 134 and 135. In addition to the matters set out below,

the Committee also considered the going concern statement set out on page 129. The Committee discussed these with the

external auditor during the year and, where appropriate, these have been addressed as areas of audit focus as outlined

in the Independent Auditor’s Report on pages 116 to 123.

Issue Judgement Actions

Impairment of amounts

receivable from customers

Receivables are impaired on

recognition in accordance with

IFRS 9. The impairment allowance is

initially dependent on the probability

of default (PD), the loss given default

(LGD) and the exposure at default

(EAD) within 12 months, discounted

at the original effective interest rate

(EIR). Lifetime losses are recognised

following a significant increase in

credit risk. The assessment of credit risk

and therefore impairment allowance

should be probability weighted,

and should utilise all information

available, including past events,

current conditions and supportable

forecasts of economic conditions at

the reporting date. An assessment of

macroeconomic factors, including

the latest economic forecasts, is also

required to estimate expected losses.

Judgement is applied to

the impairment allowance

required. This includes whether

past performance provides a

reasonable estimate of future

losses implicit within the PD, LGD

and EAD. In 2023, adjustments

made in relation to the cost-of-

living crisis, affordability, persistent

debt and Standard European

Consumer Credit Information

(SECCI) have been fully unwound

as the Group considers these

impairment provisions to be no

longer required. In addition, the

Group refined and recalibrated

the provisioning models for cards,

vehicle finance and personal

loans, to better reflect the evolving

receivables mix; this led to a

release of £57.7m of provision

as a post-model adjustment.

The Audit Committee reviews and challenges the key

judgements applied throughout the year. This includes

adjustments to determining significant increases in credit

risk and default. Post-model adjustments are reviewed and

challenged when impacting PD, LGD or EAD. The process of

creating future estimates is considered with peer analysis

performed. The design, implementation and testing of new

models and any associated model enhancements are

reviewed and challenged. The embedding of the refined

and recalibrated IFRS 9 models, along with the updated

model monitoring capabilities will be overseen by the

Committee, and the required ongoing monitoring of these

models together with associated controls will be reviewed

and challenged. Information becoming available following

the period end is assessed to determine if this would have

been available at the period end and included within the

assessments. The work performed by Deloitte LLP on validating

the management assumptions is considered. Findings are

presented in Deloitte LLP’s report to the Audit Committee which

is challenged with knowledge of the latest circumstances.

The work performed by Group Internal Audit is considered,

in particular, on technology and operational controls.

Retirement benefit asset

The valuation of the retirement

benefit asset is dependent upon a

series of actuarial assumptions. The

key assumptions are in respect of

the discount rate, inflation rates and

mortality rates used to calculate the

present value of future liabilities.

Judgement is applied in

formulating each of the

assumptions used in calculating

the retirement benefit asset.

This considers any adjustments

made to the key judgements to

ensure they remain appropriate

for the Group’s defined benefit

pension scheme.

The Company’s external actuary, Willis Towers Watson,

proposes the appropriate assumptions and calculates

the value of the retirement benefit asset. The Committee

considers the adjustments made by management to the

core assumptions proposed by the actuary. The Committee

also considers the audit work performed by Deloitte LLP

on the assumptions and to what extent the assumptions

are within the suitable ranges of assumptions based on

audit experience.

Compliance statement

The Group has fully complied with the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of

Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 throughout the 2023 financial year.

Paul Hewitt

Audit Committee Chairman

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Risk Committee Report

Role of the Committee

The Committee’s role is to ensure that there is an

appropriate Risk Management Framework that operates

across the Group to facilitate effective oversight of the

Group’s principal risks and its aggregated risk position;

and to provide advice to the Board in relation to the

Group’s current and potential future risk strategies

and exposures. The Committee’s principal areas of

responsibility are as follows:

– understanding the Board’s strategy, desired culture and

direction and identifying the key strategic and emerging risks

which might prevent delivery;

– endorsing an overall risk appetite and recommending it to the

Board for approval at least annually;

– carrying out an assessment of the principal risks facing

the Group;

– monitoring the overall effectiveness of risk management

across the Group as overseen by the CRO;

– in conjunction with the Audit Committee, reviewing the

Group’s capability to identify and manage new risk types, and

keeping under review the effectiveness of the Group’s internal

control and risk management systems;

– reviewing the Group’s management of current and

forward-looking risk exposures;

– notifying the Board of any changes in the status and control

of material risks;

– reviewing the Group’s management of anti-money

laundering, data protection and operational resilience; and

– reviewing and approving the Group’s ICAAP, ILAAP and Group

liquidity assessment, including the stress testing and capital

allocation approach.

Allocation of time chart

Angela Knight

Risk Committee Chair

Balanced risk management

to support strategic progress

Dear Shareholder,

Welcome to the Risk Committee Report for the year ended

31 December 2023. The Committee held six meetings in the

year, one of which was specifically focused on the ICAAP and

ILAAP. The Committee performs an annual effectiveness and

adherence review and has covered all the duties set out in its

Terms of Reference.

The Committee membership was expanded during the

year with Michele Greene joining us as a member from May

2023. I have remained as Chair and the other non-executive

director members are Elizabeth Chambers and Paul Hewitt,

who is also Chair of the Audit Committee. The biographies

of all our members, which also contain information about

their qualifications, are available on pages 54 to 56 and our

committee attendance is on page 70. I am also a member of

the Audit Committee and work with Paul Hewitt to coordinate

the work of both committees. The Group’s CEO, Board Chair,

CFO, Chief Internal Auditor and General Counsel also regularly

attend Risk Committee meetings.

With the exception of the ICAAP and ILAAP focused meeting,

at each regular meeting the Committee has:

– reviewed and assessed the overall risk management

status of the Group;

– reviewed and assessed the Group’s top of mind risks,

both current and emerging, and key risk priorities;

– reviewed and assessed the Group’s principal risks;

– reviewed and confirmed the risk appetite status across the

Group; and

– reviewed the minutes and actions from previous meetings.

Our Committee reporting is structured consistently to facilitate

effective use of time within meetings. The Committee regularly

considers the Chief Risk Officer’s (CRO’s) report which provides

information regarding the top of mind risks (top-down

strategic and emerging risks), the principal risks (bottom-

up all-encompassing risks), a summary of risk events and a

functional update, and reports the Group’s position against its

risk appetite. The CRO Report also informs the Committee of

the second line of defence’s oversight and challenge of first

line operations and the CRO provides an annual assessment

of the effectiveness of risk management.

The Committee receives a report from the Chief Conduct and

Compliance Officer which facilitates oversight of regulatory

matters including regulatory engagement, horizon scanning,

compliance monitoring outcomes and financial crime.

The Committee’s Terms of

Reference are available at:

www.vanquisbankinggroup.com

Top of mind, principal and

emerging risks

35%

Credit risk focus 10%

Risk appetite, framework,

policy and harmonisation

Regulatory and prudential

risk reporting

20%

Risk management

effectiveness

Governance and

external reporting

Compliance and conduct 20%

“ In a year of change for the Group the

Committee has kept a close watch

ontheGroup’soverallriskprofileto

ensure that the Group’s strategic and

emerging risks are understood and

well managed.”

Angela Knight

Risk Committee Chair

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Key areas of focus

Strategic performance risk

The Committee has overseen the risk-related impact of the

strategic review actions taken by management in October

2023 to return the Group to a path to sustainable, profitable

growth which has included product price increases, a

simplified operating model, increased outsourcing and

modifications to the IT investment plan. In response to

the associated increase in the principal risk of strategic

performance the Committee enhanced its oversight of this

area. The Committee commissioned project-specific risk

assessments that documented the Group’s risk position and

what actions were being taken by management to manage

risks, including overseeing the establishment of a project-

specific risk forum, a project risk register and bolstered

monitoring of key colleague and customer metrics.

Technology and information security risk

The Committee has overseen the delivery of the risk-related

aspects of the Group’s IT infrastructure transformation

including overseeing the adaptations of plans following the

strategic review initiated in October 2023.

The Committee has played a key role in challenging

management to ensure it has identified, considered and

addressed the risks presented by the IT change programme.

Given the continued importance of the IT programme to

the Group’s overall risk profile the Committee has received

a report regarding the IT strategy, transformation and

associated risk management activity at each regular

meeting. The Committee provides guidance and approval

to management regarding risk management and IT security

on legacy systems. You can read more about the Group’s

strategy and digital, tech, data and analytics objectives and

focus for 2024 on page 9.

Capital, funding and liquidity risk

Detailed methodological reviews were completed on our

regulatory documents during 2021 (ICAAP) and 2022 (ILAAP).

Building on these solid foundations, the documents have been

further refined this year.

The ICAAP has been revised to reflect our continuous

development of capabilities and to incorporate feedback

received from the PRA as part of its Capital Supervisory Review

and Evaluation Process (C-SREP).

The ILAAP document reflects the consolidated Group’s liquidity

risk drivers and stress testing and the behaviours of the

Group’s products through 2023.

Both documents were approved by the Committee, for onward

recommendation to the Board, in December 2023.

You can read more about liquidity, funding and capital in the

Financial Review on page 34.

People and operational risk

The Committee recognised the people and operational risks

arising from the Group’s review of operations and subsequent

decision to outsource part of its operations to South Africa. The

Committee oversaw the activity through its receipt of regular

updates regarding the risk impacts and any associated action

plans documented via the CRO Report. You can read more

about the Group’s outsourcing project in our principal decision

on page 65.

Credit risk

In response to the continued uncertainty in the

macroeconomic environment the Committee has continued

with its enhanced approach to monitoring the impact of rising

interest rates and financial pressures on our customers during

the year. The Committee has received frequent and detailed

credit risk reports from the Chief Credit Officer regarding

portfolio performance, stability and customer behaviours.

Consumer Duty

The Committee has received regular updates from

management enabling it to oversee the execution of the

Consumer Duty implementation plan. The Committee

completed a deep dive review of fair value and has overseen

the actions arising such as the review of fees and charges and

terms and conditions. The Committee will continue to monitor

the impact of changes on customer outcomes.

Risk and control maturity

The Committee has overseen the Risk Harmonisation

programme and also the First Line Control Review (FLCR)

Programme. I am pleased to report both completed

in December 2023. The programmes have delivered

tangible improvements to our risk and control maturity

including a single Enterprise Risk Management Framework

and risk management system allowing for consistent

and consolidated risk reporting by our centralised Risk

function. The completion of both programmes has resulted

in a more accurate view of the Group’s operational risk

profile and the Committee has benefited from simplified,

aggregated reporting and insight capability. The Committee

commissioned an independent external quality assessment

to support the Committee’s responsibility to oversee the

effectiveness of the Group’s risk management strategy,

governance arrangements and operating model in managing

risk. The assessment concluded that the Group’s Risk

Management Framework and processes are fully embedded

and value adding.

The Committee recognises that the Risk Harmonisation

programme has also supported the first line of defence

ownership of risks through Risk and Control Self-Assessment

(RCSA); however, this is an iterative process and more risk

education for first line colleagues is planned for 2024.

Risk appetite

The Committee has overseen the Group’s Risk Appetite

Framework and receives comprehensive risk appetite data

with detailed plans regarding any route-to-green activity for

metrics that are not within appetite.

Principal and emerging risks

The Committee is responsible for supporting the Board in its

robust assessment of the principal and emerging risks to the

Group. The CRO reports to each regular meeting on the top of

mind principal and emerging risks. The Committee considers

the top of mind and any other risks that may impact the

Group’s strategy and operations and assesses its aggregated

risk profile. Alongside the CRO Report being provided to

the Board, I also provide the Board with a verbal update of

matters considered by the Risk Committee at each following

Board meeting.

In July 2023 the Committee approved the Group’s Risk

Management Framework, including the Emerging Risks

Methodology, which defines the approach to identify, assess

and measure the principal and emerging risks. The risk

classification was reviewed and approved by the Committee

in November 2023.

You can read more about the Group’s approach to risk

management in our Strategic Report on pages 44 to 46.

A description of our principal risks and how they are being

managed can be found on pages 46 to 50.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Committee review of internal risk

management and controls

In accordance with the 2018 UK Corporate Governance

Code Principle O, the Board has a responsibility to establish

procedures to manage risk, oversee the internal control

framework, and determine the nature and extent of the

principal risks the Company is willing to take in order

to achieve its long-term strategic objectives. Provision

29 requires the Board to monitor the Company’s risk

management and internal control systems.

Following a detailed review by the Committee, the directors

can confirm that the Group’s key risks have been robustly

assessed and are effectively controlled. In reaching this

conclusion, the Risk Committee assessed the following criteria:

– a comparison between the Group’s net risk profile and

positioning on both 1 January 2023 and 2024;

– management of top of mind risks including credit risk

related to the cost-of-living crisis, strategic performance

risk, technology and change;

– performance of the Risk function against its objectives as

agreed and assessed by the Remuneration Committee;

– the effectiveness of the Risk Management Framework to

ensure consistent management of risks;

– key strategic decisions taken and executed in 2023 which

alter the risk profile of the Group, including the change

in structure and leadership of the Group and the strategy;

– an assessment of our relationships with our

regulators; and

– other key indicators such as the reduction in open and

overdue audit actions, engagement with risk awareness

activities and risk awareness within first line management.

Opportunities

Looking forward, our refreshed strategy determines that

we will continue to monitor closely strategic performance

risk and credit risk and the stability of our overall risk profile

throughout 2024.

The Committee appreciates that the embedding of a

risk-aware culture is a continual and iterative process. With

this in mind, the Committee priorities to preserve and enhance

the Group’s control environment during 2024 are set out in the

table below.

Angela Knight

Risk Committee Chair

26 March 2024

Key Committee activities in 2023 Committee

priorities in 2024

– Closely monitored the Group’s ‘top of mind’ risks and received regular Group CRO reports outlining the Group’s

strategic and emerging risks.

– Oversaw the completion of the Risk Harmonisation programme, including embedding of the Group-wide risk

system, Riskonnect, and the completion of the Group’s First Line Control Review programme and requested and

received an External Quality Assessment of Risk Management Maturity by an independent consultant.

– Performed enhanced monitoring of credit risk in light of changes to the macroeconomic environment and the

strategic review.

– Confirmed the effectiveness of the Group Risk Management Framework following an internal review

by management.

– Oversaw the execution of the Group’s Consumer Duty of Care implementation plan.

– Oversaw the IT strategic transformation as it pertained to risk management and the delivery of controls in the

IT infrastructure and monitored IT resilience Including the performance of information security testing and resulting

action plans from the Group’s Chief Information Security Officer (CISO).

– Monitored execution risk associated with the strategic and operational change activity, particularly the cost

reduction programme, strategic review and organisational design.

– Received the Group MLRO Report detailing divisional performance, money laundering systems and controls, key

financial crime risks and issues, control gaps and associated action plans.

– Received regular reports from the Chief Conduct and Compliance Officer covering compliance and data

protection.

– Approved the Group’s ILAAP, ICAAP and Pillar 3 Disclosures.

– Approved the Committee’s revised terms of reference (ToR) and forward agenda planner and the Committee’s

effectiveness review.

– Strategy and

impact on principal

and emerging risks.

– Review of the

risk appetite

framework.

– Overseeing the risk

assessment of any

new products.

– Model

development and

model validation

results.

– Credit risk

management

capability.

Risk Committee Report continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Directors’ Report

Our responsibilities

as a listed business

In accordance with section 414C(11) of the Companies Act

2006, the directors present their report for the year ended

31 December 2023. Information relevant to the Directors’ Report

that has been covered in the Strategic Report has been listed

below alongside its location. Both the Strategic Report and

the Directors’ Report have been prepared and presented in

accordance with, and in reliance upon, applicable company

law. The liabilities of the directors in connection with both the

Directors’ Report and the Strategic Report shall be subject to

the limitations and restrictions provided by company law.

Other statutory information

(including that required by Listing Rule

9.8.4R)

Agreements with controlling shareholders Not applicable

Contracts of significance 185

Details of long-term incentive schemes 104 to 105

Directors’ indemnities 88

Dividends 89

Engagement with employees 63

How we had regard to suppliers, customers and

others in a business relationship with the Group

62 to 66

Events post-balance sheet 187

Risk management including principal risks 44 to 50

Future business developments 6 to 13

Going concern and viability statement 51 and 129

Greenhouse gas emissions,

energy consumption and efficiency

Interest capitalised Not applicable

Non-pre-emptive issues of equity for cash in

relation to major subsidiary undertakings

Not applicable

Non-pre-emptive issues of equity for cash Not applicable

No political donations 91

Parent participation in a placing

by a listed subsidiary

Not applicable

Provision of services by a controlling shareholder Not applicable

Publication of unaudited financial information 4

Purchase of own shares Not applicable

Research and development 91 and 163

Share capital – structure, voting and

other rights

Share capital – employee share plan

voting rights

Shareholder waivers of dividends 89

Shareholder waivers of future dividends 89

Waiver of emoluments by a director 104

Waiver of future emoluments by a director 104

Articles of association

The directors’ powers are conferred on them by UK legislation

and by the articles of association. Changes to the articles of

association must be approved by shareholders passing a special

resolution and must comply with the provisions of the Companies

Act and the FCA’s Disclosure Guidance and Transparency Rules.

Corporate governance statement

The Board considers that the Company was fully compliant with

all the provisions of the 2018 UK Corporate Governance Code

(the Code) throughout 2023.

The Group’s Corporate Governance Report is set out on pages

52 to 92.

In relation to the 2024 financial year to-date, following the

stepping down of Andrea Blance from the Board on 1 February

2024, the Audit Committee and Remuneration Committee

membership became non-compliant with Provisions 24 and

32 of the Code, with only two members in place for each

committee. On considering Andrea’s decision to step down, the

Nomination Committee and Board considered the membership

of both committees and the prospective non-compliance with

the Code and agreed that this temporary non-compliance

was appropriate for the Company in view of the following

circumstances: (a) the non-compliance with the Code was

expected to be for a short time due to progress being made

in relation to non-executive director appointments, and would

only impact a very limited number of meetings of each of the

committees, and (b) given that both committees continued

to have sufficient skills and experience to undertake their roles

effectively. Additionally, at the time of the non-compliance,

and since September 2023, the Company has been outside of

the FTSE 350. The Code notes that the Audit and Remuneration

Committees of a smaller company, being one that is below the

FTSE 350 throughout the year immediately prior to the reporting

year, can be comprised of two members. On 26 March 2024,

the Board approved the appointments of three new non-

executive directors with effect from 27 March 2024, with the Audit

and Remuneration Committees comprising of four and three

members respectively from that point. The Group will therefore

only be non-compliant with Provisions 24 and 32 between 1

February 2024 and 27 March 2024, during which time there was

only one Remuneration Committee meeting and two Audit

Committee meetings. We will provide an explanation regarding

compliance with the Code during 2024 in our 2024 Annual Report

to be published in 2025.

Directors

The membership of the Board and biographical details of the

directors at the year end are given on pages 54 to 56 and are

incorporated into this report by reference. Commentary about the

Board’s composition and Board tenure can be found on page 70.

All directors were present throughout 2023 and up to the date

of signing the Annual Report and Financial Statements 2023,

other than:

– Michele Greene who joined the Board on 9 March 2023;

– Sir Peter Estlin who joined the Board on 19 April 2023;

– Ian McLaughlin who joined the Board on 1 August 2023;

– Dave Watts who joined the Board on 1 November 2023; and

– Malcolm Le May, Neeraj Kapur, Patrick Snowball and

Andrea Blance who stepped down from the Board on

1 August 2023, 7 August 2023, 15 September 2023 and 1

February 2024 respectively.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Directors’ Report continued

Appointment and replacement of directors

Rules about the appointment and replacement of directors are

set out in the Company’s articles of association. In accordance

with the recommendations of the Code, all directors with the

exception of Elizabeth Chambers and Margot James will offer

themselves for appointment or reappointment, as appropriate,

at the 2024 AGM.

Directors’ indemnities

The articles of association permit the Company to indemnify

directors of the Company (or of any associated company)

in accordance with section 234 of the Companies Act.

The Company may fund expenditure incurred by directors

in defending proceedings against them. If such funding is

by means of a loan, the director must repay the loan to the

Company, if they are convicted in any criminal proceedings

or judgment is given against them in any civil proceedings.

The Company may indemnify any director of the Company

or of any associated company against any liability.

However, the Company may not provide an indemnity against:

1. any liability incurred by the director to the Company

or to any associated company;

2. any liability incurred by the director to pay a criminal

or regulatory penalty;

3. any liability incurred by the director in defending criminal

proceedings in which they are convicted;

4. any liability incurred by the director in defending any civil

proceedings brought by the Company (or an associated

company) in which judgment is given against them; or

5. in connection with certain court applications under

the Companies Act, no indemnity was provided and no

payments pursuant to these provisions were made in 2023

or at any time up to the date of this report.

There were no other qualifying indemnities in place during

this period. The Company maintains both a deed of indemnity

in favour of the directors and directors’ and officers’ liability

insurance which gives appropriate cover for any legal action

brought against its directors.

Directors’ powers

Subject to the articles of association, UK legislation and any

directions given by special resolution, the business of the Company

is managed by the Board. The directors currently have powers in

relation to the issuing and buying back of the Company’s shares,

which were granted by shareholders at the 2023 AGM. The Board

is seeking renewal of these powers at the 2024 AGM.

Conflicts of interest

The Companies Act and the articles of association require the

Board to consider any potential conflicts of interest of its members.

The Board has a formal policy and operates formal procedures

regarding conflicts of interest in order to identify and manage

conflicts and to maintain independent judgement. All members

of the Board have completed conflict of interest forms which are

reviewed annually. All directors have an ongoing duty to notify

the Company of any changes and to ensure that appropriate

authorisation is sought where required and are required to

renew and confirm their external interests annually. The Board

(excluding the director concerned) considers and, if appropriate,

authorises each director’s reported actual and potential conflict

of interest, taking into consideration what is in the best interests

of the Company and whether the director’s ability to act in

accordance with his or her duties is affected. The Board will refer

to the Conflict of Interest Policy for the most appropriate mitigating

control. Records and Board minutes of all authorisations granted

by the Board and the scope of any approvals given are held and

maintained by the Company Secretary.

Share capital

The Company’s issued ordinary share capital comprises a

single class of ordinary shares. The rights attached to the

ordinary shares are set out in the articles of association. Each

share carries the right to one vote at general meetings of

the Company. No new shares were issued to satisfy awards

made under the Long Term Incentive Scheme 2015 (LTIS),

the Restricted Share Plan (RSP) or Deferred Bonus Plan (DBP).

54,638 shares were issued during the year to satisfy exercises

of options under the Vanquis Banking Group Savings-Related

Share Option Scheme 2013. 2,588,253 shares were issued

during 2023 pursuant to the acquisition of Usnoop Ltd.

Rights of ordinary shares

All of the Company’s issued ordinary shares are fully paid

up and rank equally in all respects and there are no special

rights with regard to control of the Company. The rights

attached to them, in addition to those conferred on their

holders by law, are set out in the articles of association. There

are no restrictions on the transfer of ordinary shares or on the

exercise of voting rights attached to them, except:

1. where the Company has exercised its right to suspend

its voting rights or to prohibit their transfer following the

omission by their holder or any person interested in them

to provide the Company with information requested by it in

accordance with Part 22 of the Companies Act; or

2. where their holder is precluded from exercising voting

rights by the FCA’s Listing Rules or the City Code on

Takeovers and Mergers.

Directors’ interests in shares

The below interests include those held by connected persons

and interests in shares through the Company’s share schemes.

Number of shares

31 December

2023

31 December

2022

Ian McLaughlin

1,028,939 —

Dave Watts

40,000 —

Sir Peter Estlin

100,000 —

Andrea Blance

— —

Elizabeth Chambers 12,000 12,000

Paul Hewitt 34,205 34,205

Margot James — —

Angela Knight — —

Graham Lindsay 26,464 9,771

Michele Greene

— —

1 Ian McLaughlin joined the Board on 1 August 2023.

2 Dave Watts joined the Board on 1 November 2023.

3 Sir Peter Estlin joined the Board on 19 April 2023. Shareholding includes

50,000 shares held by a connected person.

4 Andrea Blance stepped down from the Board on 1 February 2024.

5 Michele Greene joined the Board on 9 March 2023.

Between 31 December 2023 and 14 March 2024, being the

latest practicable date prior to publication, there have been

no changes to the directors’ interests.

Dividend waiver

Information on dividend waivers currently in place can be

found on page 89.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Profit and dividends

The continuing operations profit before taxation, amortisation

of acquisition intangibles and exceptional items amounts to

£24.9m (2022: profit of £126.6m). As at the date of this report,

the directors have declared dividends as follows:

Ordinary shares (p per share)

Interim dividend

2023 (paid on 21 September 2023) 5p

2022 (paid on 22 September 2022) 5p

Proposed final dividend

2023 (proposed to be paid on 30 May 2024) 1p

2022 (paid on 7 June 2023) 10.3p

Total ordinary dividend

2023 6p

2022 15.3p

All-employee share schemes

The current schemes for employees resident in the UK are the

Vanquis Banking Group Savings-Related Share Option Scheme

2022 (SAYE) and the Vanquis Banking Group Share Incentive Plan

2022 (SIP). Share schemes are a long-established and successful

part of the total reward package offered by the Company,

encouraging and supporting employee share ownership. The

Company’s schemes aim to encourage employees’ involvement

and interest in the financial performance

and success of the Group

through share ownership. The Company’s

SIP offers employees the

opportunity to further invest in the Company and to benefit from

the Company’s offer to match that investment on the basis of one

matching share for every four partnership shares purchased.

Scheme title

Total participants as at

31 December 2023

Total participants as at

31 December 2022

SAYE 439 528

SIP 106 147

Executive share incentive schemes

Awards are also outstanding under the RSP, LTIS and DBP. DBP

awards were granted during the year on 11 April 2023. RSP and

CSOP options were granted under the RSP on 11 April 2023 and

8 September 2023. LTIS awards were granted during the year

on 8 September 2023. Further information is set out on page 104.

Vanquis Banking Group 2007 Employee Benefit Trust (EBT)

The EBT, a discretionary trust for the benefit of executive

directors and employees, was established in 2007. The trustee,

SG Kleinwort Hambros Trust (CI) Limited, is not a subsidiary of

the Company. The EBT operates in conjunction with the LTIS,

RSP, RBA and DBP and either purchases shares in the market

or subscribes for the issue of new shares. The EBT is funded

by loans from the Company which are then used to acquire,

either via market purchase or subscription, ordinary shares to

satisfy awards granted under the LTIS, RSP and DBP. Funds are

used to acquire shares by way of market purchase for the RBA.

For the purpose of the financial statements, the EBT is

consolidated into the Company and Group. As a consequence,

the loans are eliminated and the cost of the shares acquired is

deducted from equity as set out in note 31 on page 181 of the

financial statements. In 2023, the EBT agreed to satisfy awards

granted during the year under the RSP and CSOP options under

the RSP in relation to 4,593,575 shares in the Company. During

the year the EBT also agreed to satisfy awards granted during

the year under the LTIS in relation to 2,821,336 shares and

granted during the year under the DBP in relation to 315,661

shares. In 2023, the EBT also agreed to satisfy awards under

the RBA of 38,053 shares in the Company by way of market

purchase in relation to 2023.

As at 31 December 2023, the EBT held the non-beneficial

interest in 1,869,980 shares in the Company (2022: 2,946,015).

The EBT may exercise or refrain from exercising any voting

rights in its absolute discretion and is not obliged to exercise

such voting rights in a manner requested by the beneficiaries.

The EBT waives its right to dividends in relation to shares held

in the trust.

Provident Financial Employee Benefit Trust

(the PF Trust)

The PF Trust, a discretionary trust for the benefit of executive

directors and employees, was established in 2003 and

operated in conjunction with the PSP. The trustee, Provident

Financial Trustees (Performance Share Plan) Limited, is

a subsidiary of the Company. The PF Trust has not been

operated with the Performance Share Plan since 2012, when

the previous PSP expired. As at 31 December 2023, the PF Trust

had no interest in any shares in the Company (2022: nil).

Substantial shareholdings

In accordance with the Disclosure Guidance and Transparency Rules (DTR 5), the Company had been notified that the

following persons hold directly or indirectly 3% or more of the voting rights of the Company:

Interests as at 31 December 2023

Holders (descending %)

Interests as at 14 March 2024 (being the latest

practicable date before publication of the report)

Holders (descending %)

Schroder Investment Management 13.89% Schroder Investment Management 13.84%

Redwood Capital Management 12.81% Redwood Capital Management 12.59%

Davidson Kempner Capital Management 9.71% Davidson Kempner Capital Management 9.70%

BlackRock 6.87% BlackRock 6.97%

Artemis Investment Management 6.27% Artemis Investment Management 6.83%

Premier Miton Investors 4.59% Goldman Sachs 5.17%

Janus Henderson Investors 4.35% Premier Miton Investors 4.59%

Vanguard Group 4.04% Vanguard Group 4.15%

Jupiter Asset Management 3.88% Janus Henderson Investors 4.02%

abrdn 3.87% abrdn 3.87%

Marathon Asset Management 3.05%

All interests disclosed to the Company in accordance with DTR 5 that have occurred since 14 March 2024 can be found on

the Group’s website: www.vanquisbankinggroup.com.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Directors’ Report continued

Vanquis Banking Group BAYE Trust

(the BAYE Trust)

The BAYE Trust is a discretionary trust which was established

in 2013 to operate in conjunction with the SIP. Equiniti Share

Plan Trustee is trustee of the BAYE Trust. It is not a subsidiary

of the Company. The BAYE Trust is funded by loans from the

Company which are then used to acquire ordinary shares

via market purchase to satisfy the Matching Awards for

participants of the SIP.

For the purposes of the financial statements, the BAYE Trust is

consolidated into the Company and Group. Participants in the

SIP can direct the trustee on how to exercise its voting rights

in respect of the shares it holds on behalf of the participant.

As at 31 December 2023, the BAYE Trust held the non-beneficial

interest in 240,294 shares (2022: 196,535 shares).

Colleague engagement and investing in

our workforce

We invest in our colleagues through recognition, reward,

development, wellbeing, the working environment and culture.

Colleagues are recognised through our ‘Way to Go’ recognition

platform and our ‘Perks at Work’ scheme, where you can

recognise colleagues for outstanding work, providing support

and generally exhibiting behaviours that show they are living

The Vanquis Way, the Group’s Values. You can also use the site

to learn new hobbies and skills through the Perks Community

Online Academy and save money on a wide range of expenses.

We have a Learning and Development hub which provides

colleagues with an online portal to enhance their skills,

performance and career.

We have a Group Reward Framework that enables clear

career progression and movement around the Group. We have

established mechanisms for colleague engagement including

having a Designated Non-Executive Colleague Champion.

Information relevant to how we invest in our colleagues and

where it can be found:

Information Location

Reward and recognition 94 and 110

Learning and development – management

programmes, apprenticeships, mandatory

e-learning and mentoring

14, 16, 63 and

Culture – equal opportunities, gender diversity,

other diversity and inclusion and Colleague

Survey results

Inside front

cover, 12, 16,

61 and 62

Health and wellbeing – support and initiatives 62

Engagement – internal communication, Colleague

Survey, Workforce Panels and Designated

Non-Executive Colleague Champion

16, 62, 63, 66,

67 and 90

Equal opportunities and diversity

The Group is committed to employment policies which follow

best practice, based on equal opportunities for all colleagues

irrespective of gender, pregnancy, race, colour, nationality,

ethnic or national origin, disability, sexual orientation, age,

marital or civil partner status, gender reassignment, religion

or belief. The Group gives full and fair consideration to

applications for employment from disabled persons, having

regard to their aptitudes and abilities.

We have signed up to the Government’s Disability Confident

Scheme for employers, our first of three steps on our Disability

Confident journey, which will help us to recruit, retain and

develop disabled colleagues.

Appropriate arrangements are made for the continued

employment and training, career development and promotion

of disabled persons employed by the Group including making

reasonable adjustments where required. If a member of staff

becomes disabled, every effort is made by the Group to ensure

their continued employment, either in the same or an alternative

position, with appropriate retraining being given if necessary.

Pensions

The Group operates two pension schemes in the UK. Employee

involvement in the Group defined benefit pension scheme is

achieved by the appointment of member-nominated trustees

and by regular newsletters and communications from the

trustees to members. In addition, there is a website dedicated to

pension matters. The trustees manage the assets of the defined

benefit pension scheme which are held under trust separately

from the assets of the Group. Each trustee is encouraged to

undertake training and regular training sessions on current

issues are carried out at meetings of the trustees by the trustees’

advisors. The trustees have a business plan and, at the start of

each year, review performance against the plan and objectives

from the previous year. In addition, they agree objectives and

a budget for the current year. The trustees have a risk register

and an associated action plan and a Conflicts of Interest Policy,

both of which are reviewed at least annually. The trustees have

implemented a de-risking investment strategy which has been

agreed with the Company and is kept under close review. The

objective of the strategy is to reduce the risk that the assets

would be insufficient in the future to meet the liabilities of the

scheme. The Company has put Pension Trustee Indemnity

Insurance in place to cover all the Group’s pension schemes

where individuals act as trustees. The trustees are also protected

by an indemnity within each scheme’s rules and this insurance

effectively protects the Group against the cost of potential

claims impacting on the solvency of the pension schemes. The

Group operates a Group Personal Pension Plan for employees

who joined the Group from 1 January 2003 and a Group

Personal Pension Plan for employees of Moneybarn who joined

the Group from 1 January 2003. Employees in both these plans

have access to websites which provide information about their

funds and general information about the plans.

Compliance

The Risk and Audit Committees oversee compliance and work

together to review the systems and controls for the prevention

of bribery.

Health and safety

The Group is committed to having a positive health and safety

culture and an integrated, embedded, and effective health

and safety management system. During 2023, the development

of Group-wide health and safety policies was finalised, with

a new approach to performance monitoring and evaluation

introduced, to review the effectiveness of the management

system. H&S toolkit training was developed to better equip

management with critical knowledge and resources, to ensure

health and safety is embedded in what they do. Focusing on

continual improvement has been an essential component of

the health and safety strategy. Accident and reporting statistics

remain a key performance indicator and area of focus. During

the year there were no RIDDOR reportable events.

Anti-bribery and corruption

The Group has a policy on anti-bribery and corruption which

reflects the requirements of the Bribery Act 2010.

The Policy sets out the Group’s zero-tolerance approach to bribery

and corruption and its commitment to acting professionally, fairly

and with integrity in all its business dealings and relationships,

wherever it operates, and implementing and enforcing effective

systems and controls to counter bribery and corruption. The Policy

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

applies to all employees, contractors and directors in relation to

the business activities undertaken by, or on behalf of, the Group.

It also applies to any third party which is undertaking business

for or on behalf of the Group, which must comply with the Policy or

maintain equivalent standards and safeguards to prevent bribery

and corruption. Under the Policy, all employees, contractors,

directors and relevant third parties of the Group and its divisions

must comply with the following minimum requirements:

– they must not directly or indirectly engage in bribery or

corruption in any form; and

– they also must not accept, solicit, agree to receive, promise,

offer or give a bribe, or facilitate payment, kickback or other

improper payment.

The Policy also states that if an employee, contractor, director or

relevant third party of the Group or its divisions becomes aware

of a breach of the above minimum requirements they must

immediately comply with applicable reporting protocols and

procedures. The Group MLRO is the responsible person within

the Group for receiving reports, and, as soon as is reasonably

practicable, reports the incident to the Deputy Company

Secretary. The Group provides anti-bribery and corruption

training to all colleagues.

Related policies

Gifts and Corporate Hospitality Policy

The Group has a Corporate Hospitality Policy which sets

out the Group’s requirements for the review, approval and

documentation of any gifts or corporate hospitality which are

accepted, offered or provided. The Risk Committee oversees

the Gifts and Corporate Hospitality Policy.

Whistleblowing Policy

The Group has a Whistleblowing Policy which is overseen

by the Board. The Group is committed to fostering a culture

of openness, honesty and accountability and requires the

highest possible standards of professional and ethical conduct.

Should any Group colleagues have any reportable concerns,

these can be raised anonymously either internally or through

the Group’s external third-party helpline facility as detailed in

the Group Whistleblowing Policy. The Group has appointed a

Whistleblowing Champion, being a non-executive director with

responsibility for ensuring and overseeing the integrity of the

Group’s arrangements on whistleblowing, including policies and

procedures. A Group Whistleblowing Forum is in place which

reviews management information on whistleblowing disclosures

and grievances and agrees on escalations to the Board. It also

considers any concerns regarding persistent trends and shares

best practice. The Group provides whistleblowing training

to all colleagues, including executive directors.

Overseas branches

The Group has no overseas branches.

Political donations

The Group made no political donations nor incurred any

political expenditure during the year.

Research and development

The Group’s research and development activities have

predominantly related to systems and applications for the

credit cards and personal loans businesses as set out in

Note 20 on page 163 of the financial statements.

Environment and greenhouse gas emissions

The Group’s greenhouse gas (GHG) and energy use reporting

is undertaken in accordance with our obligations under both

The Companies Act 2006 (Strategic Report and Directors’

Report) Regulations 2013 and the UK Government’s Streamlined

Energy and Carbon Reporting (SECR) policy that has been

implemented through the Companies (Directors’ Report)

and Limited Liability Partnership (Energy and Carbon Report)

Regulations 2018. These emissions are reported in accordance

with WRI/WBCSD GHG Protocol. For more information, please

refer to pages 19 to 28.

The Group’s total GHG emissions, in tonnes of CO

equivalent

(CO

e), along with details of our energy use and an intensity ratio,

are reported in the table on page 27. SLR Consulting Limited has

provided limited level ISAE 3000 (Revised) assurance in respect

of this data. Its full, independent assurance statement is available

online at: www.vanquisbankinggroup.com/sustainability. Where

challenges have occurred in obtaining data, estimates have

been used and assured by SLR Consulting.

The Group’s Climate Risk Committee, which is chaired by

Gareth Cronin, the Group Chief Risk Officer, and includes

senior representatives from functions such as Finance, Risk,

Operations and Sustainability, continues to support the business

to assess, manage and report material climate-related risks

and opportunities, and ensure that we continue to meet the

recommendations of the Task Force on Climate-related Financial

Disclosures (TCFD). Details on the progress the Group has made

during 2023 in meeting the TCFD recommendations are set out

on pages 19 to 28. As at 31 December 2023, the Group’s Carbon

Disclosure Project (CDP) rating was B- (2022: B-) for our climate

change risk management efforts throughout the year. To help us

to manage and reduce our wider impacts on the environment

the Group continues to have in place an environmental

management system (EMS). Our EMS helps us to identify, assess

and reduce key environmental risks and impacts; set and deliver

against environmental targets; and ensure our legal compliance.

This EMS is independently audited each year against the

requirements of the international management standard ISO

14001:2015. Following the environmental audits carried out in 2023,

all the Group’s business premises in Bradford, London, Chatham

in Kent and Petersfield in Hampshire were re-certified to comply

with the international standard ISO 14001:2015.

Important events since the end of the

financial year (31 December 2023)

See Note 36 on page 187.

Financial instruments

Details of the financial risk management objectives and

policies of the Group and the exposure of the Group to credit

risk, liquidity risk and market risk are included on pages 136 to

140 of the financial statements.

Significant agreements

There are no agreements between any Group company and

any of its employees or any director of any Group company

which provide for compensation to be paid to an employee or

a director on termination of employment or for loss of office as

a consequence of a takeover of the Company.

Directors’ responsibilities

The directors are responsible for preparing the Annual Report

and the financial statements in accordance with applicable

law and regulations.

The directors have also chosen to prepare the parent company

financial statements under United Kingdom adopted International

Accounting Standards. Under company law the directors must

not approve the financial statements unless they are satisfied that

they give a true and fair view of the state of affairs of the Company

and of the profit or loss of the Company for that period.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Directors’ responsibilities continued

In preparing these financial statements, International

Accounting Standard 1 requires that directors:

– properly select and apply accounting policies;

– present information, including accounting policies,

in a manner that provides relevant, reliable, comparable

and understandable information;

– provide additional disclosures when compliance with the

specific requirements of the financial reporting framework

are insufficient to enable users to understand the impact of

particular transactions, other events and conditions on the

entity’s financial position and financial performance; and

– make an assessment of the Company’s ability to continue

as a going concern.

The directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the Company’s

transactions and disclose with reasonable accuracy at any

time the financial position of the Company and enable them to

ensure that the financial statements comply with the Companies

Act 2006. They are also responsible for safeguarding the assets

of the Company and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and

integrity of the corporate and financial information included

on the Company’s website. Legislation in the United Kingdom

governing the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

Directors’ responsibility statement

We confirm that to the best of our knowledge:

– the financial statements, prepared in accordance with the

relevant financial reporting framework, give a true and fair

view of the assets, liabilities, financial position and profit or

loss of the Company and the undertakings included in the

consolidation taken as a whole;

– the Strategic Report includes a fair review of the development

and performance of the business and the position of the

Company and the undertakings included in the consolidation

taken as a whole, together with a description of the principal

risks and uncertainties that they face; and

– the Annual Report and Financial Statements, taken as a

whole, is fair, balanced and understandable and provides

the information necessary for shareholders to assess

the Company’s position, performance, business model

and strategy.

The directors are also required by the FCA’s Disclosure Guidance

and Transparency Rules (DTR) to include a management report

containing a fair review of the business of the Group and the

Company and a description of the principal risks, emerging risks

and uncertainties facing the Group and Company.

The Directors’ Report and the Strategic Report constitute

the management report for the purposes of DTR 4.1.5R and

DTR 4.1.8R. The directors are responsible for keeping proper

accounting records that are sufficient to:

– show and explain the Company’s transactions;

– disclose with reasonable accuracy at any time the

financial position of the Company and Group; and

– enable them to ensure that the financial statements and

the Directors’ Remuneration Report comply with the Act

and, as regards the Group financial statements, Article

4 of the IAS Regulation. They are also responsible for

safeguarding the assets of the Company and the Group

and taking reasonable steps for the prevention and

detection of fraud and other irregularities.

The Annual Report and Financial Statements 2023 will be

published on the Group’s website in addition to the normal

paper version.

The directors are responsible for the maintenance and integrity

of the Group’s website. Legislation in the United Kingdom

governing the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

Responsibility statement

Company law requires the directors to prepare financial

statements for each financial year. Under that law the

directors are required to prepare the Group financial

statements in accordance with relevant IFRS, IFRIC

interpretations and the Companies Act 2006.

The directors who held office during the financial year and to

the date of this report were as follows:

Sir Peter Estlin Chair

Ian McLaughlin Chief Executive Officer

Dave Watts Chief Financial Officer

Angela Knight Senior Independent Director

Elizabeth Chambers Independent non-executive director

Margot James Independent non-executive director

Paul Hewitt Independent non-executive director

Graham Lindsay Independent non-executive director

Michele Greene Independent non-executive director

Disclosure of information to auditor

In accordance with section 418 of the Act, each person who is

a director as at the date of this report confirms that:

– so far as they are aware, there is no relevant audit

information of which the Company’s external auditor is

unaware; and

– they have taken all steps that ought to have been taken

as a director in order to make themselves aware of any

relevant audit information and to establish that the

Company’s external auditor is aware of that information.

Auditor

Deloitte LLP, the external auditor for the Company, was first

appointed in 2012 and, following a tender process in 2020,

a resolution proposing its reappointment was passed at

the 2023 AGM. The reappointment of Deloitte LLP as the

Company’s external auditor is proposed at the 2024 AGM.

2024 AGM

The 2024 AGM will be held at the offices of Clifford Chance

LLP, 10 Upper Bank Street, Canary Wharf, London, E14 5JJ on

15 May 2024 at 3.30pm. The Notice of AGM, together with an

explanation of the items of business, will be contained in the

circular to shareholders dated 27 March 2024 and will be

available on our website, www.vanquisbankinggroup.com.

Approved by the Board on 26 March 2024 and signed by order

of the Board.

Melanie Barnett

General Counsel and Company Secretary

26 March 2024

Directors’ Report continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Directors’ Remuneration Report

Annual Statement by the Chair of the Remuneration Committee

Dear Shareholder

On behalf of the Remuneration Committee (the Committee),

I am delighted to present my first Directors’ Remuneration

Report for the year ended 31 December 2023, having

succeeded Andrea Blance in September 2023. I would like

to extend my sincere thanks to Andrea for her considerable

contribution to remuneration policies and practices at

Vanquis Banking Group. Andrea guided the Committee

with skill and determination through a period of significant

transformation for the Group. I have been a member of

the Committee since April 2019, having previously been the

Chair of the Customer, Culture and Ethics (CCE) Committee,

which has helped to facilitate a smooth handover in

our responsibilities.

The report sets out how the Committee carried out its

responsibilities during the year and our approach to

remuneration in 2023 and explains the rationale for our

decision making.

2023 Group performance

2023 was an exceptionally challenging year for the Group,

which included significant change at Board level in a relatively

short period of time and new appointments of executive

directors and the Chairman.

Our mid-year financial results, which were communicated to

shareholders on the final day of active service for the previous

CEO (Malcolm Le May), were below market expectations which

led to a significant fall in share price. Under the leadership of

the new CEO (Ian McLaughlin), the executive team worked at

pace in the second part of the year to undertake a detailed

operating review of the Group and scrutinised every cost centre

and product line. As a result, the Group reduced the cost base

and clarified expectations for the year-end financial results. A

full strategy review was commissioned and the outputs of this

will enable the Group to become the outstanding customer

champion in its target market segment and deliver sustainable,

profitable growth based on the Group’s deep understanding of,

and commitment to, the customer base.

Our financial performance stabilised at the end of the year

but was below the thresholds set at the beginning of the year,

reflected in:

– adjusted profit before tax (Adjusted PBT) of £24.9m

(£126.6m in 2022); and

– adjusted return on required equity (RORE) of 4.0%

(22.2% in 2022).

Committee members (attendance)

Graham Lindsay

(Chair from 1 September 2023) (4/4 plus 6/6 ad hoc)

Andrea Blance

(Chair until 1 September 2023) (4/4 plus 6/6 ad hoc)

(Stepped down 1 February 2024)

Margot James (4/4 plus 6/6 ad hoc)

Sir Peter Estlin

(19 April 2023 to 15 September 2023) (1/1 plus 3/3 ad hoc)

Role of the Committee

The Chairman, the Group Chief Executive Officer (CEO),

the Chief People Officer (CPO), the Group Head of

Reward and the Committee’s independent advisor

(PwC) attend Committee meetings by invitation. No

person is in attendance when their own remuneration is

being discussed.

The report complies with the provisions of the Companies

Act, the Large and Medium-sized Companies and Groups

(Accounts and Reports) Regulations 2008 and the

Listing Rules of the FCA. The Company also follows the

requirements of the UK Corporate Governance Code (the

Code) updated in July 2018.

Allocation of time

Remuneration

Governance 36%

Annual bonus 23%

Share Plans 18%

Risk 23%

The Committee’s Terms of

Reference are available at:

www.vanquisbankinggroup.com

Graham Lindsay

Remuneration Committee Chair

“ In 2023 the Committee has focused

on setting executive remuneration

within the context of the overall

Company performance.”

Graham Lindsay

Remuneration Committee Chair

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Directors’ Remuneration Report continued

Annual Statement by the Chair of the Remuneration Committee continued

Key remuneration outcomes

Given the 2023 financial results of the Group, the focus of

the Committee was to ensure that this was appropriately

reflected in the remuneration decisions made and outcomes

were aligned to the wider stakeholder experience.

As a result, the Committee has exercised its discretion in

relation to:

– 2023 Group bonus pool. Downward adjustment on the

annual bonus scorecard outcomes to zero, resulting in

no bonus for all colleagues, including the current and

previous executive directors.

– Restricted Share Plan (RSP) 2020 award final vesting

outcome. The Committee reviewed the performance

underpin of the RSP 2020 award (which vested on 9

November 2023) and determined that a downwards

adjustment of 35% should be made to the final vesting

outcomes of the previous executive directors (Malcolm

Le May and Neeraj Kapur); further details are shared on

page 104.

– RSP 2021 award interim underpin assessment. The

Committee carried out an interim assessment of the

performance underpin of the RSP 2021 award (which is

due to vest on 18 August 2024) and determined that a

downwards adjustment of 25% should be made to the

vesting outcomes. A final assessment will be carried

out in the summer of 2024 prior to vesting and the final

vesting outcome will be disclosed in the 2024 Directors’

Remuneration Report; further details on the interim

assessment are shared on page 105.

Wider workforce pay

Whilst recognising the challenges the Group faced through

the year, the Committee has also been mindful of the need to

retain and motivate our wider staff population for the future

stability of the business. It has been another tough year for

the UK economy, with the cost-of-living pressure continuing

to have an impact on our colleagues. Our pay review in early

2023 focused on our lower paid colleagues and a number of

initiatives were implemented:

– an overall pay budget of 5% for salary increases effective

1 January 2023;

– average increases of over 8% for colleagues who were

in roles at the lower levels and relatively lower paid, and

so were disproportionately hit by general cost-of-living

pressures; and

– all our colleagues were granted an extra day’s holiday in

2023 as a thank you for their hard work and support during

a very difficult latter part of the year.

In addition, for the purpose of greater pay transparency,

we published internally the VBG minimum salary by job level

and location.

In 2024, we intend to continue our focus on our colleagues

who are employed at the lower levels and from January 2024,

the minimum full time salary will be £24,600. We will update

our minimum salary (above the Living Wage for all) by level

(and location) and actively distribute a larger percentage of

our salary review pool to those colleagues.

As noted above, there will be no Group bonus in 2023 due

to our financial performance (2022: 70% of maximum). It is

important to note that this outcome is in no way reflective

of the hard work and commitment our colleagues have

made throughout the year to keep our business running

and help our customers. I want to take this opportunity to

thank our colleagues for their efforts in 2023 in such trying

circumstances.

Executive director remuneration in 2023

Annual bonus for executive directors

The financial element of the annual bonus was below threshold

for 2023 for both adjusted PBT and adjusted RORE and therefore

there was nil vesting under this element. Under the Group’s

non-financial scorecard, the Committee determined a vesting

outcome of 57.5%, which resulted in a total weighted vesting of

23% based on performance against scorecard objectives.

In determining the final bonus outcome, the Committee took

into account a number of factors including the overall business

performance in 2023, and the wider stakeholder experience.

The Committee decided to exercise discretion and make a

downward adjustment to the bonus outcomes for the current

and previous executive directors to zero (note the current CFO,

Dave Watts, was not eligible for the 2023 annual bonus as he

joined on 1 November 2023). We have set out in more detail the

annual bonus results for 2023 on pages 102 to 103.

RSP 2020 award vesting

As reported in last year’s report, the expectation was that the

RSP 2020 awards (which vested in November 2023) for the

previous CEO (Malcolm Le May) and previous CFO (Neeraj

Kapur) would vest in full subject to a final assessment by the

Committee. In October 2023 the Committee reassessed the

RSP 2020 award performance underpin and exercised its

discretion and decided to apply a downward adjustment of

35% to the RSP 2020 award to reflect the material damage to

the reputation of the Group (as viewed by investors) following

the 2023 half-year results announcement for the previous

CEO (Malcolm Le May) and the previous CFO (Neeraj Kapur).

More detailed disclosure is set out on page 104.

RSP 2021 award vesting

The RSP 2021 award was due to be granted in April/May 2021

but due to CCD wind down (Project Strickland) it was delayed

until 18 August 2021. The vesting is subject to an underpin

which provides discretion for the Committee to consider

whether any adjustment to vesting should be made. The

award is therefore scheduled to vest on 18 August 2024.

After careful consideration, the Committee’s interim

assessment as at 31 December 2023 concludes that a

downward adjustment of 25% will be made to the RSP

2021 award to reflect the impact of the Group’s financial

performance in 2023. The Committee will review this

assessment again prior to final vesting and any changes to

the above assessment and the final vesting outcome will be

disclosed in the 2024 Directors’ Remuneration Report.

Departing executive directors

As reported last year the previous CEO (Malcolm Le May)

decided to step down as CEO and retire. He was subject to a

12-month notice period which ended on 24 January 2024.

On 7 August 2023 the previous CFO (Neeraj Kapur) informed

the Board that he was stepping down from his role and as an

executive director with immediate effect for personal reasons.

Neeraj will not receive a bonus for the 2023 performance (in

line with all employees). His unvested RSP awards have been

pro-rated with respect to his leaving date. Neeraj was eligible

for a payment in lieu of notice (PILON) in accordance with the

Directors’ Remuneration Policy (the Policy). See page 102 for

more details.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

New executive directors

The current CEO (Ian McLaughlin) joined on 26 July 2023. We

set out Ian’s compensation package in last year’s report,

which is in line with the Policy and is shown below:

– salary: £725,000;

– role-based allowance: none;

– annual bonus: up to 150% of base salary (with 40% deferred

over three years);

– RSP: up to 100% of base salary (with a post-vesting holding

period of two years);

– shareholding requirement: 200% of base salary (with up to

five years to be compliant); and

– transitional travel allowance. Following a review of forecast

travel patterns, the Committee exercised discretion

and extended this arrangement to the full 24 months as

permitted under the Policy. See page 101 (note 1) for details.

There are no buyouts or other joining payments.

As intended, we made a full RSP grant to the current CEO (Ian

McLaughlin) of 100% of base salary on 8 September 2023. The

Committee considered whether it was appropriate to make

an adjustment at grant to take into account any potential for

windfall gain as per our internal Policy and determined that

for this grant, given the share price volatility, no discretion was

used in determining the basis of the award granted and it

would be more appropriate to undertake a more considered

assessment at the point of vest as part of the RSP underpin

assessment, to ensure no windfall gains have occurred.

On 1 November 2023 the current CFO (Dave Watts) joined the

Group. In line with the Policy, Dave’s compensation package is

as follows:

– salary: £550,000;

– role-based allowance: none;

– annual bonus: up to 125% of base salary (with 40% deferred

over three years);

– RSP: 75% of base salary (maximum permissible under the

Policy is 100%) (with a post-vesting holding period of two

years); and

– shareholding requirement: 200% of base salary (with up to

five years to be compliant).

Dave did not receive any buyout awards and as part of his

joining package, the Committee agreed that for RSP 2024 only,

his RSP award will be increased to 100%.

Directors’ Remuneration Report and Remuneration Policy

The Committee presented the 2023 Directors’ Remuneration

Policy to shareholders at the 2023 AGM on 25 May 2023 for

up to three years and received the approval and support of

94.8% of shareholders and the 2022 Remuneration Report

received very strong support, with 96% of votes received

in favour. A copy of this Policy can be found on our website

under the Shareholder Hub. Outside of the AGM, there

has been no further engagement with shareholders on

remuneration matters.

Implementation of Directors’ Remuneration

Policy (the Policy) in 2024

The Committee considers that current Policy, approved at

the May 2023 AGM, has operated as intended and does not

require a fundamental change. However, we are proposing

the following changes which the Committee considers to be

appropriate to ensure that the Policy will continue to operate

effectively in line with our strategic priorities and support

attraction and retention of key talent, as follows:

2024 Salary increases

The executive directors and Executive Committee were not

considered as part of the salary review and have forgone their

annual salary increase to augment and redistribute the salary

pool outcomes to lower paid colleagues (average increase of

4% for our colleagues).

2024 Annual bonus

There are no changes in annual bonus opportunity, and we

intend to retain the overall weighting of the financial/non-

financial metrics as 60%/40%. The metrics will be updated

to better reflect business strategy and align with market

practice by:

– retaining adjusted PBT (25%), replacing adjusted RORE

with adjusted ROTE (25%), and including cost:income ratio

(10%); and

– restructuring the weighting of the non-financial metrics

(40%) so that they align with our revised strategic priorities.

2024 Non-executive director (NED) fees

Sir Peter Estlin was appointed Chairman of the Group on 15

September 2023 following regulatory approval. Sir Peter joined

the Board as an independent NED in April 2023 and succeeded

Patrick Snowball as Chairman, who informed the Board of

his intention to step down earlier in 2023. Sir Peter will receive

£275,000 for his role which is 18% lower than fees received by

Patrick (£336,000 in 2023).

The NEDs have taken a significant reduction in their fees

for 2024. The reductions in NED base fees, committee

membership fees and SID fees have collectively (like-for-

like) reduced the total Chair and NED fees by c.20% when

compared with 2023. More details are shared on page 109.

RSP 2024 grant

The Committee has determined an RSP grant at 100% of salary

for the current CEO (Ian McLaughlin) and current CFO (Dave

Watts) for 2024. Subject to underpin criteria, as set out in our

Policy, awards will vest in three years from the date of grant

with an additional retention period of two years after vesting.

The date of grant will be confirmed after the Strategy Seminar

on 27 March 2024. At the point of grant the Committee will

determine whether any adjustment is required to take into

account any potential for windfall gain as per our internal

Policy. Irrespective of the decision made, a further assessment

on windfall gain will be carried out at vest as per the RSP

underpin requirements. The grant of the awards will be

confirmed via a RNS announcement in the usual way and

full details of the approach taken will be set out in the 2024

Directors’ Remuneration Report.

Conclusion

We recognise that it’s been an extremely difficult year for the

business. The Committee believes that, in combination, the

decisions made have been mindful of appropriately reflecting

the shareholder experience over the course of the year and

appropriately adjusting pay to reflect this, while setting up

the business and our next executive team for future success

and ensuring their alignment with future stability and value

creation for our shareholders going forward.

In the rest of this report, we present the disclosures required

by regulations, as well as additional information to explain

how our executive remuneration aligns with our strategy, with

shareholder interests and with wider workforce pay.

I would like to thank our shareholders for their continued

support during the year. I will be available at the Company’s

2024 AGM to answer any questions in relation to this

Remuneration Report.

Graham Lindsay

Remuneration Committee Chair

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

Directors’ Remuneration Report continued

Remuneration at a glance

The following section sets out:

– an illustration of the operation of the Policy for 2024;

– a summary of the executive directors’ single total

remuneration figures, and outcomes under the 2023

Annual Bonus Plan and the RSP 2021 award; and

– an overview of executive directors’ shareholdings.

Salary: No increase from 2023

– CEO: - Ian McLaughlin: £725,000

- Malcolm Le May: £749,700

(Previous CEO. Employment ended 24 January 2024)

– CFO: - Dave Watts: £550,000

- Neeraj Kapur: £551,250

(Previous CFO. Employment ended 23 February 2024)

Role-based allowance (RBA): No change from 2023

– CEO: - Ian McLaughlin: 0% of salary

- Malcolm Le May: 15% of salary

– Maximum annual RBA grant for individual is 25% of salary

– Delivered in shares and released in equal instalments over three years

Pension: No change from 2023

– All EDs: 10% of salary (in line with the wider workforce)

Annual bonus: Changes to the measures and weighting within non-

financial scorecard to reflect business priorities for 2024.

– Maximum opportunity:

– CEO: 150% of salary

– CFO: 125% of salary

– Performance measures:

– 60% financial

– Adjusted PBT 25% (2023: 30%)

– Adjusted ROTE 25% (2023: not used)

– Cost:income ratio 10% (2023: not used)

– Adjusted RORE will be replaced by ROTE in 2024 (2023: 30%)

– 40% non-financial will align to the 2024 North Star strategy and will be

disclosed in the 2024 Directors’ Remuneration Report. (2023: growth

and sustainability 6.7%, people and culture 6.7%, customer and

community 6.6%, transformation 20%)

– Risk overlay and Tier 1 capital ratio underpin

– Deferral: At least 40% deferred, vesting pro-rata over three years in

VBG shares

RSP:

– Award level:

– CEO: maximum 100% of salary

– CFO: maximum 75% of salary (noting that for 2024 grant only this

will be increased to 100%)

– As a part of grant process, the Committee will consider individuals’

personal and business performance for the prior year and determine

whether the proposed level of grant remains appropriate

– Underpins: The Committee will consider the following factors

(amongst others) when determining whether to exercise its

discretion to adjust the number of shares vesting:

– whether threshold performance levels have been achieved for the

performance conditions for the Annual Bonus Plan for each of the

three years covered by the vesting period;

– the underlying financial performance progression over the

vesting period;

– whether there have been any sanctions or fines issued by a

Regulatory Body; participant responsibility may be allocated

collectively or individually;

– whether there has been material damage to the reputation of the

Company; participant responsibility may be allocated collectively

or individually;

– the potential for windfall gains;

– the level of colleague and customer engagement over the vesting

period; and

– the level of achievement of our approach to ESG as set out

by the Board

– Vesting: Three years with a two-year holding period post-vesting

Shareholding requirement:

– CEO/CFO: 200% of salary

– Full requirement to be held for two years post-cessation

Further details on the implementation of the Policy, have been set out

later in this report under the ‘Directors’ Remuneration Policy in 2024’

section on pages 108 to 109.

Illustration of the Policy in 2024

Restricted Share Plan

CEO – 100% of salary

CFO – 75% of salary

Restricted

Salary,

pension,

benefits

paid

vest after

3 years

Vested

released

after

2 years

+1 +2 +3 +4 +5 +6

Minimum shareholding of 200% of salary

Vesting period

subject to continued

employment

and underpin

2-year

holding

period

(EDs only)

1/3 vest

Deferred

bonus

At least

40%

Cash

bonus

60%

Part of the bonus

is deferred into

shares vesting pro-

rata over 3 years

(no performance

conditions)

Annual bonus

CEO – 150% of salary

CFO – 125% of salary

Fixed remuneration

Year 0

(performance

year)

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Executive director 2023 remuneration outcomes

The charts below show an estimate of the remuneration that could be received by executive directors under the Policy and

how our performance has flowed through to the remuneration provided to our executive directors. The full explanatory notes

for each element of remuneration are detailed on pages 108 to 109 in the Annual Report on Remuneration.

Remuneration (£’000)

Fixed

Annual bonus

RSP

Share price

Minimum Minimum

Ian McLaughlin, CEO Dave Watts, CFO

Maximum Single

figure

2023

Single

figure

2022

Single

figure

2023

Single

figure

2022

Maximum

target

Assumptions

– Minimum pay is fixed pay only, i.e. salary + benefits + pension + RBA.

– On-target pay includes fixed pay, 60% of the maximum bonus (with

maximum equal to 150% of salary for the CEO and 125% for the CFO)

and 100% vesting of the RSP awards (with grant levels of 100% of

salary for the CEO and CFO (75% new CFO)).

– Maximum pay includes fixed pay and assumes 100% vesting of both

the annual bonus and the RSP awards.

– The illustration of ‘maximum’ assumes a 50% share price

increase on the RSP award over the vesting period and is shown

as ‘share price’.

– All amounts have been rounded to the nearest £1,000.

– The value of taxable benefits is the cost of providing those benefits

in the year ended 31 December 2023.

809

2,187

725

653

809

2,984

725

363

1,088

809

393

617

206

617

1,442

413

617

1,923

413

688

617

104

Minimum Minimum

Malcolm Le May, CEO Neeraj Kapur, CFO

Maximum Single

figure

2023

1,2

Single

figure

2022

Single

figure

2023

1,2

Single

figure

2022

Maximum

target

952

2,377

750

675

952

3,201

750

375

1,125

952

551

620

276

620

1,585

551

413

620

2,136

551

689

620

369

188

878

989

2,056

1,277

616

577

1 Single figure for 2023 pro-rated to time served as executive director.

2 RSP includes the (interim) downwards adjustment of 25% for the RSP 2021 award.

3 RSP amount (£’000) restated (from 529 to 188) to reflect the 35% downwards adjustment made to the RSP 2020 award and difference in assumed

and actual share price.

4 RSP amount (£’000) restated (from 235 to 84) to reflect the 35% downwards adjustment made to the RSP 2020 award and difference in assumed

and actual share price.

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance

2023 annual bonus outcome

The tables below summarise performance against the targets set for the 2023 bonus and the outcome, before and after

Committee discretion.

Outcome

Threshold Target Maximum CEO CFO CFO

85% 100% 110% Actual Weighting (IM) (MLM) (NK)

Financial 60% 0% 0% 0%

Adjusted PBT £70.2m £82.6m £90.9m £24.9m 30% 0% 0% 0%

Adjusted RORE 11.6% 13.6% 15.0% 4.0% 30% 0% 0% 0%

Non-financial 40% 23% 23% 23%

Risk overlay Met Met Met

Tier 1 gateway

The Group achieved a Tier 1 ratio of 20.4%

(above our hurdle)

Scorecard outcome (as a % of maximum bonus) 23% 23% 23%

Final outcome (as a % of maximum bonus) after Committee discretion 0% 0% 0%

Link between remuneration and equity of the executive directors

We believe that equity has an important part to play in the remuneration of the executive directors. There is a need for the

executive directors to understand from first-hand experience the position of the shareholders and our RSP (and deferred bonus

schemes) are structured to support that understanding. This link has been strengthened in the last few years as we require our

executive directors to hold their shares for a period of two years post-departure. We monitor regularly that the directors are on

track to meet their obligations under the Share Ownership Policy, and we confirm, although they are early in tenure, that the

current CFO and CEO are both currently on track. It should be noted that, on leaving, there is a requirement that the previous CEO

and CFO’s shareholding position on exit should be maintained for a further two years.

To ensure that our executive directors are incentivised to take a long-term, sustainable view of the performance of the Company,

when we look at the remuneration paid in the year, we also look at the total equity they hold, and its value based on the

performance of the Company.

The table sets out the number of shares beneficially owned by the executive directors at the beginning and end of the financial

year, and the impact on the value of these shares taking the opening and closing price for the year.

2023

single

figure

£’000

held at

the start

of the year

held at

the end

of the year

Value of

shares at

the start of

the year

£‘000

Value of

shares at

the end of

the year

£’000

Difference

£’000

CEO (Ian McLaughlin) 393 — 1,028,939 — 1,329.4 1,329.4

CFO (Dave Watts) 104 — 40,000 — 51.7 51.7

Previous CEO (Malcolm Le May) 551 1,137,332 1,145,091

4,5

2,174.6 1,479.5 (695.1)

Previous CFO (Neeraj Kapur) 369 689,299 709,926

4,5

1,317.9 917.2 (400.7)

1 Based on amount shown in the single figure of remuneration table.

2 Based on a closing share price on 30 December 2022 of £1.912.

3 Based on a closing share price on 29 December 2023 of £1.292.

4 Includes the 25% downwards adjustment to the RSP 2021 award for both previous executive directors (Malcolm Le May and Neeraj Kapur) which is subject to

final underpin assessment just before grant and will be confirmed in the 2024 DRR.

5 Includes pro-ration for time applied to the RSPs of both previous executive directors (Malcolm Le May and Neeraj Kapur) due to them leaving in 2024.

Directors’ Remuneration Report continued

Remuneration at a glance continued

Vanquis Banking Group plc Annual Report and Accounts 2023

Governance Financial statementsStrategic Report Shareholder information

Remuneration principles and alignment to the Corporate Governance Code

We strongly believe in fair and transparent reward throughout the organisation and when making decisions on executive

remuneration the Committee considers the context of wider workforce remuneration. This section shows how the 2018 Code is

embedded in our remuneration principles and how, in 2023, they are cascaded throughout the organisation. The table below

shows how the Policy is aligned with the factors set out in Provision 40 (which sets out a list of matters for the Remuneration

Committee to address when determining the Policy and practices – these fall under the headings of clarity, simplicity, risk,

predictability, proportionality and alignment to culture), and how our principles and Policy are aligned with the 2018 Code.

Our strategy (2023)

Growth and Sustainability People and Culture Customer and Community

Our remuneration principles

– Support delivery

of the Group’s

business strategy,

realise our vision

and be customer

champion within

our sector.

– Have flexibility in

delivering total

remuneration

outcomes

in changing

market,

economic,

commercial

and regulatory

circumstances.

– Maintain a competitive reward and

recognition offering in the markets in

which we compete, thereby supporting

our talent attraction, engagement and

retention aims.

– Ensure remuneration outcomes are

fair and consistent, reflect pay for

performance and are clear and

transparent for all our colleagues.

– Support and mitigate any conflicts of

interests.

– Manage remuneration opportunities

and outcomes for regulated colleagues

under the SMCR and material risk takers

under the Remuneration Code.

– Support the effectiveness of the Group’s

Enterprise Risk Management Framework

and incentivise the delivery of the

business strategy within risk appetite via

a controls-based framework and positive

risk conduct culture.

– Drive the Group’s ESG strategy, including

diversity, equality and inclusion agenda.

– Align the interests of our colleagues with

those of our customers, regulators and

shareholders.

How does the Committee address the requirements under Provision 40?

Cultural

alignment

– The Committee

ensures that the

overall reward

framework

embeds our

Purpose.

– The Committee

reviews the

executive reward

framework

regularly to

ensure it supports

the Company’s

culture and

strategy.

– The ED

Remuneration

Policy is cascaded

down the

organisation

ensuring that

there are

common goals.

Proportionality

– Performance

measures under

the annual

bonus as well as

the RSP underpin

are aligned with

the Company’s

scorecard

and the

payouts reflect

achievement

against the

target.

– The Committee

may apply

discretion

to reduce

outcomes under

the annual

bonus and

RSP – if they

are considered

inconsistent with

the underlying

performance of

the business.

Simplicity

– Policy for EDs is

simple and clear,

consisting of:

– fixed pay

(salary,

benefits and

fixed pension

contribution)

set to reflect

the typical

rate provided

to the UK

workforce; and

– variable pay

comprising an

annual bonus

scheme (partly

deferred into

shares) and

RSP awards

which provide

focus over the

long term.

– The Committee

avoids

unnecessary

complexity in

operating the

arrangements.

Predictability

– The Committee

sets specific

targets for

different levels

of performance

which are

communicated

to the EDs and

disclosed to

shareholders.

Clarity

– Remuneration

arrangements

have defined

parameters

that can be

transparently

communicated to

shareholders and

stakeholders.

– The Committee

consulted with

shareholders as

part of the design

phase of the

Policy approved

at the 2020 GM

and re-approved

at the 2023 AGM.

– How executives’

pay is set has

subsequently

been

communicated

to the wider

workforce along

with how it is

aligned with

the Company’s

approach to wider

pay policy and

how decisions

are made by the

Committee.

Risk

– Remuneration

arrangements

are designed to

create a robust link

between pay and

performance thereby

mitigating risk of

excessive reward.

– Policy has

safeguards

including Committee

discretion to adjust

incentive outcomes.

– The Committee

ensures that a

significant portion

of reward is equity

based and has

deferral (40% of

annual bonus

deferred in shares

for three years and

all of RSP is in shares)

and thereby linked to

shareholder return.

– Recovery provisions

such as malus and

clawback apply to

the Policy.

– Executives are

required to build

significant personal

shareholdings in the

Company.

Annual Report on Remuneration

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Governance

Directors’ Remuneration Report continued

Annual Report on Remuneration continued

Remuneration governance

The Committee met four times in 2023 plus six ad hoc meetings. The following schematic sets out the key considerations for the

Remuneration Committee during 2023:

Governance Annual bonus Share plans

All

colleague

matters General DRR

Design Review Grant Review Risk Shareholder

January

March

May

June

August

September

October

December

The CEO, the CPO and the Head of Reward also attend meetings, by invitation, to provide advice and respond to specific

questions. Such attendances are specifically excluded on any matter concerning their own remuneration. The CRO attends

several meetings throughout the year to provide updates, where necessary. The General Counsel and Company Secretary

acts as secretary to the Committee.

Advisors to the Committee

To ensure that the Company’s remuneration practices are in line with best practice, the Remuneration Committee has

appointed independent external remuneration advisors, PricewaterhouseCoopers LLP (PwC). This appointment in 2020 followed

a competitive tender process. PwC attends meetings of the Committee. The Committee reviewed the performance of PwC

during 2023 and determined that it was strong, and that the appointment should continue into 2024.

Fees, on a time-spent basis, for the advice provided by PwC to the Committee during 2023 were £113,438 excluding VAT

(2022: £192,115). Other than advice in relation to remuneration, PwC provides subject matter expertise support to management

on specific projects when requested. In 2023, this has included support in relation to IT, risk management and regulatory and

accounting advice. The Committee is satisfied that PwC engagement partners and teams which provided remuneration advice

to the Committee do not have connections with the Group or the executive directors that may impair their objectivity and

independence.

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101

Governance Financial statementsStrategic Report Shareholder information

Single total figure of remuneration (audited)

The table below sets out a single total figure of remuneration for each director for the year ended 31 December 2023 and the prior year:

Salary/fees

£’000

Role-based

allowance

(RBA)

£’000

Taxable

benefits

£’000

Annual

bonus

£’000

RSP

£’000

Pension

£’000

Total

£’000

Total

fixed

remuneration

£’000

Total

variable

remuneration

£’000

Executive directors

Ian McLaughlin 2023 314 n/a 48 — — 31 393 393 —

2022 — — — — — — — — —

Dave Watts

2023 92 n/a 3 — — 9 104 104 —

2022 — — — — — — — — —

Malcolm Le May 2023

435 65 7 — — 44 551 551 —

2022 750 112 15 878 188 112 2,056 989 1,067

Neeraj Kapur 2023

329 n/a 7 — — 33 369 369 —

2022 551 n/a 14 577 84 51 1,277 616 661

Non-executive directors

Sir Peter Estlin 2023 116

n/a — n/a n/a n/a 116 116 n/a

2022 — — — — — — — — —

Patrick Snowball 2023 336 n/a 1 n/a n/a n/a 337 337 n/a

2022 336 n/a 1 n/a n/a n/a 337 337 n/a

Andrea Blance 2023 120 n/a 1 n/a n/a n/a 121 121 n/a

2022 128 n/a 1 n/a n/a n/a 129 129 n/a

Elizabeth Chambers 2023 96 n/a 14 n/a n/a n/a 110 110 n/a

2022 87 n/a 33 n/a n/a n/a 120 120 n/a

Paul Hewitt 2023 112 n/a 5 n/a n/a n/a 117 117 n/a

2022 112 n/a 3 n/a n/a n/a 115 115 n/a

Margot James 2023 87 n/a — n/a n/a n/a 87 87 n/a

2022 87 n/a — n/a n/a n/a 87 87 n/a

Angela Knight 2023 112 n/a — n/a n/a n/a 112 112 n/a

2022 112 n/a — n/a n/a n/a 112 112 n/a

Graham Lindsay 2023 112 n/a 2 n/a n/a n/a 114 114 n/a

2022 112 n/a 5 n/a n/a n/a 117 117 n/a

Michele Greene 2023 71 n/a — n/a n/a n/a 71 71 n/a

2022 — — — — — — — — —

1 Executive directors receive standard market comparable benefits such as medical insurance. For the current CEO, the temporary travel allowance of

£100,000 per annum is included here. NEDs have travel expenses reimbursed and, to the extent that those are taxable, grossed up for tax and NIC.

2 40% of any annual bonus earned is deferred into shares for an additional three years (subject to continued service, in normal circumstances).

3 Pension participation is via a defined contribution plan (or cash alternative) with no executive director having a prospective entitlement under a defined

benefit plan.

4 The RSP value (£’000) for the single figure of remuneration for 2022 has been restated for previous executive directors (Malcolm Le May (was 529, now 188)

and Neeraj Kapur (was 235, now 84)) and as a result of the 35% downwards adjustment made (and difference in the assumed share price and actual share

price) to the RSP 2020 award which vested on 9 November 2023 (further detail on the assessment is set out on page 104). This means that the total fixed and

total variable remuneration for 2022 as shown is lower than that provided in the 2022 Directors’ Remuneration Report.

5 Note that an interim CFO was appointed from within the Company (Chief Risk Officer, Gareth Cronin) to cover the gap between previous CFO (Neeraj Kapur)

leaving on 7 August 2023 and current CFO (Dave Watts) joining on 1 November 2023. Gareth was not an executive director during this period.

6 Figures are pro-rated to cover the period that Malcolm Le May and Neeraj Kapur were executive directors. See ‘payments to former directors’ for more

details.

7 This includes a backdated payment of £55,261 made in January 2024 to cover the period as Chairman from 15 September 2023 to 31 December 2023 with

respect to the new (reduced) 2024 Chairman fee of £275,000 as shown on page 109.

Payments to former directors

Previous CEO (Malcolm Le May)

Following the announcement on 24 January 2023 that he would be retiring as CEO, Malcolm was considered a good leaver and

was entitled to 12 months’ notice, under his contract of employment. He stepped down from the Board as an executive director

on 1 August 2023 and in line with the Policy, he continued to receive his salary (£749,700 per annum paid monthly), role-based

allowance (£112,455 per annum paid quarterly and released in equal instalments over three years in the form of shares), pension

(£74,970 per annum paid monthly) and other benefits during the remainder of his notice period in accordance with his service

agreement and the Policy. The amounts received during 2023 from 1 August 2023 to 31 December 2023 were salary (£314,258),

role-based allowance (£47,139), pension (£31,426) and other benefits (£4,737). Malcolm also received a contribution of £20,000

towards legal fees in connection with him leaving the Company and the Company paid for him to attend outplacement support

sessions at a value of £10,000. His RSP 2020 award, which was adjusted downwards by 35% (see page 104), vested on 9 November

2023 with a value of £188,200 (as shown under the restated single figure of remuneration for 2022). His unvested RSP and DBP

awards will vest on their normal vesting dates in line with the relevant rules and the Policy, and subject to the two-year post-

employment shareholding requirements. DBP awards will vest in full and RSP awards will be time pro-rated to his last day of

employment.

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Annual Report on Remuneration continued

Payments to former directors continued

Previous CFO (Neeraj Kapur)

On 7 August 2023 Neeraj informed the Board that he would be stepping down from his role and as an executive director with

immediate effect for personal reasons. Neeraj was entitled to 12 months’ notice, under his contract of employment and in line

with the Policy. During the period of his employment he continued to receive his salary (£551,250 per annum paid monthly),

pension (£55,125 per annum paid monthly) and other benefits in line with his service agreement and the Policy. He is eligible

to receive a Payment in Lieu of Notice (PILON) for salary for the remainder of his notice period following the cessation of his

employment. The amounts received during 2023 from 7 August 2023 to 31 December 2023 were salary (£222,010), pension

(£22,201) and other benefits (£4,672). Neeraj also received a contribution towards legal fees of £20,000 in connection with him

leaving the Company and £27,000 in connection with other matters. The Company will also pay for him to attend outplacement

support sessions up to an aggregate value of £30,000. The final amounts will be reported in the 2024 report. He will not receive

a bonus for the 2023 performance (in line with all employees). His RSP 2020 award, which was adjusted downwards by 35% (see

page 104), vested on 9 November 2023 with a value of £83,700 (as shown under the restated single figure of remuneration for

2022). His unvested RSP and DBP awards will vest on their normal vesting dates in line with the relevant rules, and the Policy and

subject to the two-year post-employment shareholding requirements. DBP awards will vest in full and RSP awards will be time

pro-rated to his last day of employment.

2023 bonus outcome calculation (audited)

The bonus is based 60% on financial performance measures and 40% on non-financial performance measures. The tables

below set out performance against the targets set for the 2023 bonus and the outcome.

Details of the financial assessment

Performance range

Financial targets Weighting

Threshold

85%

Target

100%

Maximum

110% Actual

Outcome

as % of max

Weighted

outcome

Adjusted PBT

30.0% £70.2m £82.6m £90.9m £24.9m 0% 0%

Adjusted RORE 30.0% 11.6% 13.6% 15.0% 4.0% 0% 0%

1 Certain alternative performance measures (APMs) have been used in this report. See pages 189 to 191 for an explanation of their relevance as well as their definition.

Details of the non-financial assessment

The non-financial element was assessed at 57.5% achievement with this broken down, in 2023, as follows:

Objective Assessment of non-financial metrics Rating

Growth and

Sustainability

16.7%

Complete implementation of UK operations outsourcing in line with the defined 2023 plan

– During the course of 2023, we reduced UK operations FTE by c.595, which significantly exceeds the original

target (of reducing UK operations FTE by 275), by an incremental 320 FTE.

Develop a second charge lending book

– Heads of Terms signed with a strategic partner that provides VBG with an option to acquire a second

charge mortgage business in 2028-29.

To deliver Riskonnect system

– System is fully embedded and was favourably assessed as part of the PwC Risk EQA.

On target (plus)

67%

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103

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Objective Assessment of non-financial metrics Rating

People and

culture

16.7%

To deliver and complete the Group Rename Project

– The name change was completed in early 2023 within the timeframe and c.25% below budget.

– The change involved over 100 changes or workstreams and involved a significant stakeholder

communications plan internally and externally. Stakeholder reaction was positive and understood.

Employee Engagement Index (EEI)

– 56% (down 23 percent points). Colleagues completed the new ‘Great Place to Work’ survey in December

during a period of significant change for the business including a change in the senior management team,

redefining of business priorities and a reduction in headcount. The results provide a baseline for us to build on

and develop our colleague proposition and culture and leadership work as part of the North Star strategy.

Progress towards commitment to the Women in Finance Charter

– On track to meet the medium-term aspiration of 40%. Current tracking is over 30%.

Refresh and launch the values and behaviours needed to achieve our mission and deliver on our Purpose

– Successfully refreshed and launched our new values which were embedded into our mid-year and end of

year performance management process.

– Embedded our new values into our refreshed recognition strategy along with launching our new recognition

platform aligned to our values.

On target (mid)

60%

Customer and

community

16.7%

Deliver targeted customer satisfaction score (CSat) across all product lines

– Customer service SLAs have shown volatility throughout the year as a result of material above plan new

business volumes and the disruptive impacts of offshoring.

– In late Q4, following the final phase of offshoring, the operation has stabilised well across key customer facing

activities and we are predominantly on target across all customer SLAs.

Deliver agreed ESG programme, including launch of VBG Foundation

– The Vanquis Banking Group Foundation was launched in June 2023 via internal and external channels

in line with the Group’s plan. Positive media and social media accompanied the launch, and internal

communication colleague feedback was positive. The Foundation programme was nominated for the

Cards & Payments Awards 2024 ‘Changing Lives in the Community award’.

– Colleague volunteering has significantly increased in 2023 when compared with 2022 showing stronger

colleague engagement in the Foundation; this increase is set against a backdrop of a reduction in

headcount in 2023.

– TCFD disclosure completed and included on pages 19 to 28. Two science-based carbon reduction targets for

our scope 1 and 2 GHG emissions and the scope 3 GHG emissions associated with our suppliers have been

approved by Science Based Targets initiative (SBTi) NGO, ensuring that these targets are in line with what the

latest climate science deems necessary to limit global warming to 1.5°C above pre-industrial levels.

– The Group was notified in June 2023 that it remains a constituent of the FTSE4Good, an ESG index.

Below target

(high)

38%

Group

transformation

50%

– Successful delivery of the 2023 Change Portfolio to agreed timescales and costs.

– With approval from the Board, the 2023 Change Portfolio target was reduced in October from £42.7m

to c.£30m because of changes to the cost challenge as a result of our headcount reduction in Q4.

– Changes to the portfolio for both Gateway and non-Gateway were successfully implemented with delivery

of agreed changes continuing across all areas of the portfolio through Q4.

On target

60%

Risk Continued improvement in risk position since 2020.

Taking the above into consideration and following feedback from the CRO, the Committee determined that no

discretion should be applied to remuneration outcomes.

On target/on

target (plus)

66%

Risk overlay

A risk overlay approach was used for potential risk adjustment with a range of factual criteria for assessment agreed with the

Committee. This forms the basis of our Group Variable Risk Adjustment Framework and allows for a more flexible and holistic approach

to be adopted which considers not only the business outcomes (quantitative), but also how these have been achieved (qualitative).

After discussion with the Group CRO, and the Chair of the Group Risk Committee, the Committee concluded that, overall, the risk

position has remained stable in 2023.

Remuneration Committee discretion – final outcome for 2023

In determining the final bonus outcome, the Committee took into account a number of factors including the overall business

performance, and the wider stakeholder experience. The Committee decided to exercise discretion and make a downward

adjustment to the bonus outcomes for the current and previous executive directors to zero.

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Governance

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Annual Report on Remuneration continued

Scheme interests awarded in the year (audited)

Deferred Bonus Plan (DBP)

The DBP awards made during 2023 are set out below. 40% of the 2022 annual bonus earned was deferred into shares for three

years. The face value is based on the Company’s share price on 12 April 2023 of £2.224. The grant price is calculated using the

average price of a Vanquis Banking Group share for the five dealing days prior to grant and discounted from that price at grant

to reflect the absence of dividend equivalents during the vesting period.

Executive director Date of award RSP award (shares) Face value of award Date of vesting Release date

Malcolm Le May 12 April 2023 190,539 £351,354 12 April 2026 12 April 2026

Neeraj Kapur 12 April 2023 125,122 £230,725 12 April 2026 12 April 2026

Note that the 2023 DBP award for performance year 2022 will vest in full on the date of vesting as permitted by the DBP rules and subject to malus and clawback.

RSP 2023 award grant

The RSP awards made during 2023 are set out below. An award of 100% of salary was made to both CEOs and the previous CFO.

This represented a 0% discount to the normal level permitted under the Policy.

The face value is based on the Company’s share price on 12 April 2023 of £2.224 and on 8 September 2023 of £1.076. The grant

price is calculated using the average price of a Vanquis Banking Group share for the five dealing days prior to grant and

discounted from that price at grant to reflect the absence of dividend equivalents during the vesting period.

Executive director Date of award

RSP award

(share options) Face value of award Date of vesting End of holding period

Ian McLaughlin 8 September 2023 964,095 £725,000 8 September 2026 8 September 2028

Malcolm Le May

12 April 2023 406,561 £749,700 12 April 2026 12 April 2028

Neeraj Kapur

12 April 2023 298,942 £551,250 12 April 2026 12 April 2028

1 The RSP 2023 grant for Malcolm Le May is pro-rated for time to his last day of employment. He is not eligible for the RSP 2024.

2 The RSP 2023 grant for Neeraj Kapur is pro-rated for time to his last day of employment. He is not eligible for the RSP 2024.

These awards are conditional share awards without any performance targets. However, they are subject to underpins that will

apply over the initial three-year vesting period. The Committee will take into account the following factors (amongst others)

when determining whether to exercise its discretion to adjust the number of shares vesting:

– whether threshold performance levels have been achieved for the performance conditions for the bonus for each of the

three years in the vesting period;

– the underlying financial performance progression of the Group over the vesting period;

– whether there have been any sanctions or fines issued by a regulatory body; participant responsibility may be allocated

collectively or individually;

– whether there has been material damage to the reputation of the Company; participant responsibility may be allocated

collectively or individually;

– the potential for windfall gains; and

– the level of colleague and customer engagement over the vesting period.

In all cases, vesting is subject to the Committee’s holistic assessment based on business performance, individual performance

or wider Group considerations.

The RSP awards on vesting must be held (subject to sales to meet PAYE and NIC liabilities) for a period of two years

following vesting.

RSP 2020 award vesting (audited)

As noted in last year’s report, the Committee’s interim assessment as at 31 December 2022 suggested that no adjustment will be

required for RSP 2020 awards (which vested in November 2023) for the previous CEO (Malcolm Le May) and previous CFO (Neeraj Kapur),

subject to a review by the Committee prior to final vesting.

In October 2023 the Committee carried out a final review of the performance underpin attached to the RSP 2020 award, taking into

account a number of factors including the material damage to the reputation of the Company based on investors’ feedback following

the announcement of the interim results for the six months ended 30 June 2023 which resulted in a significant fall in the share price.

The Committee decided to exercise its discretion to apply a downward adjustment of 35% to the RSP 2020 award for the previous CEO

(Malcolm Le May) and the previous CFO (Neeraj Kapur). Downward adjustments were also made to the majority of the RSP 2020 award

recipients.

No further adjustment would be made for windfall gains as the Committee had reduced the award at grant by 15% having

considered the share price movement prior to grant date.

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Governance Financial statementsStrategic Report Shareholder information

RSP 2021 award vesting (audited)

The RSP 2021 award was due to be granted in April/May 2021 but due to CCD wind down (Project Strickland) it was delayed until 18

August 2021. The vesting is subject to an underpin which provides discretion for the Committee to consider whether any adjustment

to vesting should be made.

The underlying desire was (and remains) to ensure that participants have been positive custodians of: (i) the underlying financial health

of the business; (ii) maintaining our reputation; (iii) making progress on our strategic imperative of “being a leading specialist bank

focused on underserved markets”; (iv) ensuring that we meet our ESG commitments (and, in particular, our social commitments); and (v)

appropriately focused on our agreed risk appetite. The Committee reviewed performance against the underpin attached to the RSP 2021

awards (and the underlying desire as set out above) as at 31 December 2023 (the last full performance year prior to vesting), and took

into account a number of factors, including:

– formulaic threshold performance levels were exceeded overall for the performance conditions for the Bonus Plan for two of

the three years in the vesting period, i.e. 2021 and 2022. The threshold was not met for the financial year 2023;

– the financial performance progression of the Group over the vesting period was not in line with expectation;

– the regulatory position of the Company remains positive and there have been no sanctions or fines issued by a

regulatory body;

– the potential for windfall gains;

– there has been material damage to the reputation of the Group (as viewed by our investors) following the announcement

of the interim results for the six months ended 30 June 2023, noting that this was considered and reflected in the RSP 2020

award vesting as noted previously; and

– the level of colleague and customer engagement over the vesting period remains strong.

The Committee also took into account the decisions made in relation to the 2023 annual bonus and RSP 2020 award vesting:

– the poor financial performance of 2023 meant that there was no bonus payout for the 2023 performance year for RSP 2021

award recipients;

– the significant reduction in share price over the vesting period; and

– the adjustment for the previous RSP 2020 award to reflect the damage to the reputation of the Group (as viewed by our

investors), and the significant fall in share price in 2023 (underpinned by poor financial performance of 2023).

After careful consideration, the Committee’s interim assessment as at 31 December 2023 suggests that a downwards adjustment of 25%

will be made to the RSP 2021 award for the previous CEO (Malcolm Le May) and the previous CFO (Neeraj Kapur). Downward adjustments will

be made to all other RSP 2021 award recipients. The Committee will review this assessment again prior to final vesting and any changes to

the above assessment and the final vesting outcome will be disclosed in the 2024 Directors’ Remuneration Report.

It should be noted that the Committee has a formal Policy concerning potential windfall gains and makes, where appropriate, an

adjustment at the point of grant with another assessment at the point of vesting. In 2021, there was no adjustment made to the grant price

because during the period of the delay of the grant, the share price increased by c.58% (213p to 337p) which had the effect of reducing

the number of shares awarded. The Committee reassessed the potential for windfall gains and decided that no further adjustment

was required.

Fees from other directorships

Dave Watts has been a NED for CAF Bank since 23 August 2021. He retains no fees from this appointment.

Malcolm Le May has been a NED of IG Group plc since September 2015. He retains the fees from this appointment. During

2023, the total fees amounted to £153,250 (made up of (i) UK fees amounting to £68,250, and (ii) an additional £85,000 from US

responsibilities) (2022: £150,582).

Ian McLaughlin and Neeraj Kapur did not hold any external directorship for the period from 1 January 2023 to 31 December 2023.

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Annual Report on Remuneration continued

Statement of directors’ shareholding and share interests (audited)

The table below shows the interests of the directors and connected persons in shares (owned outright or unvested) as at 31 December

2023. There have been no further changes in directors’ interests in the period between 31 December 2023 and 27 March 2024.

owned

outright

Unvested

shares not

subject to

performance

Unvested

share options

subject to

performance

Vested but

unexercised

options

Total

scheme

interests

Shareholding

guideline

% of salary

Current

shareholding

% of salary

Guideline

met

Executive directors

Ian McLaughlin 10,000 — 1,018,939 — 1,018,939 200% 2% No

Dave Watts 40,000 — — — — 200% 9% No

Malcolm Le May (ex CEO) 239,696

413,356

492,039

2, 3

— 905,396 200% 113% No

Neeraj Kapur (ex CFO) 153,699

222,464 333,763

2, 3

— 556,227 200% 88% No

Non-executive directors

Sir Peter Estlin 50,000

— — — n/a n/a n/a

Patrick Snowball 96,477

— — — — n/a n/a n/a

Andrea Blance — — — — — n/a n/a n/a

Elizabeth Chambers 12,000 — — — — n/a n/a n/a

Paul Hewitt 34,205 — — — — n/a n/a n/a

Margot James — — — — — n/a n/a n/a

Angela Knight — — — — — n/a n/a n/a

Graham Lindsay 26,464 — — — — n/a n/a n/a

Michele Greene — — — — — n/a n/a n/a

1 Includes RSP 2020 options exercised in 2023.

2 Includes the 25% downwards adjustment to the RSP 2021 award which is subject to final underpin assessment prior to the vesting date of 18 August 2024 and will

be confirmed in the 2024 DRR.

3 Includes pro-ration for time applied to the RSPs of both previous executive directors (Malcolm Le May and Neeraj Kapur) due to them leaving in 2024.

4 Rounded to the nearest whole percent. Shares owned outright and unvested shares not subject to performance are included when assessing current

compliance to shareholding guideline. Based on a closing share price on 29 December 2023 of £1.292.

5 Includes 2,520 shares as part of the RBA which was due to be granted on 31 December 2023 but was granted on the next trading day of 3 January 2024.

6 Does not include 50,000 shares held by a person closely associated with Sir Peter Estlin, as reported in the table ‘Directors’ interests in shares’ on page 88.

7 As at 15 September 2023 when Patrick Snowball stepped down from the Board.

The shareholding guidelines for the current executive directors have not yet been met but the Policy provides for sufficient time

to be compliant. A breakdown of the journey to compliance can be seen below.

Statement of directors’ compliance with the Share Ownership Policy

The following sets out the expected level of share ownership that the executive directors will acquire over the period 2023 to 2026.

The current executive director holding requirement is 200% of base salary. Note that both previous executive directors (Malcolm

Le May and Neeraj Kapur) will leave the Group in 2024 and will be subject to the post-employment shareholding requirements,

which in both cases is to maintain the actual shareholding on the date of leaving (excluding purchased shares) plus any shares

acquired, on a ‘net-of-tax basis’, after the date of leaving for two years following the date of leaving, in line with our Policy.

Assumptions

1 Only share awards held on 29 December 2023 are included. Future RSP and DBP awards yet to be granted (for current executive directors (Ian McLaughlin

and Dave Watts) are not included.

2 Includes pro-ration for time applied to the RSPs of both previous executive directors (Malcolm Le May and Neeraj Kapur) due them leaving in 2024.

3 Includes the 25% downwards adjustment to RSP 2021 award which is subject to final underpin assessment in 2024 and will be confirmed in the 2024 DRR.

4 A 100% vesting outcome for RSPs 2022 and 2023.

5 Figures are ‘net of tax’ and a personal tax rate of 47% over the period of vest.

6 Rounded to the nearest whole percent. Share price remains static, based on a closing share price on 29 December 2023 of £1.292.

Current CEO

(Ian McLaughlin)

Forecast ED shareholding position

Previous CEO

(Malcolm Le

May)

Previous CFO

(Neeraj Kapur)

Current CFO

(Dave Watts)

200%

150%

100%

50%

Own shares (purchased or vested buyout/

DBP/RSP/RBA)

Unvested shares not subject to

performance (DBP/RBA)

Unvested shares subject to performance (RSP)

105%

129%

98%

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Governance Financial statementsStrategic Report Shareholder information

Relative importance of spend on pay

The table below shows how the Company’s performance metrics compare to total colleague pay expenditure for the financial

years ended 31 December 2022 and 31 December 2023.

Relative importance of spend on pay 2023 2022

Year-on-year

change

Shareholder distributions

£38.4m £42.8m -10%

Net income £488.8m £480.7m 2%

Adjusted PBT £24.9m £126.6m -80%

Adjusted EPS 6.8p 38.7p -82%

All remuneration costs

£111.7m £125.9m -11%

1 Reflects dividends only as there were no buybacks.

2 Remuneration costs include: aggregate gross wages and salaries paid to the Group’s employees and share-based payment charge as referred to in the

employment cost table on page 149.

Service contracts

The executive directors are employed under contracts of employment with the Company. The principal terms of the executive

directors’ service contracts are as follows.

Notice period

Executive director Position Effective date of contract From Company From director

Ian McLaughlin Chief Executive Officer 26 July 2023 12 months 12 months

Dave Watts Chief Financial Officer 1 November 2023 12 months 12 months

Malcolm Le May Previous Chief Executive Officer 1 February 2018 12 months 12 months

Neeraj Kapur Previous Chief Finance Officer 1 April 2020 12 months 12 months

The Chairman and non-executive directors have letters of appointment. Dates of the directors’ letters of appointment are set

out below:

Name Date of original appointment Date and actual date of expiry

Sir Peter Estlin 19 April 2023 18 April 2026

Patrick Snowball 21 September 2018 15 December 2023

Andrea Blance 1 March 2017 1 February 2024

Elizabeth Chambers 31 July 2018 30 June 2024

Paul Hewitt 31 July 2018 30 June 2024

Margot James 27 July 2020 25 May 2026

Angela Knight 31 July 2018 30 June 2024

Graham Lindsay 1 April 2019 30 June 2025

Michele Greene 8 March 2023 8 March 2026

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108

Governance

Directors’ Remuneration Report continued

Annual Report on Remuneration continued

Implementation of the Directors’ Remuneration Policy in 2024

The Policy was approved at the AGM on 15 May 2023 and will continue to apply until the 2026 AGM unless changes are required.

The table below summarises the key features of the Policy and how we plan to implement it in 2024/25. Full details of the Policy

can be found under the Shareholder Hub section of our website.

Element of

remuneration

Key features of Policy Implementation in 2024

Salary

An executive director’s base salary is set on appointment

and reviewed annually or when there is a change in position

or responsibility.

When determining an appropriate level of base salary, the

Committee considers:

– pay increases for other colleagues;

– remuneration practices within the Group;

– any change in scope, role and responsibilities;

– the general performance of the Group and each individual;

– the experience of the relevant director; and

– the economic environment.

No salary increases to 2023 salaries for CEO or CFO.

Ian McLaughlin

2024: £725,000

2023: £725,000

Dave Watts

2024: £550,000

2023: £550,000

Malcolm Le May

2024: £749,700

2023: £749,700

Neeraj Kapur

2024: £551,250

2023: £551,250

Benefits

Benefits include market standard benefits. Transitionary temporary travel allowance for Ian McLaughlin

only. £100,000 per annum and expires on 26 July 2025.

Role-based

allowance

(RBA)

RBA of 0% of base salary (for all EDs).

RBA of 15% of base salary (Malcolm Le May).

RBAs are non-pensionable and will be released in equal

instalments over three years in the form of shares.

The maximum annual value of an RBA grant for an individual

is 25% of base salary.

No change from 2023.

This applies to the previous CEO (Malcolm Le May) only and

will cease on his retirement on 24 January 2024.

Pension

The Company provides a pension contribution allowance

that is fair, competitive and in line with corporate governance

best practice.

No change from 2023.

CEO and CFO: 10% of salary.

10% is the norm for the Group’s Pension Plan.

Annual bonus

The Committee will determine the maximum annual

participation in the Annual Bonus Plan for each year, which

will not exceed 150% of base salary.

The Annual Bonus Plan is based on a mix of financial and

strategic/operational conditions and is measured over a

period of one financial year.

The financial measures will account for no less than 50% of

the bonus opportunity.

There is no change from 2023 to the overall approach and

percentage.

Maximum opportunity:

– CEO:

– Ian McLaughlin: 150% of salary.

– Malcolm Le May: Not eligible for a bonus for performance

year 2024.

– CFO: 125% of salary.

– Dave Watts: 125% of salary.

– Neeraj Kapur: Not eligible for a bonus for performance

year 2024.

Measures:

Financial performance measures to be changed for 2024:

– adjusted PBT (25%);

– adjusted ROTE (25%); and

– cost:income ratio (10%).

40% non-financial will align to the 2024 North Star strategy.

In addition, there is a risk overlay and Tier 1 capital ratio gateway.

Deferral:

At least 40% of the bonus is deferred, vesting pro-rata over

three years, in Company shares.

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Governance Financial statementsStrategic Report Shareholder information

Element of

remuneration

Key features of Policy Implementation in 2024

Restricted

Plan (RSP)

Awards are granted annually to executive directors in the form

of conditional awards or options. Awards vest at the end of a

three-year period subject to:

– the executive director’s continued employment at the date

of vesting; and

– the satisfaction of an underpin as determined by the

Committee whereby the Committee can adjust vesting for

business, individual and wider Company performance.

A two-year holding period will apply following the

three-year vesting period for all awards granted to the

executive directors.

Upon vesting, sufficient shares may be sold to pay tax on

the shares.

Change from 2023.

The current CFO (Dave Watts) has an RSP opportunity of 75%

of salary, which is lower than the previous CFO (100%). As part

of his joining package, the Committee agreed that for RSP

2024 only, the RSP award will be 100% of salary.

The RSP 2023 grant for previous CEO (Malcolm Le May) will be

pro-rated for time to the Termination Date in 2024 (rounded

up to the next whole year) as permitted by the RSP rules and

the Policy.

The 2023 grant made for previous CFO (Neeraj Kapur) will be

pro-rated for time to the Termination Date in 2024 (rounded

up to the next whole year) as permitted by the RSP rules and

the Policy.

Shareholding

requirements

Normal shareholding requirement of 200% of salary.

Additional requirement to hold 200% of salary for two years

following cessation of employment.

Executive directors have agreed to be bound by the

terms of the requirements and Company Secretariat will

monitor compliance.

No change from 2023.

The previous executive directors (Malcolm Le May and

Neeraj Kapur) will remain subject to the post-employment

shareholding requirements in line with the Policy.

Malus

and clawback

Standard market practice (and regulatory requirements)

malus and clawback provisions as at the time the Policy

was adopted.

No change from 2023.

Chair

and NED fees

Provides a competitive level of fees to support recruitment

and retention of a Chairman (and NEDs) with the necessary

experience to advise, and assist, the executives with establishing

and monitoring the Group’s strategic objectives.

Change from 2023.

The fee levels as at 1 January 2024 for the Chairman and NEDs

are as below. These reflect, in aggregate, a c.20% decrease

from 2023 levels.

1 Malcolm Le May left the Company on 24 January 2024.

2 Neeraj Kapur left the Company on 23 February 2024.

NED fees for 2024

Both NED fees and the Chairman fees were last reviewed by the Board and Committee in December 2022. Since then, there

has been significant change in VBG’s market capitalisation which led to a fall in ranking below the FTSE 250. In line with the

requirement to review all aspects of the business to ensure it is sustainable and develops a platform for renewed growth, it

was felt that the Board should set the ‘tone from the top’ regarding its fees, set against the backdrop of large-scale reductions

in headcount and significant cost containment programmes. The Committee and Board reviewed a benchmarking exercise

undertaken by the independent remuneration advisors (PwC) and after careful consideration given to the size and complexity of

the organisation, as well as ensuring the ability to retain and attract any future incumbents, a decision was made to reduce the

fees for all NEDs and the Chairman as shown below.

2024 2023 % change

Chairman of the Board £275,000 £336,000 -18%

Board fee

£70,000 £71,400 -2%

Senior Independent Director £15,000 £15,750 -5%

Committee Chair £20,000 £25,000 -20%

Committee members

£5,000 £15,750 -68%

1 Board fee covers all duties, including service on the VBG and VBL Nomination Committees (NomCo) or Company subsidiaries.

2 In 2023 this was a flat fee of £15,750 irrespective of the number of committee memberships. In 2024 a fee of £5,000 will be paid per committee membership

(excluding NomCo and excluding where the NED is a Chair).

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110

Governance

Directors’ Remuneration Report continued

Annual Report on Remuneration continued

Additional remuneration disclosures

Our approach to fairness and wider workforce considerations

This section of the report brings visibility of remuneration across the entire workforce together in one place. In this section, we

provide context to our director pay by explaining our colleague policies and our approach to fairness, including the following:

– the report received by the Committee on wider workforce pay policies and whether the approach to executive remuneration

is consistent and the alignment of the incentives operated by the Company with its culture and strategy;

– general pay and conditions in the Group;

– gender diversity and pay gap; and

– comparison metrics on executive and colleague remuneration.

In order for the Committee to carry out its oversight review of wider workforce pay, policies and incentives, the Committee

receives a report annually from the Group setting out key details of remuneration throughout the Group.

Details of the information reviewed by the Committee and findings are set out below.

Overview of workforce remuneration and the Committee’s review

The table illustrates how the Remuneration Policy for executive directors in 2023 cascaded throughout the colleague population.

% of

workforce

Average

increase

in base

salaries

Variable pay

plans

Pension

Benefits

Colleague group

Commission

schemes

Annual

bonus

Executive directors 0.3% 0.0% No All Yes Yes Yes

Senior management 3.5% 6.9% No All Yes Yes Yes

Management 24.1% 9.0% No All Yes Yes Yes

All other colleagues 72.1% 10.3% No All Yes Yes Yes

1 Base salaries:

– Base salaries are market competitive and determined with reference to role type, location, responsibility (level), experience and market practice.

– Annual salary increases are applied on an equitable and objective basis dependent on role type.

– Includes 2023 pay review and compares 31 December 2022 with 31 December 2023 data.

2 Variable pay:

– In line with our approach to executive director remuneration, a proportion of the remuneration for the wider workforce is in the form of variable pay, linked to the

achievement of stretching targets that align with the Company’s strategic goals.

– All colleagues are eligible for variable pay provided they have joined before 1 October of the previous performance year, are performing satisfactorily, and are not

under notice of termination. Variable pay is linked to the Group’s performance in the form of annual bonuses. Variable pay is determined with reference to financial

performance and/or the achievement of non-financial objectives which are aligned to the Group’s strategic priorities.

3 Share plans:

– Only some management, and all senior management and executive directors participate in the RSP.

– Historically, participation in the long-term incentive schemes has been limited since the Group’s variable pay arrangements provide the strong linkage

between workforce remuneration and the Group’s financial performance and/or strategic priorities.

– All colleagues have access to share ownership schemes (SAYE (an all-employee plan enabling colleagues to save monthly and receive an option to

purchase Group shares at a discount following a minimum of three years) and SIP (an all-employee plan enabling the colleagues to purchase Group

shares on a monthly basis out of deductions from salaries, also receiving some Matching Awards from the Group)).

4 Pension:

– Maximum employer contributions are consistent across the Group (maximum 10% employer contribution for the Group DC arrangements), with minor

deviations appropriate for role type or for historical reasons which will be addressed in 2024. There also exists a NEST pension arrangement.

5 Benefits:

– Consistent approach applied and determined with reference to role type, market practice and seniority.

The levels of remuneration and the types offered will vary across the Company depending on a colleague’s location, level of

seniority and role. The Committee is not looking for a homogeneous approach; when conducting its review, it is paying particular

attention to:

– whether the element of remuneration is consistent with the Company’s remuneration principles;

– if there are differences, whether they are appropriate; and

– whether the approach is fair and equitable in the context of other colleagues.

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The key findings of the Committee’s review for 2023 have been set out in the following table.

Element Findings

Salary

Average salary increases for colleagues across the Company are being applied on an equitable and objective basis.

All colleagues, whatever their age, are paid above the National Living Wage (on a full time basis).

Incentives

All of our colleagues have the ability to share in the success of the Company through incentive compensation in the

form of variable pay linked to performance.

Shareholding

requirements

Executive directors are required to adhere to minimum shareholding guidelines.

Pensions

All colleagues are eligible for enrolment in a defined contribution pension arrangement and work is planned for 2024

to bring all colleagues onto the same pension provider and the same terms and conditions across the Group.

Benefits

Benefits are offered according to the level of seniority of the role in line with market practice and Policy. Our bespoke

benefits offering is broadly in line with similar companies but the Committee acknowledges the market shift to a

‘flexible benefits’ offering; this remains under review.

The Committee is satisfied that the approach to remuneration across the Company is broadly consistent with the Company’s

principles of remuneration and the pay. Further, in the Committee’s opinion the approach to executive remuneration aligns with

the wider Group Remuneration Policy and there are no anomalies specific to the executive directors that are outside of Policy.

Communication and engagement with colleagues

The Board is committed to ensuring there is an open dialogue with our colleagues and the Committee has the authority to ask

for additional information from the Company in order to carry out its responsibilities.

The Colleague Forum is an established arrangement to facilitate effective engagement between the Board and the workforce

and to encourage workforce participation in shaping strategic initiatives and seek views on key decisions. It supports the Group

in satisfying Provision 5 of the UK Corporate Governance Code 2018, as well as capturing meaningful input and feedback from

colleagues.

Our Colleague Forum has colleague representatives from across all areas and all levels of the business and meets quarterly.

The Designated Non-Executive Colleague Champion works closely with the Colleague Forum in his capacity as engagement

sponsor on behalf of the Board to agree a rhythm of dialogue and meeting attendance to further cement the link between the

Colleague Forum and the Board.

Alongside the Colleague Forum, we commission an annual Colleague Engagement Survey, which is independently administered

by Great Place To Work, as a channel for colleague voice and feedback. The output from each Colleague Engagement Survey

is reviewed by the CCE Committee and appropriate actions are taken in response to any findings.

This is the third year that a consistent performance management framework was used fully across the Group to assess

colleagues’ performance and determine bonus allocations in line with the Group’s values. Work has continued on harmonising

pay and benefits opportunities for equivalent roles across all areas of the business through the Reward Framework and the

alignment of pension schemes across the Group will be completed in 2024. Group-wide job levels have also been rolled out to

help drive consistency and create a more unified colleague experience and support talent mobility. We have also published the

minimum pay levels by level and location in our move to greater pay transparency.

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112

Governance

Directors’ Remuneration Report continued

Annual Report on Remuneration continued

Additional remuneration disclosures continued

Living Wage, equal opportunities and diversity initiatives

A summary of the Company’s general policies in relation to Living Wage, equal opportunities and diversity initiatives are as follows:

Policy Description

Living Wage employer

The National Living Wage is the amount of money all colleagues aged over 25 are legally entitled to. Our policy is to

ensure that all colleagues, whatever their age, are paid above the National Living Wage.

Equal opportunities

and diversity

initiatives

Our Company is committed to equal opportunities in all aspects of employment, including recruitment, training,

performance review and promotions. We make decisions based on objective criteria and individual merit, ensuring

fairness, and respect, and minimising bias. We value diversity and utilise everyone’s talents, abilities and lived

experiences. As part of our commitment, we have signed up to the Women in Finance Charter and are actively working

towards becoming a Disability Confident business. We encourage continuous development and training by offering

a variety of learning opportunities that cater to the diverse learning styles of our colleagues. In 2023, we adopted a

data-driven approach to improve the quality of our diversity data and analysis. This has allowed us to set gender

diversity targets at a more gradual level, leveraging performance management data to identify key talent and

emerging leaders, and challenge recruitment processes to ensure inclusive management appointments. Additionally,

we have established partnerships with membership organisations to stay up to date with industry standards and align

our policies and processes with best practices. Through collaboration, we can continuously improve our approach to

inclusion, diversity and wellbeing, to create an inclusive and supportive workplace for all.

Further details are provided in the CCE Committee Report on pages 78 and 79.

Gender pay gap

We feel strongly about the importance of having a workforce which represents the customers we serve. We hire from diverse

backgrounds, employing (as at 31 December 2023) 51.7% men and 48.3% women across our business, and our recruitment

policies, salary and bonus structures are designed to be gender neutral.

The Group recognises that the key driver behind both our hourly rate and bonus gap is a higher proportion of male colleagues

in senior roles, and so we continue to remain focused on initiatives to increase female representation at senior management

and leadership level.

The introduction of job levelling and a consistent reward framework means that we are better able to evidence that across

the Group male and female colleagues are treated fairly. Whilst the gender pay gap has improved in 2023 at a Group level,

there is still further improvement needed, and our key focus to address this is increasing female representation in senior roles.

This is evidenced further by our commitment to the Women in Finance Charter.

The Group Gender Pay Gap reports which are communicated internally to our colleagues can also be found on our website.

CEO pay ratio

For the purposes of calculating the CEO pay ratio, we have used Option A, which takes into consideration the full-time equivalent

basis of all UK employees and provides representative results of the employee pay conditions across the Company. For 2023

the CEO pay used in these calculations are the pro-rated blend of remuneration of the current CEO (Ian McLaughlin) and

previous CEO (Malcolm Le May). The table shows that the CEO pay ratio has been improving (i.e. decreasing) since 2021. The main

reasons for this are: (1) no salary increase for the CEO since 2022, (2) salary review in 2023 focused on the lower paid population

(and again in 2024), and (3) structural changes made to the business.

The volatility in this ratio is caused by the fact that the CEO pay is made up of a higher proportion of incentive pay than that

of our colleagues, in line with the expectations of our shareholders. This introduces a higher degree of variability in his pay

each year which affects the ratio.

In order to normalise the impact to year-on-year changes to short and long-term incentive payments, the information also

shows the normalised CEO pay ratio when ‘on-target’ bonus payouts are used in the calculation. In assessing our pay ratio

versus likely ratios from industry peers with a similar headcount, we believe that we are comparable but note that annual and

long-term incentive payments have varied considerably amongst this group. We also recognise that ratios will be influenced

by levels of colleague pay and, in the sector, colleague pay will be lower than in many other sectors of the economy.

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Governance Financial statementsStrategic Report Shareholder information

Year

25th

percentile

pay ratio

Median

pay ratio

75th

percentile

pay ratio

2023 (actual) Option A 34.7:1 23.8:1 13.1:1

2022 (actual)* Option A 55.1:1 36.7:1 20.3:1

2021 (actual) Option B 79.6:1 66.3:1 44.1:1

2020 (actual) Option B 28.9:1 26.9:1 21.3:1

2023 (incl. target bonus) Option A 56:1 37.3:1 20.7:1

2022 (incl. target bonus)

Option A 60.1:1 44.2:1 24.2:1

2021 (incl. target bonus) Option B 64.5:1 53.8:1 36.8:1

2020 (incl. target bonus) Option B 55.8:1 51.8:1 41.0:1

1 Restated (downwards) for 2022 due to single figure of remuneration for 2022 being reduced as a result of the downwards adjustment to the CEO’s RSP 2020

which vested on 9 November 2023.

Base salary and total pay and benefits for CEO and colleague percentiles

2023

Base salary (£’000) 749.0

Total pay and benefits (£’000) 943.8

Colleague headcount at 31 December 2023 1,494

Base salary (£’000)

Colleague at the 25th percentile 26.2

Colleague at the 50th percentile 37.0

Colleague at the 75th percentile 64.8

Total pay and benefits (£’000)

Colleague at the 25th percentile 27.2

Colleague at the 50th percentile 39.7

Colleague at the 75th percentile 71.8

Total remuneration for each colleague was calculated on a full-time equivalent basis and the lower quartile, median and

upper quartile colleagues were identified as at 31 December 2023. Overall annualised pay was compared to the pro-rated

blend of remuneration of the current CEO (Ian McLaughlin) and previous CEO (Malcolm Le May). Colleague total remuneration

includes: basic salary, pension, maternity/paternity pay, annual cash bonus and benefits. The total remuneration for the relevant

colleagues was compared to that of the CEO.

The Company believes that the median pay ratio for 2023 is consistent with the pay, reward and progression policies for the

Company’s colleagues. We also considered the pay composition of the colleagues who represent the median, lower and upper

quartiles and were comfortable that it fairly represents pay in the Company.

Vanquis Banking Group plc Annual Report and Accounts 2023

114

Governance

Additional remuneration disclosures continued

CEO pay against total shareholder return (TSR)

The chart below shows the single figure of remuneration for our CEO over time rebased to 2013. We have also included our

TSR performance over this period against the FTSE 250, based on £100 invested. The FTSE 250 was chosen as, in the opinion

of the Committee, the size and complexity of the Company make this an appropriate basis for comparison.

Pay performance: TSR chart

Value (£) (rebased)

Vanquis Banking Group plc FTSE 250 (excl. investment trusts) CEO pay

Dec 20Dec 19Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 21

100

150

200

250

Dec 22 Dec 23

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

CEO

PC PC PC PC MLM MLM MLM MLM MLM MLM MLM IM

CEO single figure

of remuneration

(£’000) 6,594 7,500 6,315 962 71 1,387 1,507 818 1,972 2,056

551 393

Annual bonus/

earning

(% of maximum) 100 98 100 — — 69 53 — 96 78 — —

LTIS/RSP vesting

(% of maximum) 100 100 100 — — — — — — 65

n/a

1 Peter Crook (PC), Malcolm Le May (MLM), Ian McLaughlin (IM).

2 Single figure of remuneration for 2022 has been restated (see 3 below).

3 The RSP 2020 award (which formed part of the CEO single figure of remuneration for 2022) is restated to reflect the 35% downwards adjustment applied

in November 2023.

4 The RSP 2021 award (which forms part of the CEO single figure of remuneration for 2023) reflects a 25% downwards adjustment as determined as part

of the interim assessment of the RSP 2021 award performance underpin.

The greater volatility of our CEO pay is due to the higher proportion of incentive pay in his package compared with that of

our colleagues, which introduces a higher degree of variability in his pay each year versus colleagues.

Directors’ Remuneration Report continued

Annual Report on Remuneration continued

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Governance Financial statementsStrategic Report Shareholder information

Percentage change in directors’ and colleagues’ remuneration

The Committee monitors the changes year on year between our directors’ pay and average colleague pay. As per our Policy,

salary increases applied to executive directors will typically be in line with those of the wider workforce. In accordance with

The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the table below shows

the percentage change from this financial year to previous financial year in executive director and NED total remuneration

compared to the change for the average of the percentage change for colleagues within the Company. The comparator

group is based on all colleagues.

Salary/fees Taxable benefits Short-term variable pay

2023 2022 2021 2020 2023 2022 2021 2020 2023 2022 2021

2020

Executive directors

Ian McLaughlin n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Dave Watts n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Malcolm Le May -42%

5% 18% 2% -56% -6% -51% -24% -100% -15% —

-100%

Neeraj Kapur -40%

-9% -32% n/a -51% 17% 55% n/a -100% -8% —

n/a

Non-executive directors

Sir Peter Estlin n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Patrick Snowball 0% 5% -8% 0% 0% 0% -67% n/a n/a n/a n/a n/a

Andrea Blance -7% 8% 5% 0% 0% 0% -50% 0% n/a n/a n/a n/a

Elizabeth Chambers 10% 5% 1% 0% -58% 43% 0% n/a n/a n/a n/a n/a

Paul Hewitt 0% 9% 5% 0% 67% 0% 50% n/a n/a n/a n/a n/a

Margot James 0% 5% 131% n/a n/a 0% n/a n/a n/a n/a n/a n/a

Angela Knight 0% 9% 2% 0% n/a 0% n/a n/a n/a n/a n/a n/a

Graham Lindsay 0% 9% 8% 0% -60% 150% -50% n/a n/a n/a n/a n/a

Michele Greene n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Average colleague 10% 8% 3% 4% 14% 59% 0% 7% -100% -5% —

-54%

1 No bonus was paid in 2020 and therefore there is no meaningful comparison with 2021.

2 Reflects proration for time as executive director in 2023.

All data rounded to the nearest whole percent.

Graham Lindsay

Remuneration Committee Chair

26 March 2024

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Financial statements

Independent auditor’s report to the members of Vanquis Banking Group plc

Report on the audit of the financial statements

1. Opinion

In our opinion:

– the financial statements of Vanquis Banking Group plc

(the ‘parent company’) and its subsidiaries (the ‘Group’)

give a true and fair view of the state of the Group’s and of

the parent company’s affairs as at 31 December 2023 and

of the Group’s loss for the year then ended;

– the Group financial statements have been properly

prepared in accordance with United Kingdom adopted

international accounting standards);

– the parent company financial statements have been

properly prepared in accordance with United Kingdom

adopted international accounting standards and

as applied in accordance with the provisions of the

Companies Act 2006; and

– the financial statements have been prepared

in accordance with the requirements of the

Companies Act 2006.

We have audited the financial statements which comprise:

– the consolidated income statement;

– the consolidated statement of comprehensive income;

– the consolidated and parent company balance sheets;

– the consolidated and parent company statements

of changes in equity;

– the consolidated cash flow statement;

– the statement of accounting policies; and

– the related notes 1 to 37.

The financial reporting framework that has been applied

in their preparation is applicable law and United Kingdom

adopted international accounting standards , and with

regards to the parent company financial statements,

as applied in accordance with the provisions of the

Companies Act 2006.

2. Basis for opinion

We conducted our audit in accordance with International

Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our

responsibilities under those standards are further described

in the auditor’s responsibilities for the audit of the financial

statements section of our report.

We are independent of the Group and the parent company in

accordance with the ethical requirements that are relevant

to our audit of the financial statements in the UK, including

the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard

as applied to listed public interest entities, and we have

fulfilled our other ethical responsibilities in accordance with

these requirements. The non-audit services provided to the

Group and parent company for the year are disclosed in

note 6 to the financial statements. We confirm that we have

not provided any non-audit services prohibited by the FRC’s

Ethical Standard to the Group or the parent company.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

3. Summary of our audit approach

Key audit matters

The key audit matters that we identified in the current

year were:

– the estimation of expected credit losses in Credit Cards

and Vehicle Finance; and

– the valuation of the pension obligation

Within this report, key audit matters are identified as follows:

Newly identified

Increased level of risk

Similar level of risk

Decreased level of risk

Materiality

The materiality that we used for the Group and parent company financial statements was £5.83m and £5.53m

respectively which was determined on the basis of 1% of net assets, with the parent company materiality being capped

at 95% of Group materiality.

Scoping

The Group has moved from three operating segments to five for the current year, being: Credit Cards, Personal Loans,

Vehicle Finance, Second charge mortgages and Snoop. There is also the Corporate Centre, which includes Operations,

Technology & Change, and support Functions which collectively serve the needs of the wider Group.

Therefore, our Group audit scope focused on Credit Cards, Personal Loans, Vehicle Finance, Second charge mortgages

and Snoop, which, together with the parent and corporate centre entities, account for 100% of the Group’s net assets.

Significant

changes in

our approach

No significant changes in our audit approach in the current year.

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Report on the audit of the financial statements continued

4. Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate.

Our evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern

basis of accounting included:

– Obtaining an understanding of relevant controls around management’s going concern assessment and the forecasting

process at both a divisional and Group level;

– evaluating management’s going concern assessment, which includes stress testing and point of non-viability (‘PONV’)

analysis as well as consideration of the transformation projects ongoing across the Group, in order to understand, challenge

and assess the key judgements made by management;

– reading correspondence with regulators to understand the capital and liquidity requirements imposed on the Group by the

Prudential Regulation Authority (‘PRA’), and evaluating any changes to those requirements;

– reviewing the most recent Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy

Assessment Process (ILAAP), with support from our prudential regulation specialists, and assess management’s capital

and liquidity projections and stress testing, evaluating key assumptions and methods used in the capital and liquidity stress

testing models;

– assessing and evaluating the forecasts, with support from our prudential regulation specialists including reconciliation

of the opening capital and liquidity ratios to the year-end Common Reporting Framework regulatory submissions and

assessing whether the year-end balance sheet within the model was consistent with the audited position;

– challenging the cash flow forecast assumptions within the Group’s corporate plan, which was updated in 1Q24 to capture

latest outer year projections, including key growth rate assumptions through a review of their budgeted cash flows and the

return to PBT in future periods. We have also performed an assessment over the forecasting accuracy in the previous years;

– challenging the availability and effectiveness of mitigating actions which could be taken by management to avoid

or reduce the impact of macroeconomic stress for example restricting variable pay, reducing lending growth, and/or

challenging the dividend pay-out; and

– reviewing the financial statement disclosures in respect of going concern and considering whether they are consistent with

the knowledge we obtained during the course of the audit.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions

that, individually or collectively, may cast significant doubt on the Group’s and parent company’s ability to continue as a going

concern for a period of at least twelve months from when the financial statements are authorised for issue.

In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add

or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it

appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections

of this report.

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial

statements of the current period and include the most significant assessed risks of material misstatement (whether or not

due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the

allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters.

5.1. Estimation of expected credit losses in Credit Cards and Vehicle Finance

Key audit matter

description

The Group holds portfolios of receivables from credit card, personal loans and vehicle financing arrangements, totalling

£2,175.1m (2022 (restated): £1,913.3m), net of provisions. The Group’s provision for impairment against amounts receivable

from customers is £565.8m (2022: £605.8m).

Within Credit Cards, management has recognised a total ECL provision of £198.7m (2022: £270.4m) on gross receivables

of £1,476.4m (2022: £1,452.0m), representing a decline in ECL coverage ratio from 18.6% to 13.5% over the period.

Within Vehicle Finance, management has recognised a total ECL provision of £352.0m (2022 (restated): £316.9m) on

gross receivables of £1,144.2m (2022 (restated): £972.3m), representing an improvement in ECL coverage ratio from 33.6%

to 30.8% over the period.

The IFRS 9 Financial Instruments expected credit losses on amounts receivable from customers are determined

by modelling expected credit performance of the receivables’ portfolios. The underlying modelling techniques are

complex and involve significant judgements regarding the quantum and timing of expected future cash flows to

calculate expected credit losses. Given the material impact of the significant judgements involved, we also consider

there is a risk of fraud due to the potential ability of management to introduce inappropriate bias to judgements made

in the estimation process.

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Financial statements

Report on the audit of the financial statements continued

5. Key audit matters continued

5.1. Estimation of expected credit losses in Credit Cards and Vehicle Finance

continued

Key audit matter

description

continued

IFRS 9 requires that an impairment assessment should be the best estimate of expected credit losses and that

reasonable forward-looking information should be incorporated into the calculation as at the balance sheet date.

The uncertainties in the macroeconomic environment and inflationary pressures, mean there exists a wide range of

scenarios with different loss outcomes. The key economic variables relevant for the Group’s portfolio were determined

to be the hazard rate, which is the likelihood of shifting from employment to unemployment in a given time period, and

debt-to-income (‘DTI’) ratios. The hazard rate is not a widely used variable for which forecasts are published; however,

there is a strong correlation between hazard rates and unemployment such that hazard rates can be predicted based

on unemployment forecasts. There is significant judgement in determining the probability weighting of the scenarios

adopted by management and the associated assumptions.

The expected credit loss provision estimate is driven by account-specific estimation of probability of default (PD),

exposure at default (EAD) and loss given default (LGD) which represent the key areas of judgement. Across both

Credit Cards and Vehicle Finance, we have pinpointed our significant risk to the macroeconomic inputs including

the cost-of-living overlays and the valuation of the underlay recognised from the ongoing refinement of the IFRS9

impairment models, which are expected to be fully implemented in H1 2024.

Management has released its cost-of-living overlays (2022: £10.5m) as management consider that underlying

asset quality remained high with delinquency trends remaining stable. The Post Model Adjustments (‘PMA‘) were

based on management’s judgement in light of the current economic environment and were supported by scenario

modelling techniques.

Management has conducted model redevelopment and calibration activities during the year and recognised an

underlay of £57.7m from the ongoing refinement of the IFRS 9 impairment models. Due to the complexity of the calculation

and underlying assumptions, and high level of judgement involved in the refinement of the IFRS 9 impairment models to

recognise the underlay, we have identified management’s expert credit judgements in determining the valuation of the

underlay as a key audit matter for this year.

We no longer consider the significant changes in credit risk (‘SICR’) thresholds and 12-month probability of default

(‘12m PD’) recalibration in Credit Cards to be a key audit matter as these assumptions have been revised as part of the

wider model redevelopment and calibration activities carried out during the year.

Further detail in respect of these is set out in the statement of accounting policies in page 131 and 134, in the amounts

receivables from customers in note 13 of the financial statements and also within the Strategic Report in page 33.

How the scope

of our audit

responded to the

key audit matter

Control procedures

Within Credit Cards and Vehicle Finance we obtained an understanding of relevant controls relating to the identification,

valuation and recording of expected credit losses.

Substantive procedures

In respect of the macroeconomic scenarios applied we involved our economics specialist to assess the appropriateness

of the shape of the hazard rate and DTI curves and the respective weightings attached to the curves, whilst also testing

the underlying data used in this assessment for completeness and accuracy.

We benchmarked the underlying unemployment economic variables against various external sources including

His Majesty’s Treasury forecasts, the Prudential Regulation Authority, the Office for National Statistics, and other

available data.

We involved our credit risk modelling specialists to assist in our assessment and challenge of management’s

incumbent and new model methodology and assessed the methodology for Credit Cards and Vehicle Finance against

the requirements of IFRS 9. In performing these procedures, we further considered whether there were any indicators

of bias in the methodology applied by management or in the estimation of the amount and timing of expected future

cash flows, through a stand back assessment performed on the ECL coverage ratios derived from the models, post the

application of the underlay.

In respect of the cost-of-living PMA for Credit Cards and Vehicle Finance, with the involvement of our credit risk modelling

specialists, we have assessed the appropriateness of the reversal of the cost-of-living PMA through our evaluation of the

refinement of the macro model and assessment of the appropriateness of the underlay recognised on the impact of

such refinement.

In respect of the underlay from the benefit of the ongoing model refinement with the involvement of our credit risk

modelling specialists, we have tested that the methodology changes have been reflected in the creation of the underlay

through assessment of the underlying scripts, tested the completeness and accuracy of the data used to form the

new models and evaluated management’s conclusions regarding the appropriateness of the changes in the current

macroeconomic environment.

Key observations

We considered the macroeconomic assumptions and weightings to be reasonable in both Credit Cards and Vehicle

Finance. Appropriate methodologies, management expert credit judgement and reasonable assumptions were used

in the valuation of the underlay from the benefit of the ongoing model refinement and in determining the reversal of the

cost-of-living. Overall, based on our substantive testing, we found that the provision for expected credit losses in Credit

Cards and Vehicle Finance is appropriate.

Independent auditor’s report to the members of Vanquis Banking Group plc continued

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5.2. Valuation of the Pension Obligation

Key audit matter

description

Under IAS 19 ‘Employee Benefits’, the value of the defined benefit pension scheme is to be recognised on the Group’s

balance sheet, reflecting an actuarial valuation of the assets and liabilities of the scheme at the balance sheet date.

The valuation of the pension obligation involves judgements in relation to inflation, discount and mortality rates. The

most critical element identified was the discount rate assumption as set out in the sensitivity analysis in note 22. The

valuation of the pension obligation is an area of management judgement where there is a risk of fraud due to the

potential ability of management to introduce inappropriate bias to judgements made in the valuation process.

The pension obligation is £474.7m as at 31 December 2023 (2022: £490.0m). The pension surplus held on the balance

sheet has increased by £7.5m to £38.2m at 31 December 2023 (31 December 2022: £30.7m). Further detail in respect

of these assumptions is set out in the statement of accounting policies on Page 133 of the financial statements, the

retirement benefit asset in note 22 in the financial statements and within the Audit Committee Report page 83.

How the scope

of our audit

responded to the

key audit matter

We obtained an understanding of the relevant controls surrounding the determination of the discount rate and other

inputs used in the pension valuation.

We involved our actuarial specialists to assist us in evaluating the appropriateness of the principal actuarial

assumptions used in the calculation of the pension obligation being the discount rate, mortality rates and inflation

rates. We also challenged and benchmarked management’s assumptions against those used by a range of

organisations as at 31 December 2023 and considered the consistency of those judgements compared with the

prior year.

Key observations

All assumptions adopted by management are within what we considered to be an acceptable range.

6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic

decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the

scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements Parent company financial statements

Materiality

£5.83m (2022: £6.07m) £5.53m (2022: £5.76m)

Basis for

determining

materiality

1% of net assets (2022: 1% of net assets) 1% of net assets (2022: 1% of net assets) capped at 95%

of Group materiality

Rationale for

the benchmark

applied

Our benchmark upon which materiality is determined is consistent with the prior period. We determined that net assets

continue to be a more stable and relevant measure used by investors, regulators and stakeholders when assessing the

performance and longer-term prospects of the Group and parent company as well as the importance of net assets to the

Group’s regulatory capital position.

Group materiality

£5.8m

Net assets

£583.1m

Component

materiality range

£0.0m to £5.5m

Audit Committee

reporting threshold

£0.3m

Net Assets Group materiality

Report on the audit of the financial statements continued

5. Key audit matters continued

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Financial statements

Report on the audit of the financial statements continued

6. Our application of materiality continued

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected

and undetected misstatements exceed the materiality for the financial statements as a whole.

Group financial statements Parent company financial statements

Performance

materiality

70% (2022: 70%) of Group materiality 70% (2022: 70%) of parent company materiality

Basis and

rationale for

determining

performance

materiality

In determining performance materiality, we considered a number of factors, including: our understanding of the

control environment and controls reliance obtained, our understanding of the business, and the number of uncorrected

misstatements identified in the prior year.

6.3. Error reporting threshold

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £0.29m (2022: £0.30m),

as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the

Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

7. An overview of the scope of our audit

7.1. Identification and scoping of components

The Group is organised into five continuing operating segments: Credit Cards, Personal Loans, Vehicle Finance, Second charge

mortgages and Snoop. There is also the Corporate Centre, which includes Operations, Technology & Change, and support

Functions which collectively serve the needs of the wider Group.

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls,

and assessing the risks of material misstatement at the Group level. Therefore, our Group audit scope focused on Credit Cards,

Personal Loans, Vehicle Finance, Second charge mortgages and Snoop, which, together with the parent company and corporate

centre entities, account for 100% of the Group’s net assets. Credit Cards, Personal Loans and Vehicle Finance are audited by

separate engagement teams led by the Group audit partner.

7.2. Our consideration of the control environment

We identified the financial reporting, lending, and deposit business cycles to be the most relevant to the audit, including the

identification, valuation and recording of expected credit losses. We planned a controls reliance auditing strategy over the

credit card and retail deposit cycles. Due to issues identified by our IT specialists in respect of user access review over the credit

card system, we modified our audit approach to a fully substantive approach and did not place reliance on IT controls. This

increased the extent of our substantive audit procedures over these balances and, in some areas, also altered the nature of our

substantive procedures. This has been discussed within the Audit Committee Report set out on page 82.

We were however able to take a controls reliance approach over the deposit business cycle and with involvement of our IT

specialists we tested and relied upon IT controls across the aforementioned deposit system identified. The Group outsources

the processing of customer deposits to a third party and therefore, we involved our IT specialists to review the service auditor’s

report and evaluated user entity controls.

We have also obtained an understanding of the relevant controls within the financial reporting, treasury, personal loans and

loan impairment processes.

The Audit Committee has performed their own assessment of the internal control environment as set out on page 82.

7.3. Our consideration of climate-related risks

In planning our audit, we have considered the potential impact of climate change on the Group’s business and its financial

statements throughout the planning of our audit.

The Group continues to develop its assessment of the potential impacts of climate change which is currently being considered

over the short term (zero to one years), medium term (one to five years) and long term (five or more years) time horizons which is

reported on page 20 of the Strategic report.

As part of our audit, we have obtained management’s climate-related risk assessment and held enquiries with the Head

of Sustainability, the Chief Risk Officer and Finance team to understand the process of identifying climate-related risks, the

determination of mitigating actions and the impact on the Group’s financial statements. Management has identified there to

be no material impact arising from climate change on the judgements and estimates made in the financial statements as

explained in the statement of accounting policies disclosure on page 25.

We performed our own qualitative and quantitative risk assessment of the potential impact of climate change material

misstatement. Our procedures included reading disclosures included in the Strategic Report with the involvement of our climate

change and sustainability specialists and audit team consideration as to whether they are materially consistent with the

financial statements and our knowledge obtained in the audit. We also evaluated whether appropriate disclosures have been

made in the financial statements.

Independent auditor’s report to the members of Vanquis Banking Group plc continued

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Report on the audit of the financial statements continued

8. Other information

The other information comprises the information included in the Annual Report, other than the financial statements and our

auditor’s report thereon. The directors are responsible for the other information contained within the Annual Report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated

in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially

inconsistent with the financial statements, or our knowledge obtained in the course of the audit, or otherwise appears to be

materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives

rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude

that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9. Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the

financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors

determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether

due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s ability

to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis

of accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have

no realistic alternative but to do so.

10. Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance

is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect

a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually

or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of

these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

11. Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which

our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance

with laws and regulations, we considered the following:

– the nature of the industry and sector, control environment and business performance including the design of the Group’s

remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;

– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved

by the board;

– results of our enquiries of management, the directors and the Audit Committee about their own identification and

assessment of the risks of irregularities, including those that are specific to the Group’s sector;

– any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures

relating to:

– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances

of non-compliance;

– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or

alleged fraud;

– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

– the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations,

pensions, financial instruments, share-based payments, data analytics, information technology, prudential regulatory,

climate change and sustainability specialists, macroeconomic and credit risk modelling specialists, regarding how and

where fraud might occur in the financial statements and any potential indicators of fraud.

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Financial statements

Report on the audit of the financial statements continued

11. Extent to which the audit was considered capable of detecting irregularities, including fraud

continued

11.1. Identifying and assessing potential risks related to irregularities continued

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud

and identified the greatest potential for fraud in the following areas: the estimation of expected credit losses in Credit Cards

and Vehicle Finance and valuation of the pension obligation. In common with all audits under ISAs (UK), we are also required to

perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions

of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial

statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules, pension

legislation and tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements

but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included

the regulation set by the Financial Conduct Authority and the Prudential Regulation Authority relating to the Group’s regulatory

capital and liquidity requirements.

11.2. Audit response to risks identified

As a result of performing the above, we identified the estimation of expected credit losses in Credit Cards and Vehicle Finance

and valuation of the pension obligation as key audit matters related to the potential risk of fraud. The key audit matters section

of our report explains the matters in more detail and also describes the specific procedures we performed in response to those

key audit matters.

In addition to the above, our procedures to respond to risks identified included the following:

– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with

provisions of relevant laws and regulations described as having a direct effect on the financial statements;

– enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation

and claims;

– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material

misstatement due to fraud;

– reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing

correspondence with regulatory bodies such as the Prudential Regulation Authority, the Financial Conduct

Authority and HMRC;

– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and

other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential

bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course

of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members

including internal specialists and remained alert to any indications of fraud or non-compliance with laws and regulations

throughout the audit.

Report on other legal and regulatory requirements

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with

the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

– the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

– the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the

course of the audit, we have not identified any material misstatements in the Strategic Report or the Directors’ Report.

Independent auditor’s report to the members of Vanquis Banking Group plc continued

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Report on other legal and regulatory requirements continued

13. Corporate Governance Statement

The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of

the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance

Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:

– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any

material uncertainties identified set out on page 92 and 129;

– the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the

period is appropriate set out on page 51;

– the directors’ statement on fair, balanced and understandable set out on page 81;

– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on

page 84 to 85;

– the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems

set out on page 86; and

– the section describing the work of the Audit Committee set out on pages 80 to 83.

14. Matters on which we are required to report by exception

14.1. Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

– we have not received all the information and explanations we require for our audit; or

– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been

received from branches not visited by us; or

– the parent company financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

14.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration

have not been made or the part of the Directors’ Remuneration Report to be audited is not in agreement with the accounting

records and returns.

We have nothing to report in respect of these matters.

15. Other matters which we are required to address

15.1. Auditor tenure

Following the recommendation of the Audit Committee, we were appointed by the directors on 29 June 2012 to audit the

financial statements for the year ending 31 December 2012 and subsequent financial periods. The period of total uninterrupted

engagement including previous renewals and reappointments of the firm is 12 years, covering the years ending 31 December 2012

to 31 December 2023.

15.2. Consistency of the audit report with the additional report to the Audit Committee

Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance

with ISAs (UK).

16. Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act

2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to

state to them in an Auditor’s Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for

the opinions we have formed.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these

financial statements form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the

FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format

Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.

Kieren Cooper (Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

Birmingham, United Kingdom

26 March 2024

Vanquis Banking Group plc Annual Report and Accounts 2023

124

Financial statements

Consolidated income statement

For the year ended 31 December

		Group
		2023	2022
Continuing operations	Note	£m	£m
Interest income	3	556.0	491.5
Interest expense	4	(113.4)	(58.8)
Net interest income		442.6	432.7
Fee and commission income	5	44.2	47.0
Fee and commission expense	5	(1.7)	(2.8)
Net fee and commission income	5	42.5	44.2
Other income		3.7	3.8
Total income		488.8	480.7
Impairment charges	13	(166.1)	(66.1)
Risk-adjusted income		322.7	414.6
Operating costs		(327.1)	(304.5)
Statutory (loss)/profit before taxation from continuing operations	1,6	(4.4)	110.1
Tax charge for continuing operations	7	(1.6)	(27.8)
Statutory (loss)/profit after taxation from continuing operations	1	(6.0)	82.3
Loss after taxation from discontinued operations	2	—	(4.9)
Statutory (loss)/profit for the year attributable to equity shareholders		(6.0)	77.4
Add back:
Tax charge for continuing operations	7	1.6	27.8
Amortisation of acquisition intangibles	20	7.9	7.5
Exceptional items	1	21.4	9.0
Loss after taxation from discontinued operations	2	—	4.9
Adjusted profit before tax		24.9	126.6

Consolidated statement of comprehensive income

For the year ended 31 December

		Group
		2023	2022
	Note	£m	£m
(Loss)/profit for the year attributable to equity shareholders		(6.0)	77.4
Items that will not be reclassified subsequently to the income statement:
– actuarial movements on retirement benefit asset	22	6.4	(84.2)
– tax on items taken directly to other comprehensive income	7	(1.5)	16.0
– impact of change in UK tax rate on items in other comprehensive income	7	(0.1)	5.0
Other comprehensive income/(expense) for the year		4.8	(63.2)
Total comprehensive (expense)/income for the year		(1.2)	14.2
(Loss)/earnings per share
For the year ended 31 December		Group
		2023	2022
	Note	pence	pence
Basic	8	(2.4)	30.8
Diluted	8	(2.3)	30.5

The above (loss)/earnings per share is on a Group basis including discontinued operations.

Vanquis Banking Group plc Annual Report and Accounts 2023

125

Governance Financial statementsStrategic Report Shareholder information

Dividends per share

For the year ended 31 December

		Group
		2023	2022
	Note	pence	pence
Interim dividend	9	5.0	5.0
Final dividend	9	1.0	10.3

The total cost of dividends paid in the year was £38.4m (2022: £42.8m).

Balance sheets

			Group		Company
		At	At	At	At	At
		31 December	31 December	1 January	31 December	31 December
		2023	2022	2022	2023	2022
			(restated) 1	(restated) 1
	Note	£m	£m	£m	£m	£m
Assets
Cash and cash equivalents	12	743.3	464.9	717.7	14.7	4.1
Amounts receivable from customers	13	2,171.9	1,905.4	1,687.0	—	—
Trade and other receivables	14	55.9	50.6	18.8	914.9	1,197.9
Investments held at fair value through profit and loss	15	5.4	10.7	9.1	—	—
Current tax asset		8.1	—	—	—	—
Property, plant and equipment	16	8.1	8.3	8.4	0.7	0.9
Right of use assets	17	23.2	32.4	47.9	10.9	12.7
Goodwill	19	72.4	71.2	71.2	—	—
Other intangible assets	20	74.4	63.3	52.3	1.7	2.3
Investment in subsidiaries	21	—	—	—	241.6	207.4
Retirement benefit asset	22	38.2	30.7	112.2	38.2	30.7
Derivative financial instruments	23	1.3	11.3	3.1	1.0	—
Deferred tax assets	24	6.5	14.5	6.9	—	—
Total assets	1	3,208.7	2,663.3	2,734.6	1,223.7	1,456.0
Liabilities and equity
Liabilities
Trade and other payables	25	44.1	62.8	95.6	235.4	304.3
Current tax liabilities		—	—	5.6	3.1	—
Provisions	26	5.8	5.2	72.1	—	0.1
Lease liabilities	27	40.9	49.3	58.9	13.6	16.7
Retail deposits	28	1,950.5	1,100.6	1,018.5	—	—
Bank and other borrowings	28	582.5	815.4	845.2	205.7	365.8
Derivative financial instruments	23	1.8	15.3	—	3.0	15.3
Deferred tax liabilities	24	—	—	—	7.8	5.3
Total liabilities	1	2,625.6	2,048.6	2,095.9	468.6	707.5
Equity attributable to owners of the parent
Share capital	30	53.2	52.6	52.6	53.2	52.6
Share premium		276.3	273.5	273.3	276.3	273.5
Merger reserve		278.2	278.2	278.2	280.5	280.5
Other reserves	32	12.1	12.4	9.8	11.3	11.6
Retained earnings		(36.7)	(2.0)	24.8	133.8	130.3
Total equity	1	583.1	614.7	638.7	755.1	748.5
Total liabilities and equity		3,208.7	2,663.3	2,734.6	1,223.7	1,456.0

1 Refer to accounting policies for detail of restatement.

In accordance with the exemption allowed by section 408 of the Companies Act 2006, the Company has not presented its

own income statement or statement of other comprehensive income. The retained profit for the financial year reported in the

financial statements of the Company was £34.5m (2022: £64.1m).

The financial statements on pages 116 to 191 were approved and authorised for issue by the Board of Directors on 26 March 2024

and signed on its behalf by:

Ian McLaughlin Dave Watts

Chief Executive Officer Chief Financial Officer

Company Number – 668987

Vanquis Banking Group plc Annual Report and Accounts 2023

126

Financial statements

Statements of changes in shareholders’ equity

Group Note

		Share	Share	Merger	Other	Retained
		capital	premium	reserve	reserves	earnings	Total
		£m	£m	£m	£m	£m	£m
At 31 December 2021		52.6	273.3	278.2	9.8	17.3	631.2
Prior year adjustment		—	—	—	—	7.5	7.5
At 1 January 2022		52.6	273.3	278.2	9.8	24.8	638.7
Profit for the year		—	—	—	—	77.4	77.4
Other comprehensive (expense)/income:
– actuarial movements on retirement benefit asset	22	—	—	—	—	(84.2)	(84.2)
– tax on items taken directly to other comprehensive income	7	—	—	—	—	16.0	16.0
– impact of change in UK tax rate	7	—	—	—	—	5.0	5.0
Other comprehensive expense for the year		—	—	—	—	(63.2)	(63.2)
Total comprehensive income for the year		—	—	—	—	14.2	14.2
Dividends (note 9)		—	—	—	—	(42.8)	(42.8)
Purchase of own shares		—	—	—	—	(0.7)	(0.7)
Issue of share capital		—	0.2	—	—	—	0.2
Share-based payment charge	31	—	—	—	5.1	—	5.1
Transfer of share-based payment reserve on vesting
of share awards		—	—	—	(2.5)	2.5	—
At 31 December 2022		52.6	273.5	278.2	12.4	(2.0)	614.7
At 1 January 2023		52.6	273.5	278.2	12.4	(2.0)	614.7
Loss for the year		—	—	—	—	(6.0)	(6.0)
Other comprehensive income/(expense):
– actuarial movements on retirement benefit asset	22	—	—	—	—	6.4	6.4
– tax on items taken directly to other comprehensive income	7	—	—	—	—	(1.5)	(1.5)
– impact of change in UK tax rate	7	—	—	—	—	(0.1)	(0.1)
Other comprehensive income for the year		—	—	—	—	4.8	4.8
Total comprehensive expense for the year		—	—	—	—	(1.2)	(1.2)
Dividends (note 9)		—	—	—	—	(38.4)	(38.4)
Issue of share capital		0.6	2.8	—	—	—	3.4
Share-based payment charge	31	—	—	—	4.6	—	4.6
Transfer of share-based payment reserve on vesting of share awards		—	—	—	(4.9)	4.9	—
At 31 December 2023		53.2	276.3	278.2	12.1	(36.7)	583.1

1 Refer to accounting policies for detail of restatement.

The rights issue in 2018 was undertaken through a cash box structure which allowed merger relief to be applied to the issue of

shares rather than recording share premium. The full merger reserve is now considered distributable.

Other reserves are further analysed in note 32.

Financial statements continued

Vanquis Banking Group plc Annual Report and Accounts 2023

127

Governance Financial statementsStrategic Report Shareholder information

Statements of changes in shareholders’ equity continued

Company Note

capital

£m

premium

£m

Merger

reserve

£m

Other

reserves

£m

Retained

earnings

£m

Total

£m

At 1 January 2022 52.6 273.3 280.5 9.0 171.5 786.9

Profit for the year — — — — 64.1 64.1

Other comprehensive (expense)/income:

– actuarial movements on retirement benefit asset 22 — — — — (84.2) (84.2)

– tax on items taken directly to other comprehensive

income — — — — 16.0 16.0

– impact of change in UK tax rate — — — — 5.0 5.0

Other comprehensive expense for the year — — — — (63.2) (63.2)

Total comprehensive income for the year — — — — 0.9 0.9

Dividends (note 9) — — — — (42.8) (42.8)

Purchase of own shares — — — — (0.7) (0.7)

Issue of share capital — 0.2 — — — 0.2

Share-based payment charge 31 — — — 2.9 — 2.9

Transfer of share-based payment reserve on vesting of

share awards — — — (1.4) 1.4 —

Share-based payment movement in investment in

subsidiaries — — — 1.1 — 1.1

At 31 December 2022 52.6 273.5 280.5 11.6 130.3 748.5

At 1 January 2023 52.6 273.5 280.5 11.6 130.3 748.5

Profit for the year — — — — 34.5 34.5

Other comprehensive income/(expense):

– actuarial movements on retirement benefit asset 22 — — — — 6.4 6.4

– tax on items taken directly to other comprehensive

income — — — — (1.5) (1.5)

– impact of change in UK tax rate — — — — (0.1) (0.1)

Other comprehensive income for the year — — — — 4.8 4.8

Total comprehensive income for the year — — — — 39.3 39.3

Dividends (note 9) — — — — (38.4) (38.4)

Issue of share capital 0.6 2.8 — — — 3.4

Share-based payment charge 31 — — — 2.5 — 2.5

Transfer of share-based payment reserve on vesting of

share awards — — — (2.6) 2.6 —

Share-based payment movement in investment in

subsidiaries — — — (0.2) — (0.2)

At 31 December 2023 53.2 276.3 280.5 11.3 133.8 755.1

Other reserves are further analysed in note 32.

Vanquis Banking Group plc Annual Report and Accounts 2023

128

Financial statements

Statements of cash flows

For the year ended 31 December

		Group		Company
		2023	2022	2023	2022
	Note	£m	£m	£m	£m
Cash flows from operating activities
Cash (used in)/generated from operations	35	(175.0)	(148.1)	248.0	(106.6)
Finance costs paid		(76.1)	(48.8)	(55.3)	(30.6)
Finance income received		26.6	5.4	24.4	57.2
Tax paid		(6.0)	(13.4)	—	—
Net cash (used in)/generated from operating activities		(230.5)	(204.9)	217.1	(80.0)
Cash flows from investing activities
Purchase of intangible assets	20	(19.0)	(29.2)	—	(2.3)
Purchase of property, plant and equipment	16	(3.3)	(3.6)	(0.3)	—
Proceeds from sale of available for sale investment		6.4	—	—	—
Cash placed on deposit		—	—	—	(90.0)
Acquisition of a subsidiary		(2.9)	—	—	—
Dividends received from subsidiaries	33	—	—	—	115.3
Net cash (used in)/generated from investing activities		(18.8)	(32.8)	(0.3)	23.0
Cash flows from financing activities
Proceeds from bank and other borrowings		1,100.0	330.0	—	—
Repayment of bank and other borrowings		(523.3)	(288.4)	(163.5)	(30.0)
Payment of lease liabilities		(11.2)	(10.8)	(4.4)	(2.2)
Dividends paid to Company shareholders		(38.4)	(42.8)	(38.4)	(42.8)
Repayment of loan from subsidiaries		—	—	—	(70.0)
Proceeds from derivatives		—	—	—	(0.7)
Proceeds from issue of share capital	30	0.1	0.2	0.1	0.2
Purchase of own shares for share awards		—	(0.7)	—	—
Net cash generated from/(used in) financing activities		527.2	(12.5)	(206.2)	(145.5)
Net increase/(decrease) in cash, cash equivalents and overdrafts		277.9	(250.2)	10.6	(202.5)
Cash, cash equivalents and overdrafts at beginning of year		463.9	714.1	4.1	206.6
Cash, cash equivalents acquired from Snoop (note 18)		—	—	—	—
Cash, cash equivalents and overdrafts at end of year		741.8	463.9	14.7	4.1
Cash, cash equivalents and overdrafts at end of year comprise:
Cash at bank and in hand	12	743.3	464.9	14.7	4.1
Overdrafts (held in bank and other borrowings)	28	(1.5)	(1.0)	—	—
Total cash, cash equivalents and overdrafts		741.8	463.9	14.7	4.1

Cash at bank and in hand includes £681.5m (2022: £420.5m) in respect of the liquid assets buffer, including other liquidity

resources, held by Vanquis Bank Limited in accordance with the PRA’s liquidity regime.

1 2022 cash flows reclassified between proceeds from and repayments of bank and other borrowings within cash flows from financing activities due to

netting of retail deposit retained amounts totalling £155.5m.

Financial statements continued

Vanquis Banking Group plc Annual Report and Accounts 2023

129

Governance Financial statementsStrategic Report Shareholder information

General information

The Company is a public limited company incorporated and

domiciled in the UK. The address of its registered office is

No. 1 Godwin Street, Bradford, England BD1 2SU. The Company

is listed on the London Stock Exchange.

Basis of preparation

The financial statements of the Group and Company are

prepared in accordance with International Accounting

Standards as adopted by the UK, International Financial

Reporting Standards (IFRSs) and the Companies Act 2006.

The financial statements have been prepared on a going

concern basis under the historical cost convention, as

modified by the revaluation of derivative financial instruments

and investments held at fair value through profit and loss.

In assessing whether the Group is a going concern, the

directors have reviewed the Group’s corporate plan as

approved in March 2024, in doing so, the Board reviewed

detailed forecasts for the three year period to December

2026 and also considered less detailed forecasts for 2027 and

2028. These higher-level outer year forecasts do not contain

any information which would cause different conclusions to

be reached over the longer-term viability of the Group. The

assessment included consideration of the Group’s principal

risks and uncertainties, with a focus of capital and liquidity

and the going concern assessment covers a period of 12

months from the accounts approval date.

The directors have also reviewed the Group’s stress testing

projections which are based on a severe but plausible

scenario. The stress test scenario envisages that the UK

economy enters a period of stagflation in 2024 with inflation

rising to approximately 8.6% and the UK Bank Rate rising

to 6.75%. As a result, the UK Unemployment rate rises to

approximately 8.1%. This shows that the Group is able to

maintain sufficient capital headroom above minimum

requirements. The directors have reviewed the Group’s reverse

stress testing projections to the point of non-viability, which

concluded that the Group’s viability only comes into question

under an unprecedented macroeconomic scenario.

Prior year restatement

In the current year, as part of the Group’s continual focus on

improving the precision of its IFRS 9 impairment models, it

was identified within vehicle finance that recovery cash flows

were being discounted to the date of default rather than

the reporting date. This led to cash flows being discounted

too heavily and therefore a higher core model impairment

provision being historically recognised. In 2021, this would

have resulted in a reduction in Group loss after tax of £7.5m,

an increase in vehicle finance receivables of £9.3m and a

reduction in the current tax asset of £1.8m. Management

considers that a prior period restatement is appropriate and

has retrospectively restated the 2022 balance sheet which

has resulted in an increase in vehicle finance receivables

of £9.3m, a reduction in the current tax asset of £1.8m and a

corresponding increase of £7.5m through retained earnings.

Change in presentation of income statement

In line with our continued repositioning as a specialist banking

group, the Group changed the presentation of its income

statement in the Annual Report and Accounts for the year ended

31 December 2022 to align with the wider banking industry.

The presentation of the income statement in this report is

consistent with that in the Annual Report and Accounts for 31

December 2022, with the exception of interest received from

Vanquis Bank Limited’s liquid asset buffer and net fair value

gains recognised in relation to the Group’s derivative financial

instruments previously reported in other income now being

recognised within interest income, and certain elements

of vehicle finance income which were previously reported

in interest income now being recognised in other income.

All periods presented in this report have been retrospectively

re-presented. This change does not constitute a change in

accounting policy and there is no impact on recognition,

measurement or profit and loss in any period presented

in this report.

The impact of new standards not yet

effective and not adopted by the Group

from 1 January 2024

There are no new standards not yet effective and not adopted

by the Group from 1 January 2024 which are expected to have

a material impact on the Group .

Basis of consolidation

The consolidated income statement, consolidated statement

of comprehensive income, balance sheet, statement of

changes in shareholders’ equity, statement of cash flows

and notes to the financial statements include the financial

statements of the Company and all of its subsidiary

undertakings drawn up from the date control passes to the

Group until the date control ceases.

Control is achieved when the Group:

– has the power over the investee;

– is exposed, or has rights, to variable returns from its

involvement with the investee; and

– has the ability to use its power to affect returns.

All intra-group transactions and balances and unrealised

gains on transactions between Group companies are

eliminated on consolidation.

The accounting policies of subsidiaries are consistent with the

accounting policies of the Group.

Interest income

Interest income is earned from credit cards, personal loans,

vehicle finance and second charge mortgage products. It

also includes interest received from Vanquis Bank Limited’s

liquid asset buffer, held in the Bank of England central reserve

account, and net fair value gains recognised in relation to the

Group’s derivative financial instruments.

Interest is calculated on credit card advances to

customers using the effective interest rate on the daily

balance outstanding.

Within vehicle finance and loans, interest income on customer

receivables is recognised using an effective interest rate.

The effective interest rate is calculated using estimated

cash flows. Directly attributable incremental issue costs are

also taken into account in calculating the effective interest

rate. Interest income continues to be accrued on impaired

receivables using the original effective interest rate applied

to the loan’s carrying value until revenue equal to the loan’s

original service charge has been fully recognised.

Interest income is recognised on the gross receivable when

accounts are in IFRS 9 stages 1 and 2 and on the net receivable

for accounts in stage 3. Accounts can only move between

stages for interest income recognition purposes at the Group’s

interim or year-end balance sheet date.

Directly attributable acquisition costs are capitalised as

part of receivables and amortised over the life of the loan as

a deduction to interest income.

Group interest income excludes intra-group transactions.

Company interest income includes intra-group transactions.

Statement of accounting policies

Vanquis Banking Group plc Annual Report and Accounts 2023

130

Financial statements

Interest expense

Interest expense principally comprises the interest on retail

deposits, bank and other borrowings, securitisation and,

for the Company, intra-group loan arrangements, and is

recognised on an effective interest rate basis.

Fee and commission income

Fee and commission income is earned from credit cards and

is recognised at the time the charges are made to customers

on the basis that the performance obligation is complete.

Group fee income excludes intra-group transactions.

Dividend income

Dividend income is recognised in the income statement

when the Company’s right to receive payment is established.

Goodwill

All acquisitions are accounted for using the purchase method

of accounting.

Goodwill is an intangible asset and is measured as the excess

of the fair value of the consideration over the fair value of the

acquired identifiable assets, liabilities and contingent liabilities

at the date of acquisition. Gains and losses on the disposal of

a subsidiary include the carrying amount of goodwill relating

to the subsidiary sold.

Goodwill is allocated to cash-generating units for the

purposes of impairment testing. The allocation is made to

those cash-generating units or groups of cash-generating

units which are expected to benefit from the business

combination in which the goodwill arose.

Goodwill is tested annually for impairment and is carried at

cost less accumulated impairment losses. Impairment is

tested by comparing the carrying value of the asset to the

discounted expected future cash flows from the relevant

cash-generating unit. Expected future cash flows are derived

from the Company’s latest budget projections and the

discount rate is based on the Company’s risk-adjusted cost of

equity at the balance sheet date.

Investments in subsidiaries

The Company’s investments in subsidiaries are stated at cost

less provisions for impairment where required. Impairment

provisions reflect the shortfall between the carrying value of

the investment with the higher of: (i) fair value less costs to sell;

and (ii) value in use of the subsidiary.

Leases

The Group and Company as a lessee

The Group and Company assess whether a contract contains

a lease at inception of a contract. A right of use asset and

a corresponding liability are recognised with respect to all

lease arrangements where it is a lessee, except for short-term

leases (leases with a lease term of 12 months or less) and

leases of low-value assets (less than £5,000). For these leases,

the lease payment is recognised within operating expenses

on a straight-line basis over the lease term.

The lease liability is initially measured at the present value of

the lease payments at the commencement date, discounted

using the rate implicit in the lease. This rate could not be

readily determined; therefore, the incremental borrowing rate

has been used. This is defined as the rate of interest that the

lessee would have to pay to borrow, over a similar term and

with similar security, the funds necessary to obtain an asset of

a similar value to the right of use asset in a similar economic

environment. For Vanquis Bank Limited, this would represent an

average retail deposit rate; for all other companies this would

be based on the assessment of their funding rate at the time.

The lease payments included in the measurement of the

lease liability comprise:

– fixed lease payments;

– variable lease payments; and

– payment of penalties for terminating the lease, if the

lease term reflects the exercise of an option to terminate

the lease.

The lease liability is subsequently measured by increasing

the carrying amount to reflect interest on the lease, using

the effective interest rate method, and reducing the carrying

amount to reflect the lease payments made.

The lease liability is remeasured whenever:

– the lease term has changed, in which case the lease

liability is remeasured by discounting the revised lease

payments using a revised discount rate;

– the lease payments change due to changes in an index

or rate, in which case the lease liability is remeasured by

discounting the revised lease payments using the initial

discount rate; and

– the lease contract is modified and the modification is not

accounted for as a separate lease, in which case the lease

liability is remeasured by discounting the revised lease

payments using a revised discount rate.

During the year the Company remeasured its lease liability due to

changes in Retail Price Index which is linked to the lease payments.

The right of use asset comprises the initial measurement

of the corresponding lease liability and is subsequently

measured at cost less accumulated depreciation and

impairment losses.

Right of use assets are depreciated over the shorter period

of lease term and useful life of the underlying asset.

The lease liability and right of use asset are presented

as separate line items on the balance sheet. The interest

on the lease and depreciation are charged to the income

statement and presented within interest expense and

operating costs respectively.

The Group and Company as a lessor

Vehicle finance is considered a lessor for its conditional

sale agreements to customers; however, both revenue

and impairment are accounted for under IFRS 9.

The Group subleases a portion of its office space and

accounts for it under finance lease.

Other intangible assets

Other intangible assets include acquisition intangibles

in respect of the broker relationships at vehicle finance,

technology and brand of Snoop, standalone computer

software and development costs of intangible assets

across the Group.

The fair value of vehicle finance broker relationships on

acquisition of the Moneybarn Group was estimated by

discounting the expected future cash flows from vehicle

finance core broker relationships over their estimated useful

economic life which was deemed to be 10 years. The asset is

being amortised on a straight-line basis over its estimated

useful life.

The fair value of Snoop’s technology was estimated using Multi-

Period-Excess-Earnings methodology. The fair value of Snoop’s

brand valuation was estimated using an income approach

based on the Relief from Royalties Methodology. The estimated

useful life of the technology was deemed to be 9 years and

of the brand was deemed to be 5 years. The assets are being

amortised on a straight-line basis over their useful life.

Statement of accounting policies continued

Vanquis Banking Group plc Annual Report and Accounts 2023

131

Governance Financial statementsStrategic Report Shareholder information

Other intangible assets continued

Computer software and computer software development

assets represent the costs incurred to acquire or develop

software and bring it into use. Directly attributable costs

incurred in the development of software are capitalised

as an intangible asset if the software will generate future

economic benefits. Directly attributable costs include the

cost of software development employees and an appropriate

portion of relevant directly attributable overheads.

Computer software and computer software development costs

are amortised on a straight-line basis over their estimated useful

economic life which is generally estimated to be between 3 and 10

years. The residual values and economic lives of intangible assets

are reviewed by management at each balance sheet date.

Other intangible assets are valued at cost less subsequent

amortisation and impairment. Amortisation is charged

to the income statement as part of operating costs. An

impairment loss is recognised for the amount by which the

asset’s carrying value exceeds the higher of the asset’s value

in use and its fair value less costs to sell.

Amounts receivable from customers

Customer receivables are initially recognised at fair value

which represents the amount advanced to the customer plus

directly attributable issue costs less an impairment provision

for expected losses. The receivables are originated under a

business model that intends to collect the contractual cash

flows and includes only elements of principal and interest,

so are subsequently measured at amortised cost less

impairment provisions. The impairment provision recognised

is based on the probability of default (PD) within 12 months,

the loss given default (LGD) and the exposure at default (EAD).

On initial recognition, all accounts are recognised in IFRS 9 stage 1.

The account moves to stage 2 when a significant increase

in credit risk (SICR) becomes evident, such as a missed

payment or a significant increase in PD, but has not defaulted.

In absence of other factors indicating SICR, this will occur at

30 days past due.

An account moves to stage 3 and is deemed to have

defaulted at 90 days past due, or when a payment

arrangement is initiated, or when other unlikeliness to pay

factors arise (like customer bankruptcy proceedings).

Credit cards

On inception an expected loss impairment provision is

recognised using PD/LGD/EAD models which forecast

customer behaviour to calculate losses.

For credit cards, the PD is determined by utilising a customer’s

behavioural score used for underwriting the credit card. The

LGD discounts the exposure at default (EAD) which adjusts the

current card balance for future expected spend and interest. It

does not include any future credit line increases.

Personal loans

For personal loans, the EAD follows the amortisation schedules

of the loan and is adjusted for expected missed payments at

point of default.

Following an SICR, evident from a missed monthly payment or

a significant increase in PD, lifetime losses are recognised.

A customer is deemed to have defaulted when they become

three minimum monthly payments in arrears or they enter a

temporary payment arrangement. A customer is written off

in the following cycle after becoming six minimum monthly

payments in arrears.

Vehicle finance

Losses are recognised on inception of a loan based on the

probability of a customer defaulting within 12 months. This

is determined with reference to historical customer data

and outcomes.

An account moves from stage 1 to stage 2 when there has been

a SICR or when the customer is assessed as vulnerable. Lifetime

losses are recognised for all accounts in stages 2 and 3.

A customer is deemed to have defaulted when they become

three monthly payments in arrears or enter into a forbearance

arrangement. Customer agreements which have been terminated,

either voluntarily, by the customer settling their agreement early, or

through the agreement being default terminated, are also included

within stage 3.

A customer’s debt is written off when it is sold to debt

collection agencies.

Customers under forbearance

Customers are moved to IFRS 9 stage 3 and lifetime losses

are recognised in all products where forbearance is provided

to the customer or alternative payment arrangements

are established. Customers under temporary payment

arrangements are separately identified according to the type

of arrangement. The carrying value of receivables under each

type of payment arrangement is calculated using historical

cash flows under that payment arrangement, discounted at

the original effective interest rate.

Macroeconomic scenarios

Macroeconomic provisions are part of the core model and are

recognised to reflect the expected impact of future economic

events on a customer’s ability to make payments on their

agreements and the losses which are expected to be incurred.

The provisions consider the relationship between hazard

rate, the number of people who were employed last month

but who are unemployed the following month (derived from

unemployment), debt to income ratio and default rates.

Property, plant and equipment

Property, plant and equipment is shown at cost less

accumulated depreciation and impairment, except for land,

which is shown at cost less impairment.

Cost represents invoiced cost plus any other costs that are

directly attributable to the acquisition of the items. Repairs

and maintenance costs are expensed as incurred.

Depreciation is calculated to write down assets to their

estimated realisable values over their useful economic lives.

The following principal bases are used:

	%	Method
Land	Nil	—
	Over the
Leasehold improvements	lease period	Straight line
Equipment (including
computer hardware)	10 to 33 1/3	Straight line
Motor vehicles	25	Reducing balance

The residual values and useful economic lives of all assets are

reviewed, and adjusted if appropriate, at each balance sheet

date. All items of property, plant and equipment, other than

land, are tested for impairment whenever events or changes

in circumstances indicate that the carrying value may not be

recoverable. Land is subject to an annual impairment test. An

impairment loss is recognised for the amount by which the asset’s

carrying value exceeds the higher of the asset’s value in use and

its fair value less costs to sell. Gains and losses on disposal of

property, plant and equipment are determined by comparing any

proceeds with the carrying value of the asset and are recognised

within operating costs in the income statement.

Depreciation is charged to the income statement as part of

operating costs.

Vanquis Banking Group plc Annual Report and Accounts 2023

132

Financial statements

Investments

Investments held at fair value through profit and loss

Visa Inc shares are measured at fair value in the balance

sheet as a reliable estimate of the fair value can be

determined. Valuation adjustments arising as a result of

routine mark-to-market revaluation are recognised in the

income statement.

Fair value changes including any impairment losses and

foreign exchange gains or losses are recognised within other

income in the income statement. The fair value of monetary

assets denominated in foreign currency is determined

through translation at the spot rate at the balance sheet date.

Dividends on equity instruments are recognised in the income

statement when the Group’s right to receive the dividends

is established.

Derivative financial instruments and hedge

accounting

As permitted by IFRS 9, the Group continues to apply the

requirements of IAS 39 to its hedging relationships.

Derivatives are recognised at fair value with changes

recognised in the income statement. Hedge accounting

allows the derivative to be designated as a hedge of

another financial instrument. At the inception of the

hedge relationship, formal documentation is drawn up

specifying the hedging strategy, the hedged item, the

hedging instrument and the methodology that will be used

to measure the effectiveness of the hedge relationship in

offsetting changes in the fair value or cash flow of the hedged

risk. The effectiveness of the hedging relationship is tested

both at inception and throughout its life and if at any point it is

concluded that it is no longer highly effective in achieving its

documented objective, hedge accounting is discontinued.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in

hand which includes amounts invested in the Bank of England

reserve account held in accordance with the Prudential

Regulation Authority’s (PRA’s) liquidity regime. Cash held as

part of securitisations is not immediately available due to the

terms of the arrangements. Bank overdrafts are presented

in borrowings to the extent that there is no right of offset

with cash balances.

Intercompany

Expected credit losses on Company intercompany balances

are assessed at each balance sheet date. The PDs and LGDs

are determined for each loan based on the subsidiary’s

available funding and cash flow forecasts.

Borrowings

Borrowings are recognised initially at fair value, being issue

proceeds less any transaction costs incurred. Borrowings

are subsequently stated at amortised cost; any difference

between proceeds less transaction costs and the redemption

value is recognised in the income statement over the

expected life of the borrowings using the effective interest rate.

Dividends paid

Dividend distributions to the Company’s shareholders are

recognised in the Group and the Company’s financial

statements as follows:

– final dividend: when approved by the Company’s

shareholders at the AGM; and

– interim dividend: when paid by the Company.

Retirement benefits

Defined benefit pension schemes

The charge in the income statement in respect of defined

benefit pension schemes comprises the actuarially assessed

current service cost of working employees up to when the

scheme was closed, together with the interest on pension

liabilities offset by the interest on pension scheme assets.

All charges are recognised within operating costs in the

income statement.

The retirement benefit asset recognised in the balance sheet

in respect of defined benefit pension schemes is the fair value

of the schemes’ assets less the present value of the defined

benefit obligation at the balance sheet date. A retirement

benefit asset is recognised to the extent that the Group and

Company have an unconditional right to a refund of the asset

or if it will be recovered in future years as a result of reduced

contributions to the pension scheme.

The defined benefit obligation is calculated annually

by independent actuaries using the projected unit credit

method. The present value of the defined benefit obligation is

determined by discounting the estimated future cash outflows

using interest rates of high-quality corporate bonds that have

terms to maturity approximating to the terms of the related

pension liability.

Actuarial gains and losses arising from experience

adjustments and changes in actuarial assumptions

are recognised immediately in the statement of

comprehensive income.

Past service costs are recognised immediately in the

income statement.

Defined contribution pension schemes

Contributions to defined contribution pension schemes are

charged to the income statement on an accruals basis.

Share capital

Ordinary shares are classified as equity. Incremental costs

directly attributable to the issue of new shares are shown

in equity as a deduction, net of tax, from the proceeds.

Merger reserve

The rights issue completed in 2018 was transacted through

a ‘cash box’ structure. The proceeds would ordinarily be

recognised as share capital and share premium. However,

as the proceeds were generated through a cash box structure,

the proceeds are held as share capital and a merger reserve.

The share capital generated is in line with the 20 8/11p par

value of the shares with the additional amounts credited to

the merger reserve. All fees were recognised on an accruals

basis and deducted from the merger reserve with the net

credit being deemed distributable, subject to the capital

injected into Vanquis Bank Limited. Following the transfer of

Vanquis Bank Limited to Provident Financial Holdings Limited

in December 2020 the full merger reserve of £278.2m is now

considered distributable.

Statement of accounting policies continued

Vanquis Banking Group plc Annual Report and Accounts 2023

133

Governance Financial statementsStrategic Report Shareholder information

Share-based payments

Equity-settled schemes

The Company grants options under employee savings-related

share option schemes (typically referred to as Save As You

Earn schemes (SAYE)) and makes awards under the Deferred

Bonus Plan (DBP), the Long Term Incentive Scheme (LTIS), the

Restricted Share Plan (RSP) and the Company Share Option

Plan (CSOP). All of these schemes are equity settled.

The cost of providing options and awards to Group and

Company employees is charged to the income statement of

the entity over the vesting period of the related options and

awards. The corresponding credit is made to a share-based

payment reserve within equity. The grant by the Company

of options and awards over its equity instruments to the

employees of subsidiary undertakings is treated as an

investment in the Company’s financial statements. The fair

value of employee services received, measured by reference

to the fair value at the date of grant, is recognised over the

vesting period as an increase in investments in subsidiary

undertakings, with a corresponding adjustment to the

share-based payment reserve within equity.

The cost of options and awards is based on their fair value.

A binomial model is used for calculating the fair value of SAYE

options which have no performance conditions attached

and the RSP for which vesting is based on the discretion of the

Remuneration Committee. No charge has been recognised

for the CSOP as it is linked to the RSP awards granted at the

same time. Any gains made by an employee in relation to

the CSOP reduce the number of shares exercisable under

the RSP award.

The value of the charge is adjusted at each balance sheet

date to reflect lapses and expected or actual levels of

vesting, with a corresponding adjustment to the share-based

payment reserve.

Cancellations by employees of contributions to the Group’s

SAYE plans are treated as non-vesting conditions and the

Group recognises, in the year of cancellation, the amount of

the expense that would have otherwise been recognised over

the remainder of the vesting period.

Modifications are assessed at the date of modification and any

incremental charges are recognised in the income statement.

A transfer is made from the share-based payment reserve

to retained earnings when options and awards vest, lapse or

are cancelled. In respect of the SAYE options, the proceeds

received, net of any directly attributable transaction costs,

are credited to share capital and share premium when the

options are exercised.

Taxation

The tax charge represents the sum of current and deferred tax.

Current tax

Current tax is calculated based on taxable profit for the year

using tax rates that have been enacted or substantively

enacted by the balance sheet date. Taxable profit differs from

profit before taxation as reported in the income statement

because it excludes items of income or expense that are

taxable or deductible in other years and it further excludes

items that are never taxable or deductible.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable

on differences between the carrying amounts of assets and

liabilities in the financial statements and the corresponding

tax bases used in the computation of taxable profit, and is

accounted for using the balance sheet liability method.

Deferred tax is determined using tax rates (and laws) that

have been enacted or substantively enacted by the balance

sheet date and are expected to apply when the related

deferred tax asset is realised or the deferred tax liability is

settled. Deferred tax is also provided on temporary differences

arising on investments in subsidiaries, except where the timing

of the reversal of the temporary difference is controlled by the

Company and it is probable that the temporary difference will

not reverse in the future.

Deferred tax assets are recognised to the extent that it is

probable that future taxable profits will be available against

which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a

legally enforceable right to offset current tax assets against

current tax liabilities and when the deferred tax assets and

liabilities relate to income taxes levied by the same taxation

authority on either the taxable entity or different taxable

entities where there is an intention to settle the balances

on a net basis.

Provisions

Provisions are recognised when the Group has a present

obligation (legal or constructive) as a result of a past event,

it is probable that the Group will be required to settle that

obligation and a reliable estimate can be made of the

amount of the obligation.

The amount recognised as a provision is the best estimate

of the consideration required to settle the present obligation

at the balance sheet date, taking into account the risks and

uncertainties surrounding the obligation. Where a provision is

measured using the cash flows estimated to settle the present

obligation, its carrying amount is the present value of those

cash flows (when the effect of the time value of money

is material).

Contingent liabilities

Contingent liabilities are possible obligations arising from

past events, whose existence will be confirmed only by

uncertain future events, or present obligations arising from

past events that are not recognised because either an outflow

of economic benefits is not probable or the amount of the

obligation cannot be reliably measured. Contingent liabilities

are not recognised in the balance sheet but information

about them is disclosed unless the possibility of any economic

outflow in relation to settlement is remote.

Exceptional items

Exceptional items are items which the directors consider

should be disclosed separately to enable a full understanding

of the Group’s results. An exceptional item needs to meet at

least two of the following criteria:

– the financial impact is material;

– it is one-off and not expected to recur; and

– it is outside the normal course of business.

Examples include, but are not limited to, costs arising from

redundancy, acquisition or restructuring activities. The

Audit Committee and Board may also apply judgement

to determine whether an item should be classified as an

exceptional item and be an allowable adjustment to a

statutory measure.

Vanquis Banking Group plc Annual Report and Accounts 2023

134

Financial statements

Critical accounting judgements and key

sources of estimation uncertainty

In applying the accounting policies set out above, the Group

and Company make judgements (other than those involving

estimates) that have a significant impact on the amounts

recognised and make estimates and assumptions that affect

the reported amounts of assets and liabilities. The estimates

and judgements are based on historical experience; actual

results may differ from these estimates.

In preparing the Group’s financial statements, the Group has

considered the impact of the results of our scenario analysis

and climate-related risks on our financial performance, and

while the effects of climate change represent a source of

uncertainty, there has not been a material impact on our

financial judgements and estimates due to the physical and

transition climate-related risks in the short to medium term.

Amounts receivable from customers (note 13)

Group: £2,171.9m (2022 restated: £1,905.4m)

Critical accounting judgements

The Group reviews amounts receivable from customers for

impairment at each balance sheet date. For the purposes

of assessing the impairment, customers are categorised

into IFRS 9 stages and cohorts which are considered to be

the most reliable indication of future payment performance.

The determination of expected credit losses involves complex

modelling techniques and requires management to apply

significant judgements to calculate expected credit losses.

The most critical judgements are outlined below.

The determination of the significant increase in credit risk

(SICR) thresholds to be used in the models for credit card,

vehicle finance and personal loans require management

judgement to optimise the performance and therefore

effectiveness of the staging methodology. Assessments are

made to determine whether there is objective evidence of

a SICR which indicates whether there has been an adverse

effect on Probability of Default (PD). A SICR for customers is

when there has been a significant increase in behavioural

score or when one contractual monthly payment has

been missed.

For the purpose of IFRS 9, default is assumed when three

contractual repayments have been missed.

The Group’s impairment models are subject to periodic

monitoring, independent validation and back testing

performed on model components (where appropriate),

including probability of default, exposure at default and

loss given default to ensure management judgements

remain appropriate.

Limitations in the Group’s impairment models or data inputs

may be identified through the ongoing assessment and

validation of the output of the models. In these circumstances,

management makes appropriate adjustments to the Group’s

allowance for impairment losses to ensure that the overall

provision adequately reflects all material credit risks. These

adjustments are determined by considering the particular

attributes of exposures which have not been adequately

captured by the impairment models and range from changes

to model inputs and parameters, at account level, through to

more qualitative post-model overlays. Those changes applied

to model inputs and parameters are deemed to be in-model

overlays; more qualitative changes that have a higher degree

of management judgement are deemed to be post-model

overlays. All adjustments are reviewed quarterly and are

subject to internal review and challenge to ensure that

amounts are appropriately calculated. A breakdown of the

in-model and post-model overlays is included within note 13.

During the year, the Group refined and recalibrated the

impairment provisioning models for cards, vehicle finance

and personal loans, to better reflect the evolving receivables

mix; this led to a release of c.£57.7m of impairment provision,

which has been recognised a model underlay. In addition,

other post-model overlays relating to affordability, persistent

debt and recoveries have been released as these have

been deemed as no longer required. Credit performance

across the Group remains stable and internal analysis shows

no obvious signs of credit quality deterioration.

Macroeconomic impairment provision adjustments are

recognised in the core model to reflect an increased PD,

based on future macroeconomic scenarios. These provisions

reflect the potential for future changes in hazard rate, the

number of people who were employed last month but

who are unemployed the following month (derived from

unemployment), and debt to income ratio.

Management judgement was required to determine the

appropriate macroeconomic indicators to be used in the

model by assessing their correlation with credit losses

incurred by the business. Unemployment is judged to be a key

macroeconomic indicator as analysis has clearly evidenced

a correlation between changes in unemployment and credit

losses incurred by the business.

Key sources of estimation uncertainty

The level of impairment recognised is calculated using

models which utilise historical payment performance to

generate the estimated amount and timing of future cash

flows from each cohort of customers in each arrears stage.

The models are regularly monitored to ensure they retain

sufficient accuracy. Sensitivity analysis has been performed

in note 13 which shows the impact of a 1% movement of gross

exposure into stage 2 from stage 1 on the allowance accounts.

The unemployment data used in the macroeconomic

provisions has been compiled from a consensus of sources

including the Bank of England, HM Treasury, the Office for

Budget Responsibility (OBR), Bloomberg and a number of

prime banks. These estimates are used to derive base case,

upside, downside and severe scenarios.

The table below shows the scenario five-year peak and

average unemployment assumptions adopted and the

weightings applied to each.

Scenario for year
ended 2023	Base	Upside	Downside	Severe
Weighting	60%	15%	20%	5%
2024	4.5%	3.9%	4.8%	5.1%
2025	4.7%	3.7%	6.1%	7.5%
2026	4.7%	4.2%	6.2%	8.0%
2027	4.7%	4.3%	5.5%	6.6%
2028	4.7%	4.4%	5.2%	5.8%
Five-year peak	4.8%	4.5%	6.4%	8.4%

Scenario for year
ended 2022	Base	Upside	Downside	Severe
Weighting	50%	10%	35%	5%
2023	4.1%	3.4%	4.2%	4.6%
2024	4.7%	3.6%	5.8%	7.4%
2025	4.8%	4.3%	6.3%	8.2%
2026	4.8%	4.5%	5.5%	6.8%
2027	4.8%	4.5%	5.1%	6.0%
Five-year peak	4.8%	4.5%	6.5%	8.6%

Statement of accounting policies continued

Vanquis Banking Group plc Annual Report and Accounts 2023

135

Governance Financial statementsStrategic Report Shareholder information

Critical accounting judgements and key

sources of estimation uncertainty continued

Amounts receivable from customers (note 13)

Group: £2,171.9m (2022 restated: £1,905.4m) continued

Key sources of estimation uncertainty continued

Weightings applied to the macroeconomic assumptions were

reviewed and updated at the December 2023 Assumptions

Committee meeting, to more appropriately reflect

management’s view of exposure to changes in the projected

macroeconomic environment.

Sensitivity analysis has been performed on the weightings

which show that changing the weightings for vehicle finance

and personal loans would not have a material impact on the

allowance account.

For credit cards, increasing the downside weighting by

5%, from 20% to 25%, and a corresponding reduction in the

base case would increase the allowance account by £0.2m.

Increasing the upside weighting by 5%, from 15% to 20%, and

a corresponding reduction in the base case would decrease

the allowance account by £0.3m.

Retirement benefit asset (note 22)

Group and Company: £38.2m (2022: £30.7m)

Key sources of estimation uncertainty:

– The valuation of the retirement benefit asset is dependent

upon a series of assumptions, the key assumptions being

mortality rates and the discount rate applied to liabilities.

The most significant assumption which could lead to

material adjustment is a change in discount rates.

– Discount rates are based on the market yields of

high-quality corporate bonds which have terms

closely linked with the estimated term of the retirement

benefit obligation. During 2023, government backed

corporate entities were removed from the corporate

bond universe as these are considered to be outliers.

Mortality estimates are based on standard mortality

tables, adjusted where appropriate to reflect the Group’s

own expected experience.

Sensitivity analysis of the Group’s main assumptions is set

out in note 22.

Other accounting judgements:

Intangibles (note 20)

Group: £58.7m (2022: £50.8m)

All intangible assets have been reviewed for impairment under

IAS 36 and the recoverable amounts exceed the carrying

value therefore no impairment has been recognised in 2023.

Where project timings have been amended, these have also

been reflected in amortisation profiles; this is not expected to

have a material impact on profit in future years. However, as

the Group continues to evolve there is a risk that assets may

require impairment in the future.

Provisions: Customer remediation complaints (note 26)

During 2023 the Group experienced elevated levels of

customer compensation claims from claims management

companies. The majority of these claims are speculative in

nature, primarily driven by spurious CMC activity, and related

to a wide range of different matters. During the second half of

2023 this activity has begun to stabilise within vehicle finance,

with attention of the CMCs turning to the cards product.

The cost for the Group of customer remediation costs, which

relate to a wide range of different matters, amounts to

£11.7m in 2023 (2022: £4.6m). Financial Ombudsman Service

(FOS) case fees and resource costs incurred in processing

complaint submissions amount to £16.8m (2022: £11.9m).

Customer complaints have increased by 144% year-on-year

primarily driven by a higher than normal volume of spurious

complaints by Claims Management Companies (CMCs)

primarily related to lending origination rather than in-life

servicing. This higher volume drives a lower uphold rate given

the vast majority of complaints lack substance and are not

upheld. Customer remediation costs relate to a wide range

of different matters primarily in respect of the lending process

but with no common theme or systemic issue.

Customer remediation costs also include compensation

that may be paid to customers based on estimated uphold

complaint rates and average compensation values.

A provision of £3.5m (2022: £1.4m) is held for customer

compensation claims received where compensation may

be paid but which have not yet been assessed, upheld or

compensation amounts agreed. The provision is determined

based on the complaints volume pipeline at 31 December

2023, estimated uphold complaint rates, and average

compensation amounts for each complaint type based on

historic data.

FOS case fees of £750 per case are payable on all cases

referred to the FOS regardless of outcome. FOS case fees

have increased reflecting the increase in total volumes

referred to FOS; this increase is mainly due to the high spike in

volumes submitted by CMC’s exceeding time bound service

level agreements, and is not an indication of deteriorating

underlying issues. These costs are based on complaints

volume pipeline as at 31 December 2023, in addition to further

estimated referrals based on historic data, and £4.8m (2022:

£1.2m) is included within accruals at 31 December.

Resource costs include permanent staff, temporary staff, and

offshore third-party resources employed in processing the

resolution of these complaints.

The complaint volumes and uphold rates are set out below:

			Change
Complaint volumes	2023	2022	%
CMC	38,972	5,716	582%
Direct	30,637	22,860	34%
Total	69,609	28,576	144%

			Change
Complaint uphold rates	2023	2022	%
CMC	11%	14%	(3%)
Direct	35%	38%	(3%)
Total	22%	33%	(11%)

			Change
FOS referral volumes	2023	2022	%
CMC	7,346	1,163	532%
Direct	2,628	1,790	47%
Total	9,974	2,953	238%

			Change
FOS uphold rates	2023	2022	%
CMC	6%	37%	(31%)
Direct	31%	34%	(3%)
Total	14%	35%	(21%)

Vanquis Banking Group plc Annual Report and Accounts 2023

136

Financial statements

Financial risk management

The Group’s activities expose it to a variety of financial risks,

which can be categorised as credit risk, liquidity risk and

market risk. The objective of the Group’s Risk Management

Framework is to identify and assess the risks facing the

Group and to minimise the potential adverse effects of these

risks on the Group’s financial performance. Financial risk

management is overseen by the Risk Committee.

Further details of the Group’s Risk Management Framework

are described on pages 44 to 46.

(a) Credit risk

Credit risk is the risk that the Group will suffer loss in the event

of a default by a customer, a bank counterparty or the UK

Government. A default occurs when the customer or bank

fails to honour repayments as they fall due.

(i) Amounts receivable from customers

The Group’s maximum exposure to credit risk on amounts

receivable from customers as at 31 December 2023 is the

carrying value of amounts receivable from customers

of £2,171.9m (2022 restated: £1,905.4m).

The Risk Committee is responsible for setting the credit policy.

The CRO is responsible for ensuring that the approach to

lending is within sound risk and financial parameters and that

key metrics are reviewed to ensure compliance with policy.

The CRO discharges and informs this decision making through

the Credit Committee.

The Group Credit Committee meets at least 10 times a year.

A customer’s risk profile and credit line are evaluated

at the point of application and, for revolving limits, at

various times during the agreement. Internally generated

scorecards based on historical payment patterns and

other behavioural characteristics of customers are used to

assess the applicant’s potential default risk and their ability

to manage a specific credit line. For new customers, the

scorecards incorporate data from the applicant and sourced

from external credit bureaux. Certain policy rules including

customer profile, proposed loan size and vehicle type (where

applicable) are also assessed in the decisioning process,

as well as affordability checks to ensure that, at the time of

application, the loan repayments are affordable. For existing

customer lending, the scorecards also incorporate data

on actual payment performance and product utilisation,

together with data sourced from an external credit bureau

each month to refresh customers’ payment performance

position with other lenders. Credit lines can go up as well

as down according to risk assessment.

Arrears management is conducted by way of a combination

of letters, inbound and outbound telephony, SMS, email

and outsourced debt collection agency activities. Contact

is made with the customer to discuss the reasons for

non-payment and specific strategies are employed to

support the customer in returning to a good standing and

retaining use of the vehicle. These include appropriate

forbearance arrangements, or where the contract has

become unsustainable for the customer, then an appropriate

exit strategy is implemented.

(ii) Bank and government counterparties

The Group’s maximum exposure to credit risk on bank and

government counterparties as at 31 December 2023 was

£755.1m (2022: £508.6m).

Counterparty credit risk arises as a result of cash deposits

and collateral placed with banks and central governments

and derivative contracts that are currently assets.

Counterparty credit risk is managed by the Group’s Assets

and Liabilities Committee (ALCO) and is governed by a

Board-approved Counterparty Policy which ensures that the

Group’s cash deposits and derivative financial instruments

are only made with high-quality counterparties with the level

of permitted exposure to a counterparty firmly linked to the

strength of its credit rating. In addition, there is a maximum

exposure limit for all institutions, regardless of credit rating.

This is linked to the Group’s regulatory capital base in line

with the Group’s regulatory reporting requirements on large

exposures to the PRA.

(b) Liquidity risk

Liquidity risk is the risk that the Group will have insufficient

liquid resources available to fulfil its operational plans and/or

to meet its financial obligations as they fall due.

Liquidity risk is managed by the Group’s centralised treasury

department through daily monitoring of expected cash

flows in accordance with a Board-approved Internal Liquidity

Adequacy Assessment Process (ILAAP) and Group Funding

and Liquidity Policy, which is designed to ensure that the

Group is able to continue to fund the growth of the business.

This process is monitored regularly by the Group (and Vanquis

Bank) Assets and Liabilities Committee (ALCO). ALCO monitors

liquidity risk metrics within limits set by the Board, including

meeting regulatory requirements.

The Group’s risk appetite and Funding and Liquidity Policy

are designed to ensure that the Group is able to continue to

fund the growth of the business. The Group maintains liquidity

to fund growth and meet contractual maturities in its retail

deposit, securitisation and bond funding.

Vanquis Bank is a PRA-regulated institution. It is required to

maintain a liquid assets buffer, and other liquid resources,

based upon daily stress tests detailed in the Group and Bank

ILAAP, in order to ensure that it has sufficient liquid resources to

fulfil its operational plans and meet its financial obligations as

they fall due. It also maintains an operational buffer over such

requirements in line with its risk appetite.

Both the Group and Vanquis Bank are required to meet the

liquidity coverage ratio (LCR). The LCR requires institutions to

match net liquidity outflows during a 30-day period with a

buffer of ‘high-quality’ liquid assets (HQLA). The Group and

Vanquis Bank have developed systems and controls to monitor

and forecast the LCR and have been submitting regulatory

reports on the ratio since 1 January 2014. As at 31 December 2023,

the HQLA amounted to £681.5m (2022: £420.5m). HQLA have been

in significant surplus to the minimum regulatory requirements

throughout 2023. Vanquis Bank currently holds its liquid assets

buffer, including other liquid resources, solely in a Bank of

England reserve account. As at 31 December 2023, the Group,

on a consolidated basis, and Vanquis Bank, on an individual

basis, had an LCR of 1,263% (2022: 1,139%) and 1,031%

(2022: 348%) respectively.

On 1 November 2022, the Group received notice from the PRA

that it had approved the Group’s application for a Core UK

Group (CUG) large exposure waiver which enables Moneybarn

to access funding from Vanquis Bank with immediate effect.

This enabled the Group’s transition to a traditional bank

funding model in which the Group’s funding consists of: (i)

retail deposits; (ii) securitisation of the credit cards and vehicle

finance books; and (iii) liquidity and funding facilities at the

Bank of England. The Group retains access to wholesale market

funding and debt capital markets via the £2bn Euro Medium-

Term Note (EMTN) programme (renewed in November 2023). The

retail deposits include 90-day and 120-day notice accounts,

and fixed terms of one to five years and are subject to cover by

the Financial Services Compensation Scheme (FSCS). Vanquis

Bank expects to further diversify its retail deposit funding mix

through more cost-effective behaviour driven deposits (i.e.

accounts which are easy access and notice and are lower

cost) and individual savings accounts (ISAs).

Financial and capital risk management

Vanquis Banking Group plc Annual Report and Accounts 2023

137

Governance Financial statementsStrategic Report Shareholder information

Financial risk management continued

(b) Liquidity risk continued

A maturity analysis of the undiscounted contractual cash flows of the Group’s bank and other borrowings is shown below:

Financial liabilities

	Repayable				Over 5
	on demand	<1 year	1–2 years	2–5 years	years	Total
2023 – Group	£m	£m	£m	£m	£m	£m
Retail deposits	—	1,137.6	467.0	408.7	—	2,013.3
Bank and other borrowings:
– bank facilities	1.5	—	—	—	—	1.5
– senior public bonds	—	—	—	—	—	—
– securitisation	—	13.6	207.4	—	—	221.0
– retail bonds	—	—	—	—	—	—
– Tier 2 capital	—	17.8	17.8	53.3	271.0	359.9
– TFSME	—	1.3	175.3	—	—	176.6
Total borrowings	1.5	1,170.3	867.5	462.0	271.0	2,772.3
Trade and other payables	—	44.1	—	—	—	44.1
Lease liabilities	—	10.7	10.7	11.3	11.9	44.6
Derivative financial instruments	—	6.2	(0.7)	(3.7)	—	1.8
Total	1.5	1,231.3	877.5	469.6	282.9	2,862.8

	Repayable				Over 5
	on demand	<1 year	1–2 years	2–5 years	years	Total
2022 – Group	£m	£m	£m	£m	£m	£m
Retail deposits	—	602.3	322.5	214.7	—	1,139.5
Bank and other borrowings:
– bank facilities	1.0	—	—	—	—	1.0
– senior public bonds	—	107.7	—	—	—	107.7
– securitisation	—	122.5	178.4	—	—	300.9
– retail bonds	—	63.1	—	—	—	63.1
– Tier 2 capital	—	17.8	17.8	53.3	288.8	377.7
– TFSME	—	1.3	1.3	175.3	—	177.9
Total borrowings	1.0	914.7	520.0	443.3	288.8	2,167.8
Trade and other payables	—	62.8	—	—	—	62.8
Lease liabilities	—	11.1	10.2	18.5	14.2	54.0
Derivative financial instruments	—	9.1	6.1	1.2	—	16.4
Total	1.0	997.7	536.3	463.0	303.0	2,301.0

The unutilised credit card commitments are included in note 13.

Vanquis Banking Group plc Annual Report and Accounts 2023

138

Financial statements

Financial risk management continued

(b) Liquidity risk continued

Financial liabilities continued

	Repayable				Over 5
	on demand	<1 year	1–2 years	2–5 years	years	Total
2023 – Company	£m	£m	£m	£m	£m	£m
Bank and other borrowings:
– bank facilities	—	—	—	—	—	—
– senior public bonds	—	—	—	—	—	—
– retail bonds	—	—	—	—	—	—
– Tier 2 capital	—	17.8	17.8	53.3	271.0	359.9
Total borrowings	—	17.8	17.8	53.3	271.0	359.9
Trade and other payables	—	235.4	—	—	—	235.4
Lease liabilities	—	3.7	3.7	2.4	5.6	15.4
Derivative financial instruments	—	6.2	(0.2)	(3.0)	—	3.0
Total	—	263.1	21.3	52.7	276.6	613.7

	Repayable				Over 5
	on demand	<1 year	1–2 years	2–5 years	years	Total
2022 – Company	£m	£m	£m	£m	£m	£m
Bank and other borrowings:
– bank facilities	—	—	—	—	—	—
– senior public bonds	—	107.7	—	—	—	107.7
– retail bonds	—	63.1	—	—	—	63.1
– Tier 2 capital	—	17.8	17.8	53.3	288.8	377.7
Total borrowings	—	188.6	17.8	53.3	288.8	548.5
Trade and other payables	—	304.3	—	—	—	304.3
Lease liabilities	—	4.4	3.6	5.1	5.7	18.8
Derivative financial instruments	—	9.1	6.1	1.2	—	16.4
Total	—	506.4	27.5	59.6	294.5	888.0

Market risk is the risk of loss due to adverse market movements caused by active trading, or unmatched, positions taken in interest

rates, foreign exchange markets, bonds and equities. The Group’s corporate policies do not permit it to undertake position taking or

trading books of this type and therefore it does not do so. The Group’s exposure to market risk is primarily through interest rate risk.

Interest rate risk

Interest rate risk is the risk of potential loss through unhedged or mismatched asset and liability positions which are sensitive

to changes in interest rates. Primarily, the Group is at risk of a change in external interest rates which leads to an increase in the

Group’s cost of borrowing without an offsetting increase in revenue. The Group’s exposure to foreign exchange risk is de minimis.

The Group’s exposure to movements in interest rates is managed by the ALCO and is governed by a Board-approved Market

Risk Policy which forms part of the Group’s treasury policies. Interest rates in the UK, which are impacted by factors outside

of the Group’s control, including the fiscal and monetary policies of the UK Government and central bank, as well as UK and

international political and economic conditions, affect the Group’s results, profitability and consequential return on capital in

three principal areas: cost and availability of funding, margins and revenues and impairment levels.

The Group seeks to limit its net exposure to changes in interest rates. This is achieved through a combination of diversified

funding sources, including issuing fixed rate debt, and by the use of derivative financial instruments such as interest rate swaps.

Financial and capital risk management continued

Vanquis Banking Group plc Annual Report and Accounts 2023

139

Governance Financial statementsStrategic Report Shareholder information

Financial risk management continued

Interest rate risk continued

The Group’s exposure to this risk is a consequence of its

lending, deposit taking and other borrowing activities, as

some of its financial assets and liabilities bear interest at rates

that are linked to an underlying index, such as SONIA or Bank

base rate. In contrast, others banking products are fixed, either

for a term or their whole lives, referred to as interest rate risk

in the banking book (IRRBB).

The principal market-set interest rate used by the Group’s

and Bank’s lenders is the Sterling Overnight Index Average

(SONIA). The SONIA index tracks the Sterling overnight indexed

swaps for unsecured transactions in the market. SONIA is the

risk-free borrowing rate which is used to set rates for certain

borrowings and swaps.

The Group’s Risk Management Framework for IRRBB continues

to evolve in line with updates in regulatory guidance on

methods expected to be used by banks to measure, manage,

monitor and control such risks. The Group and Bank will

continue to develop the interest rate risk framework to ensure

ongoing compliance with the PRA rulebook.

The Group has adopted the standard methodology

measurement of interest rate risk. The Group measures and

monitors the following market risk drivers under the IRRBB

framework through which risk exposure may arise:

– repricing, directional and yield curve risk – the risk of loss

from a mismatch between the Group and Bank’s assets

and liabilities and movements in the overall direction of

interest rates and relative movement in rate at different

maturities on the yield curve;

– basis risk – the risk of loss because of the balance sheet

being adversely affected by movements in different

index rates;

– prepayment risk – the risk that an asset or liability

repays quicker or slower than originally anticipated

resulting in a mismatch between product and the natural

offset or hedge;

– mark-to-market risk – the risk of volatility in the P&L arising

from derivatives which are not in a hedge accounting

relationship being mark to market through the P&L; and

– credit spread risk – the risk of loss because of a dislocation

in rates between liquidity (within the HQLA) and swaps.

The Group measures these risks through a combination of

economic value and earnings-based measures:

– economic value (EV) – a range of parallel and non-parallel

interest rate stresses are applied to assess the change in

market value from assets, liabilities and off-balance sheet

items repricing at different times; and

– net interest income (NII) – impact on earnings from

a range of interest rate stresses.

Exposures to structured entities

At 31 December 2023, the Group has in issue two securitisations

to diversify its sources of funding. As at the end of 2023, the

Group has securitised £831.9m of receivables (2022: £888.8m),

in exchange for receiving £200.0m (2022: £275.0m) of funding

from external sources, and a further £174.0m (2022: £174.0m)

of funding has been obtained by using retained notes as

collateral in the Bank of England’s Term Funding Scheme

with additional incentives for Small and Medium-sized

Enterprises (TFSME).

The Group holds an exposure to the performance of these

vehicles in the form of retained notes and has a contractual

right to the variable returns of the vehicles. This risk is limited

to the performance of the underlying assets, which have not

been derecognised in the financial statements. The Group

has no exposure to other contractual risks associated with

the vehicles; no additional credit enhancements have been

provided beyond the exposure created by the retained notes.

	2023		2022
	Receivables	Notes in	Receivables	Notes in
	secured	issue	secured	issue
Vehicle	£m	£m	£m	£m
Oban-Cards
2021-1 Holdings
Limited	510.9	453.1	520.2	453.1
Moneybarn
Financing Limited	321.0	321.0	368.6	368.6

Vanquis Banking Group plc Annual Report and Accounts 2023

140

Financial statements

Capital risk management

To support the delivery of the Group’s Purpose, the Group

operates a financial model that is founded on investing in

customer-centric businesses offering attractive returns, which

aligns an appropriate capital structure focused on optimising

shareholder value, in a safe and sustainable manner. The

Capital Principal Risk Policy of the Group helps to ensure

capital resources are sufficient to support planned levels

of growth.

The Group has in place a Capital Principal Risk Policy, which

sets out the framework in which the Group aims to maintain a

secure funding and capital structure and establishes defined

capital risk appetite. Adherence to the policy ensures that

the Group maintains minimum capital levels and that the

capital held at business division levels is adequate to support

the business’ underlying requirements and is sufficient to

support growth in that business. Internal capital is allocated

to business lines and risk categories, calibrated to maximise

return on equity while remaining within the risk appetite. The

distribution of dividends is aligned with the Group’s growth

targets, whilst continuing to meet the required capital levels

in line with regulatory requirements and internal risk appetite.

The Group is subject to supervision by the PRA on a

consolidated basis, as a group containing an authorised

bank. For regulatory purposes the Company is designated

as a CRR consolidation entity, as defined by the PRA rulebook.

As part of this supervision, the regulator will issue a total

capital requirement (TCR) setting the amount of regulatory

capital which the Group is required to hold at all times, in

order to safeguard depositors from loss in the event of severe

losses being incurred by the Group. The minimum regulatory

capital requirement imposed by the PRA on firms is the sum

of the total capital requirement, the combined CRD buffer

requirements as applicable and the PRA buffer requirements

as applicable. This requirement is set in accordance

with the international Basel 3 rules, issued by the Basel

Committee on Banking Supervision (BCBS), which, following

the implementation of the Financial Services Act 2021 on

1 January 2022, are implemented through the PRA rulebook.

The Group’s regulatory capital is monitored by the Board, its

Risk Committee and the ALCO, which ensure that appropriate

action is taken to ensure compliance with the regulator’s

requirements. The future regulatory capital requirement is also

considered as part of the Group’s planning process.

The minimum amount of regulatory capital held by the

Group and Vanquis Bank Limited represents the higher

of the imposed requirement and their respective internal

assessments of minimum capital requirements based

upon an assessment of risks facing the Group. The Internal

Capital Adequacy Assessment Process (ICAAP) considers

all risks facing the business, including credit, operational,

counterparty, conduct, pension and market risks, and

assesses the capital requirement for such risks in the event

of downside stresses should such requirement exceed that

set out under the Pillar 1 framework.

The following table reconciles the Group’s equity to the

regulatory capital resources for the Group.

Regulatory capital (unaudited)

	2023	2022
	£m	£m
Total equity	583.1	607.2
Regulatory adjustments
IFRS 9 transitional arrangements	—	54.2
Retirement benefit asset	(38.2)	(30.7)
Deferred tax on retirement benefit asset	9.6	7.7
Goodwill	(72.4)	(71.2)
Intangible assets	(74.4)	(63.3)
Deferred tax on intangible asset	3.9	3.1
Foreseeable dividend	(2.6)	(26.1)
Other regulatory adjustments	—	(2.1)
Common Equity Tier 1 capital	409.0	478.8
Tier 2 capital	200.0	200.0
Total regulatory capital	609.0	678.8
Risk-weighted exposures	1,990.6	1,810.8
CET1 ratio	20.5%	26.4%
Total capital ratio	30.6%	37.5%

1 Total equity is based on published FY22 results and was not updated for

the prior year restatement, please see page 129 for details on the prior

year restatement.

2 The Group elected to take advantage of the IFRS 9 transitional

arrangements set out in Article 473a of the CRR, which allow the capital

impact of expected credit losses to be phased in over the transitional

period. As there has been no increase in ECL in the non-credit impaired

book arising from 1 January 2020 the Group has no IFRS 9 transitional relief

remaining.

3 Other regulatory adjustments relate to any Prudent Valuation Adjustments

calculated using the ‘Simplified Approach’ set out in the PRA Rulebook and,

in the prior year, any insufficient coverage for non-performing exposures

required under Article 47(c) of the CRR (this requirement was removed

in the UK by the PRA in November 2023).

Pillar 3 complements Basel’s Pillar 1 and Pillar 2 frameworks

and seeks to encourage market discipline by developing

a set of disclosure requirements which would allow market

participants to assess key pieces of information on a firm’s

capital, risk exposures and risk assessment processes. Pillar 3

disclosures for the Group, for the year ended 31 December 2023,

are published as a separate document and are available on

the Group’s website.

Financial and capital risk management continued

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Governance Financial statementsStrategic Report Shareholder information

1 Segment reporting

IFRS 8 requires segment reporting to be based on the internal financial information reported to the chief operating decision

maker. The Group’s chief operating decision maker is deemed to be the Group ExCo, whose primary responsibility is to support

the Chief Executive Officer in managing the Group’s day-to-day operations and analyse trading performance. The Group’s

segments are set out below, which are the segments reported in the Group’s management accounts used by the Group ExCo

as the primary means for analysing trading performance. The Group ExCo assesses profit performance using profit before tax

measured on a basis consistent with the disclosure in the Group financial statements.

				Second
		Vehicle		charge		Corporate
	Cards	finance	Loans	mortgages	Snoop	centre	Total
	2023	2023	2023	2023	2023	2023	2023
	£m	£m	£m	£m	£m	£m	£m
Interest income	371.0	150.3	25.9	0.4	—	8.4	556.0
Interest expense	(51.6)	(28.7)	(4.0)	(0.2)	—	(28.9)	(113.4)
Net interest income	319.4	121.6	21.9	0.2	—	(20.5)	442.6
Fee and commission income	44.2	—	—	—	—	—	44.2
Fee and commission expense	(1.7)	—	—	—	—	—	(1.7)
Net fee and commission income	42.5	—	—	—	—	—	42.5
Other income	1.3	2.0	—	—	0.4	—	3.7
Total income	363.2	123.6	21.9	0.2	0.4	(20.5)	488.8
Impairment charges	(130.0)	(15.2)	(20.9)	-	—	—	(166.1)
Risk-adjusted income	233.2	108.4	1.0	0.2	0.4	(20.5)	322.7
Adjusted Operating Costs	(167.8)	(49.5)	(16.0)	(0.7)	(2.9)	(60.9)	(297.8)
Adjusted PBT/(LBT)	65.4	58.9	(15.0)	(0.5)	(2.5)	(81.4)	24.9
Exceptional items						(21.4)	(21.4)
Amortisation of acquisition intangibles						(7.9)	(7.9)
Statutory loss before taxation on continuing operations						(110.6)	(4.4)
Tax charge for continuing operations							(1.6)
Statutory loss after taxation on continuing operations							(6.0)
Loss after taxation on discontinued
operations							—
Statutory loss for the year attributable to equity shareholders							(6.0)

Notes to the financial statements

Vanquis Banking Group plc Annual Report and Accounts 2023

142

Financial statements

Notes to the financial statements continued

1 Segment reporting continued

				Second
		Vehicle		charge		Corporate
	Cards	finance	Loans	mortgages	Snoop	centre	Total
	2022	2022	2022	2022	2022	2022	2022
	£m	£m	£m	£m	£m	£m	£m
Interest income	337.4	137.7	13.1	—	—	3.3	491.5
Interest expense	(22.4)	(22.1)	(1.2)	—	—	(13.1)	(58.8)
Net interest income	315.0	115.6	11.9	—	—	(9.8)	432.7
Fee and commission income	47.0	—	—	—	—	—	47.0
Fee and commission expense	(2.8)	—	—	—	—	—	(2.8)
Net fee and commission income	44.2	—	—	—	—	—	44.2
Other income	0.9	2.9	—	—	—	—	3.8
Total income	360.1	118.5	11.9	—	—	(9.8)	480.7
Impairment charges	(16.8)	(40.8)	(8.5)	—	—	—	(66.1)
Risk-adjusted income	343.3	77.7	3.4	—	—	(9.8)	414.6
Adjusted Operating Costs	(164.8)	(39.7)	(19.1)	—	—	(64.4)	(288.0)
Adjusted PBT/(LBT)	178.5	38.0	(15.7)	—	—	(74.2)	126.6
Exceptional items						(9.0)	(9.0)
Amortisation of acquisition intangibles						(7.5)	(7.5)
Statutory (loss)/profit before taxation on continuing operations						(90.6)	110.1
Tax charge for continuing operations							(27.8)
Statutory profit after taxation on continuing operations							82.3
Loss after taxation on discontinued
operations							(4.9)
Statutory profit for the year attributable to equity shareholders							77.4

Acquisition intangibles represent the fair value of the broker relationships of £75.0m, which arose on the acquisition of

Moneybarn in August 2014; the fair value of intangible assets of £10.1m; and the brand name of £1.0m, arising on the acquisition

of Snoop in the current year. The amortisation charge in 2023 amounted to £7.9m (2022: £7.5m).

Revenue between business segments is not material.

Exceptional items for continuing operations represent a net exceptional charge of £21.4m in 2023 (2022: £9.0m) and comprise:

	2023	2022
	£m	£m
Strategy consultancy costs	(3.5)	(3.8)
Redundancy – outsourcing and other staff exits (note 11(b))	(7.2)	(1.5)
Other outsourcing costs	(2.2)	—
Property exit costs (note 17)	(4.1)	—
Total transformation costs	(17.0)	(5.3)
Other exceptional costs:
Snoop acquisition costs (note 18)	(3.0)	—
Legal and other advice	(1.0)	—
Repayment Option Plan (ROP) provision release (note 26)	2.0	—
CCD liquidation/scheme costs	(2.4)	(3.7)
Total exceptional items	(21.4)	(9.0)

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143

Governance Financial statementsStrategic Report Shareholder information

1 Segment reporting continued

		Segment assets		Segment liabilities		Net assets/(liabilities)
	2023	2022	2023	2022	2023	2022
Group	£m	£m	£m	£m	£m	£m
Credit cards, personal loans and second charge mortgages	2,195.7	1,795.6	(1,802.0)	(1,410.7)	393.7	384.9
Vehicle finance	896.1	770.1	(683.2)	(589.7)	212.9	180.4
Central	29.4	504.8	(58.4)	(72.7)	(29.0)	432.1
Other	11.8	—	(6.3)	—	5.5	—
Continuing operations before intra-group elimination	3,133.0	3,070.5	(2,549.9)	(2,073.1)	583.1	997.4
Discontinued operations	—	—	—	(382.7)	—	(382.7)
Intra-group elimination	75.7	(407.2)	(75.7)	407.2	—	—
Total Group	3,208.7	2,663.3	(2,625.6)	(2,048.6)	583.1	614.7

The presentation of segment net assets reflects the statutory assets, liabilities and net assets of each of the Group’s divisions.

This results in an intra-group elimination reflecting the difference between the central intercompany funding provided to the

divisions and the external funding raised centrally. Credit cards, personal loans and second charge mortgages are recognised

within Vanquis Bank Limited and are therefore combined for balance sheet reporting purposes.

The Group’s businesses operate principally in the UK.

		Capital expenditure	Depreciation		Amortisation
	2023	2022	2023	2022	2023	2022
Group	£m	£m	£m	£m	£m	£m
Credit cards, personal loans and second charge mortgages	12.9	21.6	1.3	1.6	8.6	7.1
Vehicle finance	0.7	1.7	0.5	0.6	0.1	0.4
Central	19.4	9.5	0.4	0.6	9.8	8.5
Other	0.4	—	—	—	—	—
Continuing operations	33.4	32.8	2.2	2.8	18.5	16.0
Discontinued operations	—	—	—	—	—	—
Total Group	33.4	32.8	2.2	2.8	18.5	16.0

Capital expenditure in 2023 comprises expenditure on intangible assets of £30.1m (2022: £29.2m) which included the acquisition

intangible relating to Snoop of £11.1m and property, plant and equipment of £3.3m (2022: £3.6m).

The acquired intangible asset in respect of the acquisition of vehicle finance and Snoop is held on consolidation and, therefore,

the amortisation charge has been allocated to Central in the above analysis, consistent with the segment net asset analysis.

2 Discontinued operations

The Group closed its CCD business comprising home credit and Satsuma loans during 2021 and in accordance with IFRS 5

‘Non-current Assets Held for Sale and Discontinued Operations’ these businesses are presented as discontinued operations.

The loss for discontinued operations for 2023 is £nil. No amounts are included in the Group income statement in the current year.

Subsequently the basic and diluted loss per share for discontinued operations in 2023 is £nil.

The loss for discontinued operations for 2022 was £4.9m resulting in a basic and diluted loss per share of 2.0p. The loss for discontinued

operations in 2022 included: interest expense of £6.2m; operating costs of £9.1m; an exceptional release of £4.6m; and a tax credit of £5.8m.

There were no cash flows arising from discontinued operations in 2023. In 2022 discontinued operations generated cash of £0.1m

in respect of operating activities, generated £nil in respect of investing activities and used £0.1m in respect of financing activities.

Cash flows relating to exceptional items in 2022 were £4.6m in respect of operating activities.

During the year the discontinued operations generated cash of £nil (2022: £0.1m) in respect of operating activities, generated £nil

(2022: £nil) in respect of investing activities and used £nil (2022: £0.1m) in respect of financing activities. Discontinued operations

cash flows relating to exceptional items was £nil (2022: release of £4.6m) in respect of operating activities.

3 Interest income

	Group
	2023	2022
Interest receivable from:	£m	£m
Customer receivables (note 13)	525.7	484.0
Cash balances held on deposit and other (note 12)	25.6	5.4
Net fair value gains on derivative financial instruments (note 23)	4.7	2.1
Total income	556.0	491.5

Interest income from customer receivables is recognised by applying the effective interest rate (EIR) to the carrying value of a

loan. The EIR is calculated at inception and represents the rate which exactly discounts the future contractual cash receipts from

a loan to the amount of cash advanced under that loan, plus directly attributable issue costs (e.g. aggregator/broker fees).

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Financial statements

Notes to the financial statements continued

4 Interest expense

	Group
	2023	2022
Interest payable on:	£m	£m
Retail deposits	57.7	19.6
Senior public and retail bonds	35.9	30.7
Securitisation	18.8	13.5
Lease liabilities finance costs	1.0	1.2
Total interest expense	113.4	65.0
Interest expense – continuing operations	113.4	58.8
Interest expense – discontinued operations (note 2)	—	6.2

5 Net fee and commission income

Fee income is recognised at the time the charges are made to the customer on the basis the performance obligation is complete.

	Group
	2023	2022
	£m	£m
Fee and commission income	44.2	47.0
Fee and commission expense	(1.7)	(2.8)
Net fee and commission income – continuing operations	42.5	44.2

Fee income predominantly relates to credit cards and reflects default and over-limit fees as well as other ancillary income

streams and interchange income.

6 Profit before taxation

	Group
	2023	2022
Profit before taxation for continuing operations is stated after charging/(crediting):	£m	£m
Amortisation of other intangible assets:
– computer software (note 20)	10.6	8.5
– acquisition intangibles (note 20)	7.9	7.5
Depreciation of property, plant and equipment (note 16)	2.2	2.8
Loss on disposal of property, plant and equipment (note 16)	1.3	0.9
Loss on disposal of intangibles (note 20)	0.5	2.2
Depreciation of right of use assets (note 17)	6.9	9.3
Lease liability finance costs (note 4)	1.0	1.2
Impairment of amounts receivable from customers (note 13)	166.1	66.1
Employment costs (prior to exceptional redundancy costs (note 11(b))	130.6	149.6
Exceptional items:
Strategy consultancy costs	(3.5)	(3.8)
Redundancy – outsourcing and other staff exits (note 11)	(7.2)	(1.5)
Other outsourcing costs	(2.2)	—
Property exit costs (note 17)	(4.1)	—
Snoop acquisition costs (note 18)	(3.0)	—
Legal and other advice	(1.0)	—
Repayment Option Plan (ROP) provision release (note 26)	2.0	—
CCD liquidation/scheme costs (note 26)	(2.4)	(3.7)
Total exceptional items	(21.4)	(9.0)

All of the above activities relate to continuing activities.

	Group
	2023	2022
Auditor’s remuneration	£m	£m
Fees payable to the Company’s auditor for the audit of Company and consolidated financial statements	0.4	0.4
Fees payable to the Company’s auditor and its associates for other services:
– audit of Company’s subsidiaries pursuant to legislation	1.6	1.3
– other non-audit services	0.3	0.7
Total auditor’s remuneration	2.3	2.4

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Governance Financial statementsStrategic Report Shareholder information

7 Tax charge

			Group
		2023			2022
	Continuing	Discontinued		Continuing	Discontinued
	operations	operations	Total	operations	operations	Total
Tax charge/(credit) in the income statement	£m	£m	£m	£m	£m	£m
Current tax – UK	(2.0)	—	(2.0)	14.4	(5.8)	8.6
Deferred tax (note 24) – UK	2.3	—	2.3	10.2	—	10.2
Impact of change in UK tax rate (note 24)	1.3	—	1.3	3.2	—	3.2
Total tax charge/(credit)	1.6	—	1.6	27.8	(5.8)	22.0

			2023
			Continuing operations
	Adjusted	Exceptional
	PBT	items	Amortisation	Total
	£m	£m	£m	£m
Profit/(loss) on ordinary activities before tax	24.9	(21.4)	(7.9)	(4.4)
Profit/(loss) before tax multiplied by standard rate of corporation tax in the UK of 23.5%	5.8	(5.0)	(1.8)	(1.0)
Effect of:
– impact of change of UK tax rate (note (a))	1.3	—	—	1.3
– write off of deferred tax assets (note (b))	0.3	—	—	0.3
– adjustments in respect of prior years (note (c))	1.5	—	—	1.5
– non-deductible general expenses (note (d))	0.2	0.7	—	0.9
- benefit of capital losses (note (e))	(1.4)	—	—	(1.4)
Total tax charge/(credit)	7.7	(4.3)	(1.8)	1.6

The tax charge in 2023 was £nil for discontinued operations.

				2022
			Continuing operations		Discontinued operations
	Adjusted	Exceptional			Adjusted	Exceptional
	PBT	items	Amortisation	Total	PBT	items	Total
	£m	£m	£m	£m	£m	£m	£m
Profit/(loss) on ordinary activities before tax	126.6	(9.0)	(7.5)	110.1	(15.3)	4.6	(10.7)
Profit/(loss) before tax multiplied by standard rate
of corporation tax in the UK of 19%	24.1	(1.7)	(1.4)	21.0	(2.9)	0.9	(2.0)
Effect of:
– impact of change of UK tax rate (note (a))	3.2	—	—	3.2	—	—	—
– write off of deferred tax assets (note (b))	0.2	—	—	0.2	—	—	—
– adjustments in respect of prior years (note (c))	(4.4)	0.8	—	(3.6)	(6.5)	0.4	(6.1)
– non-deductible general expenses (note (d))	0.2	0.7	—	0.9	0.6	(0.4)	0.2
– benefit of capital losses (note (e))	—	—	—	—	—	—	—
– impact of bank corporation tax surcharge (note (f))	8.4	—	—	8.4	—	—	—
– impact of lower tax rates overseas and overseas
losses (note (g))	—	—	—	—	(0.1)	(0.1)	(0.2)
– prior year adjustments related to transfer pricing
and losses (note (h))	1.0	—	—	1.0	(1.0)	—	(1.0)
– discount on payment for losses of discontinued
operations (note (i))	(3.3)	—	—	(3.3)	3.3	—	3.3
Total tax charge/(credit)	29.4	(0.2)	(1.4)	27.8	(6.6)	0.8	(5.8)

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146

Financial statements

Notes to the financial statements continued

7 Tax charge continued

(a) Impact of change of UK tax rate

In 2021, changes were enacted to increase the mainstream corporation tax rate from 19% to 25% with effect from 1 April 2023.

At 31 December 2021, deferred tax balances were remeasured at 25%, and in the case of credit cards and loans, at the combined

mainstream corporation tax rate (25%) and bank corporation tax surcharge rate (8%) of 33% to the extent that the temporary differences

on which deferred tax had been calculated were expected to reverse, or the tax loss was expected to be utilised, after 1 April 2023.

In 2022, further changes were enacted which, with effect from 1 April 2023, reduced the bank corporation tax surcharge rate

from 8% to 3% and increase the bank corporation tax surcharge allowance, being the threshold below which banking profits

are not subject to the surcharge, from £25m to £100m.

Deferred tax balances at 31 December 2023 and movements in deferred tax balances during the year have therefore been

measured at 25% (2022: 25%), and in the case of credit cards and personal loans, at the combined mainstream corporation

tax rate (25%) and the bank corporation tax surcharge charge rate (3%) of 28% (2022: 28%) except to the extent the temporary

differences reverse when profits from credit cards and personal loans are expected to be below the bank surcharge threshold,

in which case deferred tax balances have been measured at the combined rate of 25% (2022: 25%).

A tax charge of £1.3m (2022: charge of £3.2m) represents the income statement adjustment to deferred tax as a result of these

changes. In 2022, an additional deferred tax credit of £5.0m was taken directly to other comprehensive income in respect

of items reflected in other comprehensive income.

(b) Write off of deferred tax assets

In 2023 the tax charge in respect of deferred tax assets written off amounts to £0.3m (2022: £0.2m) and relates to share scheme

awards where future deductions are expected to be lower than previously anticipated.

The tax charge of £1.5m in respect of prior years (2022: £9.7m tax credit) is due to lower tax deductions in respect of share

scheme awards as a result of a lower than anticipated share price on vesting and adjustments to write off deferred tax assets

which are no longer supportable.

In 2022, the tax credit of £9.7m in respect of prior years comprised: (a) a net release of tax liabilities in respect of prior years

of continuing operations of £3.6m following agreement of certain historical tax matters with HMRC; (b) a £7.5m reinstatement

of deferred tax assets in respect of certain losses and temporary differences of discontinued operations which were written

off in 2021 but for which tax relief was considered to be available in 2022; and (c) a £1.4m tax charge in respect of a reduction

in tax losses of the discontinued operations available for group relief in prior years.

(d) Non-deductible general expenses

These primarily comprise exceptional costs in respect of the acquisition of Snoop.

In 2022, these primarily comprised: (a) in the case of discontinued operations, costs for which tax deductions may not be

available post-closure of the business net of the release of the provision for costs associated with the FCA investigation into

affordable lending in CCD, part of which is non-taxable; and (b) in the case of continuing operations, the cost of certain projects

for which it was considered a tax deduction may not be available.

(e) Benefit of capital losses

The conversion and subsequent sale in 2023 of a further tranche of the preferred stock in Visa Inc gave rise to a capital gain

which has been partially offset by brought forward capital losses in respect of which a deferred tax asset was not previously

recognised. This gives rise to a beneficial impact on the tax charge of £1.4m (2022: £nil).

(f) Impact of bank corporation tax surcharge

The adverse impact of the bank corporation tax surcharge amounts to £nil (2022: £8.4m) as the taxable profits of credit cards

and personal loans is below the annual threshold (£25m to 31 March 2023; £100m thereafter) below which banking profits are

not subject to the surcharge.

In 2022, the adverse impact of the bank corporation tax surcharge amounted to £8.4m and represented tax at the bank

corporation tax surcharge rate of 8% on credit cards and personal loans taxable profits in excess of £25m where taxable profits

are calculated ignoring the benefit of losses elsewhere in the Group, including capital losses.

(g) Impact of lower tax rates overseas and overseas losses

Prior to its closure in 2021, the home credit business in the Republic of Ireland was subject to tax at the Republic of Ireland

statutory tax rate of 12.5% rather than the UK statutory mainstream corporation tax rate of 19.0%. In 2022, no tax liability arose

on the release of various provisions and accruals following the closure of the Irish business giving a favourable impact on the

tax charge of £0.2m, all of which related to discontinued operations.

(h) Prior year adjustments related to transfer pricing and losses

In 2022 this comprised a £1.0m credit related to discontinued operations net of a £1.0m charge related to continuing operations

and relates to transfer pricing adjustments between the continuing operations and discontinued operations in prior years, as

well as adjustments related to prior year tax losses of the discontinued operation which were surrendered as group relief to the

continuing operation and which the continuing operation paid for at a discounted price.

(i) Discount on payment for losses of discontinued operation

In 2022 this comprised a credit of £3.3m related to continuing operations and a £3.3m charge related to discontinued

operations, and related to tax losses of the discontinued operation which had been surrendered as group relief to the continuing

operation and which the continuing operation paid for at a discounted price. The overall impact on the tax charge was £nil.

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7 Tax charge continued

Tax on exceptional items

The tax credit in respect of exceptional items amounts to £4.3m (2022: £0.6m tax charge) and comprises a £4.3m credit

(2022: £0.2m credit) relating to continuing operations and £nil (2022: £0.8m charge) related to discontinued operations.

In 2023:

– The £4.3m tax credit represents a tax credit in respect of all exceptional costs with the exception of costs in respect of the

acquisition of Snoop in the current year for which tax deductions may not be available.

In 2022:

– The £0.2m tax credit relating to continuing operations represents a tax credit in respect of all exceptional costs of the continuing

operations with the exception of certain project costs for which it is considered tax deductions may not be available.

– The £0.8m tax charge relating to discontinued operations represents the tax charge on the release of certain provisions and

accruals for which tax deductions were previously claimed with the exception of those relating to the Irish branch which are

non-taxable.

The tax (charge)/credit on items taken directly to other comprehensive income is as follows:

	Group
	2023	2022
Tax credit on items taken directly to other comprehensive income	£m	£m
Deferred tax (charge)/credit on actuarial movements on retirement benefit asset	(1.5)	16.0
Impact of change in UK tax rate	(0.1)	5.0
Total tax (charge)/credit on items taken directly to other comprehensive income	(1.6)	21.0

The tax (charge)/credit on items taken directly to other comprehensive income relates entirely to continuing operations.

8 (Loss)/earnings per share

Basic (loss)/earnings per share (L)/EPS is calculated by dividing the (loss)/profit for the year attributable to equity shareholders

by the weighted average number of ordinary shares outstanding during the year less the number of shares held by the

Employee Benefit Trust which are used to satisfy the share awards such as DBP, PSP, LTIS, RSP and CSOP.

Diluted (L)/EPS calculates the effect on (L)/EPS assuming conversion of all dilutive potential ordinary shares. Dilutive potential

ordinary shares are calculated as follows:

(i) For share awards outstanding under performance-related share incentive schemes such as the Deferred Bonus Plan (DBP)

(previously the Performance Share Plan (PSP)), the Long Term Incentive Scheme (LTIS), the Restricted Share Plan (RSP) and the

Company Share Option Plan (CSOP), the number of dilutive potential ordinary shares is calculated based on the number of

shares which would be issuable if: (i) the end of the reporting period is assumed to be the end of the schemes’ performance

period; and (ii) the performance targets have been met as at that date.

(ii) For share options outstanding under non-performance-related schemes such as the Save As You Earn scheme (SAYE), a

calculation is performed to determine the number of shares that could have been acquired at fair value (determined as

the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights

attached to outstanding share options. The number of shares calculated is compared with the number of share options

outstanding, with the difference being the dilutive potential ordinary shares. The Group also presents an adjusted EPS,

prior to the amortisation of acquisition intangibles and exceptional items.

Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease

earnings per share or increase loss per share.

Reconciliations of basic and diluted (L)/EPS for continuing operations and the Group are set out below:

		2023			2022
		Weighted			Weighted
		average			average
		number of	Per share		number of	Per share
	Earnings	shares	amount	Earnings	shares	amount
Continuing operations	£m	m	pence	£m	m	pence
Basic (loss)/earnings per share	(6.0)	253.0	(2.4)	82.3	250.9	32.8
Dilutive effect of share options and awards	—	9.8	0.1	—	2.8	(0.4)
Diluted (loss)/earnings per share	(6.0)	262.8	(2.3)	82.3	253.7	32.4

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148

Financial statements

Notes to the financial statements continued

8 (Loss)/earnings per share continued

		2023			2022
		Weighted			Weighted
		average			average
		number of	Per share		number of	Per share
	Earnings	shares	amount	Earnings	shares	amount
Group	£m	m	pence	£m	m	pence
Basic (loss)/earning per share	(6.0)	253.0	(2.4)	77.4	250.9	30.8
Dilutive effect of share options and awards	—	9.8	0.1	—	2.8	(0.3)
Diluted (loss)/earning per share	(6.0)	262.8	(2.3)	77.4	253.7	30.5

The directors have elected to show an adjusted earnings per share prior to the amortisation of acquisition intangibles which

arose on the acquisition of vehicle finance in August 2014 (see note 19) and prior to exceptional items (see note 1). This is presented

to show the adjusted earnings per share generated by the continuing and Group operations. A reconciliation of continuing and

Group basic/diluted earnings/(loss) per share to adjusted basic and diluted earnings/(loss) per share is as follows:

		2023			2022
		Weighted			Weighted
		average			average
		number of	Per share		number of	Per share
	Earnings	shares	amount	Earnings	shares	amount
Continuing operations	£m	m	pence	£m	m	pence
Basic (loss)/earnings per share	(6.0)	253.0	(2.4)	82.3	250.9	32.8
Amortisation of acquisition intangibles, net of tax	6.1	—	2.4	6.1	—	2.4
Exceptional items, net of tax	17.1	—	6.8	8.8	—	3.5
Adjusted basic earnings per share	17.2	253.0	6.8	97.2	250.9	38.7
Diluted (loss)/earnings per share	(6.0)	262.8	(2.3)	82.3	253.7	32.4
Amortisation of acquisition intangibles, net of tax	6.1	—	2.4	6.1	—	2.4
Exceptional items, net of tax	17.1	—	6.4	8.8	—	3.5
Adjusted diluted earnings per share	17.2	262.8	6.5	97.2	253.7	38.3

		2023			2022
		Weighted			Weighted
		average			average
		number of	Per share		number of	Per share
	Earnings	shares	amount	Earnings	shares	amount
Group	£m	m	pence	£m	m	pence
Basic (loss)/earnings per share	(6.0)	253.0	(2.4)	77.4	250.9	30.8
Amortisation of acquisition intangibles, net of tax	6.1	—	2.4	6.1	—	2.4
Exceptional items, net of tax	17.1	—	6.8	5.0	—	2.0
Adjusted basic earnings per share	17.2	253.0	6.8	88.5	250.9	35.2
Diluted (loss)/earnings per share	(6.0)	262.8	(2.3)	77.4	253.7	30.5
Amortisation of acquisition intangibles, net of tax	6.1	—	2.4	6.1	—	2.4
Exceptional items, net of tax	17.1	—	6.4	5.0	—	2.0
Adjusted diluted earnings per share	17.2	262.8	6.5	88.5	253.7	34.9

9 Dividends

	Group
	2023	2022
	£m	£m
2022 interim – 5.0p per share	—	12.7
2022 final – 10.3p per share	25.7	30.1
2023 interim – 5.0p per share	12.7	—
Dividends paid	38.4	42.8

The directors are recommending a final dividend in respect of the financial year ended 31 December 2023 of 1.0p per share

which will amount to an estimated dividend of £2.6m. If approved, this dividend will be paid on 30 May 2024 to shareholders who

were on the register of members at 19 April 2024.

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Governance Financial statementsStrategic Report Shareholder information

10 Directors’ remuneration

The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate for each

of the categories specified in IAS 24 ‘Related Party Disclosures’.

		Group and Company
	2023	2022
	£m	£m
Salary and other benefits	2.5	4.1
Share-based payment charge	0.9	1.5
Total directors’ remuneration	3.4	5.6

Salary and other benefits comprise salary/fees, bonus, benefits earned in the year and pension salary supplements for

executive directors.

The share-based payment charge reflects the expected vesting of the Group’s share-based incentives.

11 Employee information

(a) Average monthly number of employees in the Group

	Credit		2023					2022
	cards,
	personal					Credit
	loans and					cards and
	second charge	Vehicle		Corporate		personal	Vehicle		Corporate
	mortgages	finance	Snoop	centre	Group	loans	finance	Snoop	centre	Group
Full time	1,007	338	49	310	1,704	1,195	370	—	364	1,929
Part time	139	34	—	31	204	176	49	—	53	278
Total	1,146	372	49	341	1,908	1,371	419	—	417	2,207

The 15% reduction in workforce is predominantly in relation to the redundancy programme to simplify the Group’s operating

model and natural staff attrition.

During the year the Company had 161 (2022: 186) average full time employees and 14 (2022: 21) average part time employees.

(b) Employment costs

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Aggregate gross wages and salaries paid to the Group’s employees	107.1	120.8	18.8	25.8
Employer’s National Insurance contributions	12.1	15.3	3.1	3.5
Pension charge	6.8	8.4	1.9	1.4
Share-based payment charge (note 31)	4.6	5.1	2.4	2.9
Total employment cost prior to exceptional costs	130.6	149.6	26.2	33.6
Exceptional redundancy cost	7.2	1.5	1.9	1.1
Total employment costs	137.8	151.1	28.1	34.7

The pension charge comprises the retirement benefit charge for defined benefit schemes and contributions to the stakeholder

pension plan.

The decrease in the share-based payment charge from £5.1m in 2022 to £4.6m in 2023 primarily reflects the lower RSP scheme

costs in the year. The share-based payment charge relates entirely to the equity-settled scheme.

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150

Financial statements

Notes to the financial statements continued

12 Cash and cash equivalents

Cash and cash equivalents includes cash at bank and held in short-term deposits and Vanquis Bank Limited’s liquid assets

buffer, including other liquid resources.

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Central bank reserves	683.1	420.5	—	—
Cash at bank	60.2	44.4	14.7	4.1
Total cash and cash equivalents	743.3	464.9	14.7	4.1

In addition to cash and cash equivalents, the Group had £1.5m of bank overdrafts at 31 December 2023 (2022: £1.0m) and the

Company had £nil bank overdrafts (2022: £nil), both of which are disclosed within bank and other borrowings (see note 28).

All cash and cash equivalents are held with investment grade rated banks and are held in sterling.

Vanquis Bank Limited’s total liquid assets buffer is held in the Bank of England central reserve account and amounted to £681.5m

at 31 December 2023 (2022: £420.5m).

The currency profile of cash and cash equivalents is held in pound sterling.

Cash and cash equivalents are non-interest bearing other than in respect of the cash held on deposit and the amounts held

by Vanquis Bank Limited as a liquid assets buffer and other liquid resources which bear interest at rates linked to the Bank

of England base rate.

13 Amounts receivable from customers

		2023			2022 (restated)
	Due	Due in		Due	Due in
	within	more than		within	more than
	one year	one year	Total	one year	one year	Total
	£m	£m	£m	£m	£m	£m
Credit cards	1,277.7	—	1,277.7	1,181.6	—	1,181.6
Vehicle finance	230.3	561.9	792.2	184.0	471.4	655.4
Personal loans	15.0	87.4	102.4	34.1	42.2	76.3
Second charge mortgages	—	2.8	2.8	—	—	—
Total	1,523.0	652.1	2,175.1	1,399.7	513.6	1,913.3
Fair value adjustment for portfolio hedged risk	(2.3)	(0.9)	(3.2)	(4.7)	(3.2)	(7.9)
Total reported amounts receivable from customers	1,520.7	651.2	2,171.9	1,395.0	510.4	1,905.4

The fair value adjustment for the portfolio hedge risk relates to the unamortised hedged accounting adjustment in relation

to the balance guaranteed swap, where hedge accounting has been discontinued. (see note 23).

The gross amounts receivable from customers and allowance account which form the net amounts receivable from customers

are as follows:

			2023	Second				2022 (restated)	Second
	Credit	Vehicle	Personal	charge		Credit	Vehicle	Personal	charge
	cards	finance	loans	mortgages	Group	cards	finance	loans	mortgages	Group
Group	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Gross amounts receivable from customers	1,476.4	1,144.2	117.5	2.8	2,740.9	1,452.0	972.3	85.5	—	2,509.8
Allowance account	(198.7)	(352.0)	(15.1)	—	(565.8)	(270.4)	(316.9)	(9.2)	—	(596.5)
Reported amounts receivable
from customers	1,277.7	792.2	102.4	2.8	2,175.1	1,181.6	655.4	76.3	—	1,913.3

The below receivables tables have been represented from prior year to show a more granular level of detail, bring consistency

across products and to net down receivables classified as purchased or originated as credit impaired under IFRS 9 in

vehicle finance.

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13 Amounts receivable from customers continued

Amounts receivable from customers for credit cards can be reconciled as follows:

		2023				2022
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
Credit cards	£m	£m	£m	£m	£m	£m	£m	£m
Gross carrying amount
At 1 January	1,116.6	148.7	186.7	1,452.0	883.8	340.9	192.5	1,417.2
Originations	479.5	—	—	479.5	434.1	—	—	434.1
Drawdowns	1,832.6	74.1	13.2	1,919.9	1,472.7	210.1	16.7	1,699.5
Net transfers and changes in credit risk:
– from stage 1 to stage 2	(459.1)	459.1	—	—	(584.7)	584.7	—	—
– from stage 1 to stage 3	(52.3)	—	52.3	—	(20.2)	—	20.2	—
– from stage 2 to stage 1	247.3	(247.3)	—	—	532.4	(532.4)	—	—
– from stage 2 to stage 3	—	(151.8)	151.8	—	—	(180.1)	180.1	—
– from stage 3 to stage 1	9.3	—	(9.3)	—	21.5	—	(21.5)	—
– from stage 3 to stage 2	—	2.0	(2.0)	—	—	15.3	(15.3)	—
Write offs (regular)	(13.3)	(9.6)	(31.5)	(54.4)	(9.8)	(12.6)	(111.0)	(133.4)
Write offs (debt sale)	—	—	(217.3)	(217.3)	—	—	(54.0)	(54.0)
Repayments	(2,312.7)	(147.7)	(40.0)	(2,500.4)	(1,884.4)	(378.2)	(56.9)	(2,319.5)
Interest and fee income	340.5	45.4	7.8	393.7	271.2	101.0	8.0	380.2
Other movements	12.4	(11.5)	2.5	3.4	—	—	27.9	27.9
At 31 December	1,200.8	161.4	114.2	1,476.4	1,116.6	148.7	186.7	1,452.0
Allowance account
At 1 January	(93.2)	(58.2)	(119.0)	(270.4)	(99.7)	(102.1)	(152.0)	(353.8)
Movements through income statement:
Originations	(32.9)	—	—	(32.9)	(51.3)	—	—	(51.3)
Drawdowns and net transfers and changes in credit risk:
– from stage 1 to stage 2	73.4	(191.8)	—	(118.4)	74.1	(210.6)	—	(136.5)
– from stage 1 to stage 3	8.0	—	(28.4)	(20.4)	4.6	—	(17.4)	(12.8)
– from stage 2 to stage 1	(27.4)	94.1	—	66.7	(55.8)	142.2	—	86.4
– from stage 2 to stage 3	—	109.2	(126.0)	(16.8)	—	99.8	(118.5)	(18.7)
– from stage 3 to stage 1	(0.9)	—	3.0	2.1	(1.4)	—	3.9	2.5
– from stage 3 to stage 2	—	(0.9)	0.9	—	—	(3.0)	3.0	—
- remeasuring with existing stage	(26.8)	(25.1)	7.8	(44.1)	(3.9)	(39.7)	14.6	(29.0)
- post-model overlays	8.8	7.1	11.1	27.0	33.7	48.2	10.6	92.5
- write offs	(9.2)	(3.5)	(6.0)	(18.7)	(7.4)	(5.6)	(22.4)	(35.4)
- debt sales	—	—	15.4	15.4	—	—	37.0	37.0
- derecognition of stage 3 interest	—	—	5.1	5.1	—	—	8.4	8.4
- recoveries	—	—	7.2	7.2	—	—	18.3	18.3
- revaluations	—	—	(0.8)	(0.8)	—	—	16.8	16.8
– other movements	1.7	1.9	(5.0)	(1.4)	4.1	—	0.9	5.0
Total movements through income
statement	(5.3)	(9.0)	(115.7)	(130.0)	(3.3)	31.3	(44.8)	(16.8)
Movements through allowance
account:
– write offs (regular)	13.3	9.6	31.5	54.4	9.8	12.6	111.0	133.4
– write offs (debt sale)	—	—	217.3	217.3	—	—	54.0	54.0
– debt sale proceeds	—	—	(71.3)	(71.3)	—	—	(65.7)	(65.7)
– derecognition of stage 3 interest	—	—	(5.1)	(5.1)	—	—	(8.4)	(8.4)
– Other	—	—	6.4	6.4	—	—	(13.1)	(13.1)
Allowance account at 31 December	(85.2)	(57.6)	(55.9)	(198.7)	(93.2)	(58.2)	(119.0)	(270.4)
Reported amounts receivable from customers at 31 December	1,115.6	103.8	58.3	1,277.7	1,023.4	90.5	67.7	1,181.6
Reported amounts receivable from customers at 1 January	1,023.4	90.5	67.7	1,181.6	784.1	238.8	40.5	1,063.4

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Financial statements

Notes to the financial statements continued

13 Amounts receivable from customers continued

Total credit cards interest and fee income from customers of £393.7m (2022: £380.2m) comprises of £349.5m (2022: £333.2m)

interest income and £44.2m (2022: £47.0m) of fee and commission income.

As at 31 December 2023 unutilised credit card commitments were £1,332.4m (2022: £1,370.9m).

An increase of 1% of the gross exposure into stage 2 from stage 1 would result in an increase in the allowance account of £3.4m

(2022: £3.4m) based on applying the difference between the coverage ratios from stage 1 to stage 2 to the movement in

gross exposure.

A breakdown of the in-model and post-model overlays for credit cards is shown below:

Credit cards

	2023	2022
	£m	£m
Core Model	209.4	254.1
New Model (under)/overlays (note (a))	(12.7)	—
Post-Model (under)/overlays	2.0	16.3
Total allowance account	198.7	270.4

	2023	2022
	£m	£m
Post-model (under)/overlays:
Affordability risk event (note (b))	—	0.3
Persistent debt (note (c))	—	2.8
Cost of living (note (d))	—	10.0
Recoveries (note (e))	—	2.5
Other (note (f))	2.0	0.7
Total post-model (under)/overlays	2.0	16.3
Total (under)/overlays	(10.7)	16.3

(a) Model overlay

Throughout 2023 the Group, in line with its ongoing commitment to continue to enhance the quality and accuracy of expected

credit loss modelling, has taken steps to refine and re-calibrate the IFRS 9 model suite across the credit cards, vehicle finance

and personal loans resulting in a release of £57.7m across all portfolios. Enhanced segmentation, refreshed data calibration,

and a refinement to model input parameters has indicated the need for a model rebuild underlay at Dec’23. The resultant level

of ECL provision is considered to more accurately reflect the Groups’ current exposure to credit risk and takes into account how

our receivables mix has evolved throughout recent months. It is expected this new model underlay will be retired when the

incumbent IFRS9 models are substituted with the new suite of IFRS 9 models during 1H24.

(b) Affordability

An additional IFRS 9 impairment provision had been created to cover the principal balance of those customers impacted by risk

events which may need to be written off. These risk events arose from minor temporary data misalignment instances impacting

a small number of accounts which have now been remediated. This overlay has been fully released in 2023.

A post-model overlay was calculated to refine provisioning for those customers who have entered into persistent debt 36

months. These customers have been split into two categories: those who have responded to communications and agreed to

pay down their outstanding balance; and those who are making minimum payments but have not responded. This overlay has

been fully released in 2023, as this model drawback was remediated in the new model and hence included in the model overlay.

(d) Cost of living

A cost of living overlay was initially raised in 2021 due to rising inflation and higher energy costs, which might have impacted

customers’ ability to make repayments. The actual effect on the customers’ ability to make repayments was closely monitored

since, however the underlying credit metrics of the book remained stable and showed no signs of significant increase in credit

risk. In 2023, both the inflation and energy costs started stabilising and management decided to gradually release the overlay

with full release by the end of 2023.

(e) Recoveries

A post-model overlay was created in 2021 to account for an estimated reduction in recoveries for debt sold to debt collection

agencies. Updated information and further refinement in understanding the extent of the exposure has led to management fully

releasing this overlay in 2023.

(f) Other

Other includes adjustment for fraud and one day interest adjustment due to known model deficiencies.

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13 Amounts receivable from customers continued

A breakdown of the gross receivable by internal credit risk rating is shown below:

		2023				2022
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
Credit cards	£m	£m	£m	£m	£m	£m	£m	£m
Good	991.7	114.4	—	1,106.1	975.9	90.6	—	1,066.5
Satisfactory	209.1	47.0	—	256.1	140.7	58.1	—	198.8
Lower quality	—	—	114.2	114.2	—	—	186.7	186.7
Total	1,200.8	161.4	114.2	1,476.4	1,116.6	148.7	186.7	1,452.0

Low-quality receivables relate to defaulted accounts and are therefore assigned as stage 3. Satisfactory receivables consist of

accounts that are above a prescribed PD cut-off, dependent on the customer’s credit score. High-quality receivables consist of

accounts that are below a prescribed PD cut-off, dependent on the customer’s credit score.

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Financial statements

Notes to the financial statements continued

13 Amounts receivable from customers continued

Amounts receivable from customers for vehicle finance can be reconciled as follows:

		2023					2022 (restated)
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3 1	Total 1
Vehicle finance	£m	£m	£m	£m	£m	£m	£m	£m
Gross carrying amount
At 1 January	351.0	169.3	452.0	972.3	350.2	112.9	378.6	841.7
Originations	381.6	—	—	381.6	325.5	—	—	325.5
Transfers due to changes in credit risk:
– from stage 1 to stage 2	(159.0)	159.0	—	—	(132.8)	132.8	—	—
– from stage 1 to stage 3	(129.5)	—	129.5	—	(126.6)	—	126.6	—
– from stage 2 to stage 1	18.6	(18.6)	—	—	10.2	(10.2)	—	—
– from stage 2 to stage 3	—	(59.4)	59.4	—	—	(48.5)	48.5	—
– from stage 3 to stage 1	11.9	—	(11.9)	—	11.1	—	(11.1)	—
– from stage 3 to stage 2	—	18.8	(18.8)	—	—	12.1	(12.1)	—
Write offs	—	—	(9.7)	(9.7)	—	—	(3.1)	(3.1)
Repayments	(160.7)	(78.7)	(131.6)	(371.0)	(160.5)	(56.7)	(143.8)	(361.0)
Interest and fee income	66.5	34.1	51.7	152.3	62.8	25.8	52.0	140.6
Other movements	11.3	0.3	7.1	18.7	11.1	1.1	16.4	28.6
At 31 December	391.7	224.8	527.7	1,144.2	351.0	169.3	452.0	972.3
Allowance account
At 1 January	(15.9)	(25.8)	(275.2)	(316.9)	(14.3)	(15.8)	(216.1)	(246.2)
Movements through income statement:
– Originations	(64.4)	—	—	(64.4)	(54.3)	—	—	(54.3)
Drawdowns and net transfers and changes in credit risk:
– from stage 1 to stage 2	21.2	(23.1)	—	(1.9)	19.8	(21.2)	—	(1.4)
– from stage 1 to stage 3	34.4	—	(46.4)	(12.0)	28.7	—	(41.1)	(12.3)
– from stage 2 to stage 1	(0.9)	3.2	—	2.3	(0.3)	1.3	—	1.0
– from stage 2 to stage 3	—	11.6	(20.6)	(9.0)	—	8.8	(15.7)	(6.9)
– from stage 3 to stage 1	(0.3)	—	2.1	1.8	(0.2)	—	2.0	1.8
– from stage 3 to stage 2	—	(1.8)	3.8	2.0	—	(1.1)	2.4	1.3
– remeasurements within existing stage	5.6	5.3	(18.2)	(7.3)	5.1	3.4	(4.0)	4.5
– post-model overlays	2.1	3.6	43.2	48.9	—	0.5	—	0.5
– write offs	—	—	(8.6)	(8.6)	—	—	(11.9)	(11.9)
– debt sales	—	—	—	—	—	—	—	—
– derecognition of stage 3 interest	—	—	33.9	33.9	—	—	33.8	33.8
– recoveries	—	—	(1.7)	(1.7)	—	—	(1.8)	(1.8)
– revaluations	—	—	4.4	4.4	—	—	4.2	4.2
– other movements	—	—	(3.6)	(3.6)	(0.4)	(1.7)	2.9	0.8
Total amount recorded in impairment charges	(2.3)	(1.2)	(11.7)	(15.2)	(1.6)	(10.0)	(29.2)	(40.8)
Movements through allowance account:
– write offs	—	—	9.7	9.7	—	—	3.1	3.1
– derecognition of stage 3 interest	—	—	(33.9)	(33.9)	—	—	(33.8)	(33.8)
– other changes	—	—	4.3	4.3	—	—	(0.8)	(0.8)
Allowance account at 31 December	(18.2)	(27.0)	(306.8)	(352.0)	(15.9)	(25.8)	(275.2)	(316.9)
Reported amounts receivable from customers at 31 December	373.5	197.8	220.9	792.2	335.1	143.5	176.8	655.4
Reported amounts receivable from customers at 1 January	335.1	143.5	176.8	655.4	335.9	97.1	162.5	595.5

1 During 2023, an error in the ECL model was identified, and management has raised a prior period restatement for this item. Remediation of this had an impact

of £9.3m decrease of the allowance account opening position at 1 January 2022.

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Governance Financial statementsStrategic Report Shareholder information

13 Amounts receivable from customers continued

Total vehicle finance interest and fee income from customers of £152.3m (2022: £140.6m) comprises of £150.3m (2022: £137.7m)

interest income and £2.0m (2022: £2.9m) of other income.

Other changes within gross receivables include the capitalisation of broker costs.

Included within vehicle finance receivables is £2.1m (2022: £2.8m) in relation to receivables classified as purchased or originated

as credit impaired under IFRS 9.

Vehicles are held as collateral against a vehicle finance conditional sale agreement until it is repaid in full. The impact of

holding the collateral of £350.4m (2022: £453.4m) on the allowance account as at 31 December 2023 was £54.3m (2022: £54.7m),

representing 85% (2022: 88%) of the balance.

Vehicle finance gross receivables are stated net of unearned finance income of £364.5m (2022: £337.5m).

An increase of 1% of the gross exposure into stage 2 from stage 1 would result in an increase in the allowance account of £0.3m

(2022: £0.4m) based on applying the difference between the coverage ratios from stage 1 to stage 2 to the movement in

gross exposure.

A breakdown of the in-model and post-model overlays for vehicle finance is shown below:

Vehicle finance

		2022
	2023	(restated)
	£m	£m
Core model	403.4	319.4
New model (under)/overlays (note (a))	(47.0)	—
Post-model (under)/overlays	(4.4)	(2.5)
Total allowance account	352.0	316.9

	2023	2022
	£m	£m
Post-model (under)/overlays
Fraud (note (b))	(5.2)	(3.0)
Cost of living (note (c))	—	0.5
Borrowers in financial difficulty (note (d))	0.8	—
Total post-model (under)/overlays	(4.4)	(2.5)
Total (under)/overlays	(51.4)	(2.5)

(a) Model overlay

Relates to new model development executed in 2023. Refer to Cards section for further details.

(b) Fraud

The fraud overlay represents a cohort of live accounts within the vehicle finance portfolio that have been identified as fraud

customers. There is a corresponding adjustment within gross receivables for these accounts.

A cost of living overlay was fully released in 2023. Refer to Cards section for further details.

(d) Borrowers in financial difficulty

An overlay has been recognised for a selection of customer accounts that are deemed to be borrowers in financial difficulty.

A breakdown of the gross receivable by internal credit risk rating is shown below:

		2023				2022
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
Vehicle finance	£m	£m	£m	£m	£m	£m	£m	£m
Good	127.9	46.3	—	174.2	145.9	20.6	—	166.5
Satisfactory	229.9	87.3	—	317.2	174.1	59.7	—	233.8
Lower quality	32.5	29.5	—	62.0	30.1	38.6	—	68.7
Below standard	1.4	61.7	527.7	590.8	0.9	50.4	452.0	503.3
Total	391.7	224.8	527.7	1,144.2	351.0	169.3	452.0	972.3

Internal credit risk rating is based on the internal credit score of a customer at the balance sheet date.

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Financial statements

Notes to the financial statements continued

13 Amounts receivable from customers continued

Amounts receivable from customers for personal loans can be reconciled as follows:

		2023				2022
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
Personal loans	£m	£m	£m	£m	£m	£m	£m	£m
Gross carrying amount
At 1 January	78.1	2.1	5.3	85.5	29.9	1.8	2.0	33.7
Originations	109.4	—	—	109.4	90.0	—	—	90.0
Net transfers and changes in credit risk:
– from stage 1 to stage 2	(22.1)	22.1	—	—	(3.1)	3.1	—	—
– from stage 1 to stage 3	(10.0)	—	10.0	—	(18.7)	—	18.7	—
– from stage 2 to stage 1	5.8	(5.8)	—	—	0.4	(0.4)	—	—
– from stage 2 to stage 3	—	(12.5)	12.5	—	—	(1.7)	1.7	—
– from stage 3 to stage 1	0.2	—	(0.2)	—	0.1	—	(0.1)	—
– from stage 3 to stage 2	—	0.1	(0.1)	—	—	—	—	—
Write offs	—	—	(18.2)	(18.2)	—	—	(6.2)	(6.2)
Repayments	(81.3)	(1.2)	(1.9)	(84.4)	(32.5)	(1.1)	(10.2)	(43.8)
Interest and fee income	24.0	0.7	1.2	25.9	12.0	0.4	0.7	13.1
Other movements	—	—	(0.7)	(0.7)	—	—	(1.3)	(1.3)
At 31 December	104.1	5.5	7.9	117.5	78.1	2.1	5.3	85.5
Allowance account
At 1 January	(5.0)	(0.7)	(3.5)	(9.2)	(3.5)	(0.8)	(1.3)	(5.6)
Originations	(8.4)	—	—	(8.4)	(5.1)	—	—	(5.1)
Movements through income statement:
Drawdowns and net transfers and changes in credit risk:
– from stage 1 to stage 2	5.2	(8.7)	—	(3.5)	0.6	(0.7)	—	(0.1)
– from stage 1 to stage 3	2.2	—	(5.9)	(3.7)	2.4	—	(3.5)	(1.1)
– from stage 2 to stage 1	(0.9)	1.9	—	1.0	—	(0.1)	—	(0.1)
– from stage 2 to stage 3	—	5.3	(7.0)	(1.7)	—	(0.4)	0.4	—
– from stage 3 to stage 1	—	—	—	—	—	—	—	—
– from stage 3 to stage 2	—	—	—	—	—	—	—	—
– remeasurement with existing stage	(0.4)		0.6	0.2	0.6	—	0.1	0.7
– post-model overlays	(0.3)	(0.3)	(0.8)	(1.4)	0.8	0.2	0.1	1.1
– write offs	—	—	(7.9)	(7.9)	—	—	(4.2)	(4.2)
– debt sales	—	—	2.0	2.0	—	—	—	—
– derecognition of stage 3 interest	—	—	1.1	1.1	—	—	0.1	0.1
– recoveries	—	—	1.9	1.9	—	—	0.9	0.9
– revaluations	—	—	—	—	—	—	—	—
– other movements	1.3	0.1	(1.9)	(0.5)	(0.8)	1.1	(1.0)	(0.7)
Total movements through income
statement	(1.3)	(1.7)	(17.9)	(20.9)	(1.5)	0.1	(7.1)	(8.5)
Movements through allowance account:
– write offs	—	—	18.2	18.2	—	—	6.3	6.3
– debt sale proceeds	—	—	(2.0)	(2.0)	—	—	—	—
– derecognition of stage 3 interest	—	—	(1.1)	(1.1)	—	—	(0.1)	(0.1)
– other	—	—	(0.1)	(0.1)	—	—	(1.3)	(1.3)
Allowance account at 31 December	(6.3)	(2.4)	(6.4)	(15.1)	(5.0)	(0.7)	(3.5)	(9.2)
Reported amounts receivable from customers at 31 December	97.8	3.1	1.5	102.4	73.1	1.4	1.8	76.3
Reported amounts receivable from customers at 1 January	73.1	1.4	1.8	76.3	26.4	1.0	0.7	28.1

Total personal loans interest and fee income from customers of £25.9m (2022: £13.1m) comprises solely of interest income.

An increase of 1% of the gross exposure into stage 2 from stage 1 would result in an increase in the allowance account of £0.4m (2022:

£0.2m) based on applying the difference between the coverage ratios from stage 1 to stage 2 to the movement in gross exposure.

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13 Amounts receivable from customers continued

A breakdown of the in-model and post-model overlays for personal loans is shown below:

Personal loans

	2023	2022
	£m	£m
Core model	13.1	8.6
New model (under)/overlays (note (a))	2.0	—
Post-model (under)/overlays	—	0.6
Total allowance account	15.1	9.2

	2023	2022
	£m	£m
Post-model (under)/overlays:
Cost of living (note (b))	—	0.3
Other	—	0.3
Total post-model (under)/overlays	—	0.6
Total (under)/overlays	2.0	0.6

(a) Model overlay

Relates to new model development executed in 2023. Refer to Cards section for further details.

(b) Cost of living

A cost of living overlay was fully released in 2023. Refer to Cards section for further details.

A breakdown of the gross receivable by internal credit risk rating is shown below:

		2023					2022
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
Personal loans	£m	£m	£m	£m	£m	£m	£m	£m
Good	73.1	0.6	—	73.7	62.3	0.6	—	62.9
Satisfactory	31.0	4.9	—	35.9	15.8	1.5	—	17.3
Lower quality	—	—	7.9	7.9	—	—	5.3	5.3
Total	104.1	5.5	7.9	117.5	78.1	2.1	5.3	85.5

Low-quality receivables relate to defaulted accounts and are therefore assigned as stage 3. Satisfactory receivables consist of

accounts that are above a prescribed PD cut-off, dependent on the customer’s credit score. High-quality receivables consist of

accounts that are below a prescribed PD cut-off, dependent on the customer’s credit score.

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Financial statements

Notes to the financial statements continued

13 Amounts receivable from customers continued

The movement in directly attributable acquisition costs included within amounts receivable from customers can be analysed

as follows:

			2023	Second				2022	Second
	Credit	Vehicle	Personal	charge		Credit	Vehicle	Personal	charge
	cards	finance	loans	mortgages	Group	cards	finance	loans	mortgages	Group
Group	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Brought forward	30.3	44.3	1.3	—	75.9	29.4	32.4	0.2	—	62.0
Capitalised	15.1	37.6	1.5	0.1	54.3	11.9	30.2	1.8	—	43.9
Amortised	(13.1)	(25.9)	(1.6)	—	(40.6)	(11.0)	(18.3)	(0.7)	—	(30.0)
Carried forward	32.3	56.0	1.2	0.1	89.6	30.3	44.3	1.3	—	75.9

The impairment charge in respect of amounts receivable from customers can be analysed as follows:

	Group
	2023	2022
Impairment charge on amounts receivable from customers	£m	£m
Credit cards	130.0	16.8
Vehicle finance	15.2	40.8
Personal loans	20.9	8.5
Total impairment charge	166.1	66.1

The average effective interest rate for the year ended 31 December 2023 was 23.9% for credit cards (2022: 25%), 27% for vehicle

finance (2022: 29%) and 25.8% for personal loans (2022: 28%).

The average period to maturity of the amounts receivable from customers within vehicle finance is 35 months (2022: 35 months)

and 1.7 years for personal loans (2022: 1.7 years). Within credit cards, for the majority of customers, there is no fixed term for

repayment other than a general requirement for customers to make a monthly minimum repayment towards their outstanding

balance. This is currently the greater of 3% of the amount owed plus any fees and interest charges in the month and £10.

14 Trade and other receivables

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Other receivables	8.8	25.6	9.5	23.0
Stock	1.8	1.6	—	—
Finance lease receivable (note (a))	6.3	6.2	—	—
Amounts placed on deposit by Group undertaking	—	—	15.0	90.0
Amounts owed by Group undertakings	—	—	887.0	1,083.0
Prepayments and accrued income	39.0	17.2	3.4	1.9
Total trade and other receivables	55.9	50.6	914.9	1,197.9

Amounts placed on deposit by Group undertaking represents funds placed on deposit via Vanquis Bank with the Bank of

England. On a Group basis these amounts are presented within cash and cash equivalents.

There are £nil amounts past due in respect of trade and other receivables (2022: £nil).

Within the Company, an impairment provision of £78.3m (2022: £104.6m) is held against amounts owed by Group undertakings

due in less than one year. This consists of performing loans of £887.0m (2022: £1,172.9m), categorised as stage 1 against which no

provision is recognised, and £78.3m (2022: £104.7m) of loans categorised as stage 3 against which a provision of £78.3m (2022:

£104.6m) has been recognised. Performing loans have no provision recognised as the loan entities have sufficient expected

cash flow to service their obligations and sufficient realisable net assets to sell in the event of a default. Non-performing loans

are close to fully provided as they have either little or no expected cash flow and are recognised at the realisable value of net

assets. The Company has assessed the estimated credit losses for these intercompany loans. Due to the CCD companies

entering voluntary liquidation, there has been a credit to the income statement of £26.3m in 2023 arising from the release of an

intercompany impairment provision previously held, as the balances were settled prior to liquidation. In 2022 a £0.6m charge

was recognised primarily relating to the liquidation of dormant companies and other provision movements (see note 33).

Stock represents cars held by vehicle finance where customer agreements have been terminated.

Amounts owed by Group undertakings are unsecured and repayable on demand or within one year, and generally accrue

interest at rates linked to SONIA.

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14 Trade and other receivables continued

(a) Finance lease receivable

In December 2022, the Group entered into a finance lease arrangement to sub-lease 50% of the existing floor space of its

London office. As a result the Group now recognises a lease receivable, representing the amount of the Group’s net investment

outstanding in respect of the finance lease; 50% of the corresponding right of use asset was also derecognised (see note 17).

A maturity analysis of the amounts receivable under the finance lease is shown below:

	Group
	2023	2022
	£m	£m
Due within one year	—	—
Due between one and five years	3.9	2.9
Due in more than five years	2.9	3.9
Total	6.8	6.8
Unearned finance cost	(0.5)	(0.6)
Total lease receivable	6.3	6.2

Undiscounted lease payments analysed as:

	2023	2022
	£m	£m
Recoverable after 12 months	6.8	6.8
Recoverable within 12 months	—	—
Total	6.8	6.8

Net investment in the lease analysed as:

	2023	2022
	£m	£m
Recoverable after 12 months	6.4	6.3
Recoverable within 12 months	(0.1)	(0.1)
Total	6.3	6.2

The finance lease arrangement does not include variable payments. The average effective interest rate contracted

approximates to 1.6% per annum.

No impairment provision has been recognised against the lease receivable.

15 Investments

	Group
	2023	2022
	£m	£m
Visa shares	5.4	10.7
Total investments	5.4	10.7

Visa shares

The Visa Inc shares represent preferred stock in Visa Inc held by Vanquis Bank Limited following completion of Visa Inc’s

acquisition of Visa Europe Limited on 21 June 2016. In consideration for Vanquis Bank Limited’s interest in Visa Europe Limited,

Vanquis Bank Limited received cash consideration of €15.9m (£12.2m) on completion, preferred stock with an approximate value

of €10.7m and deferred cash consideration of €1.4m which was received in 2019.

The valuation of the preferred stock has been determined using the common stock’s value as an approximation as both classes

of stock have similar dividend rights. However, adjustments have been made for: (i) illiquidity, as the preferred stock is not

tradeable on an open market and can only be transferred to other Visa members; and (ii) future litigation costs which could

affect the valuation of the stock prior to conversion.

As at 31 December 2023, the total fair value of £5.4m of Visa shares comprised preferred stock only. During the year, common

stock (35,200 Class A Common shares) was fully sold on 24 February 2023 for $219.13 per share.

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Financial statements

Notes to the financial statements continued

16 Property, plant and equipment

Group

	Leasehold	Equipment
	land and	and
	buildings	vehicles	Total
	£m	£m	£m
Cost
At 1 January 2023	8.6	23.2	31.8
Additions	1.6	1.7	3.3
Disposals	(1.9)	(3.0)	(4.9)
At 31 December 2023	8.3	21.9	30.2
Accumulated depreciation and impairment
At 1 January 2023	2.8	20.7	23.5
Charged to the income statement	0.1	2.1	2.2
Disposals	(0.9)	(2.7)	(3.6)
At 31 December 2023	2.0	20.1	22.1
Net book value at 31 December 2023	6.3	1.8	8.1
Net book value at 1 January 2023	5.8	2.5	8.3

The loss on disposal of property, plant and equipment in 2023 amounted to £1.3m (2022: loss of £0.9m). The loss comprised

proceeds received of £nil (2022: £nil) less the net book value of disposals of £1.3m (2022: £0.9m).

The charge to the income statement compromises depreciation.

Additions in 2023 and 2022 principally comprise expenditure in respect of the routine replacement of IT equipment.

Group

	Leasehold	Equipment
	land and	and
	buildings	vehicles	Total
	£m	£m	£m
Cost
At 1 January 2022	8.9	21.5	30.4
Additions	1.6	2.0	3.6
Disposals	(1.9)	(0.3)	(2.2)
At 31 December 2022	8.6	23.2	31.8
Accumulated depreciation and impairment
At 1 January 2022	3.6	18.4	22.0
Charged to the income statement – continuing operations	0.1	2.7	2.8
Disposals	(0.9)	(0.4)	(1.3)
At 31 December 2022	2.8	20.7	23.5
Net book value at 31 December 2022	5.8	2.5	8.3
Net book value at 1 January 2022	5.3	3.1	8.4

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16 Property, plant and equipment continued

Company

	Leasehold	Equipment
	land and	and
	buildings	vehicles	Total
	£m	£m	£m
Cost
At 1 January 2023	0.2	12.2	12.4
Additions	—	—	—
Disposals	—	—	—
At 31 December 2023	0.2	12.2	12.4
Accumulated depreciation
At 1 January 2023	0.1	11.4	11.5
Charged to the income statement	—	0.2	0.2
Disposals	—	—	—
At 31 December 2023	0.1	11.6	11.7
Net book value at 31 December 2023	0.1	0.6	0.7
Net book value at 1 January 2023	0.1	0.8	0.9

The profit on disposal of property, plant and equipment in 2023 amounted to £nil (2022: £nil) and represented proceeds received

of £nil (2022: £nil) less the net book value of disposals of £nil (2022: £nil).

Company

	Leasehold	Equipment
	land and	and
	buildings	vehicles	Total
	£m	£m	£m
Cost
At 1 January 2022	0.2	12.2	12.4
Additions	—	—	—
Disposals	—	—	—
At 31 December 2022	0.2	12.2	12.4
Accumulated depreciation
At 1 January 2022	0.1	11.1	11.2
Charged to the income statement	—	0.3	0.3
Disposals	—	—	—
At 31 December 2022	0.1	11.4	11.5
Net book value at 31 December 2022	0.1	0.8	0.9
Net book value at 1 January 2022	0.1	1.1	1.2

17 Right of use assets

	Group		Company
	2023	2022	2023	2022
Group	£m	£m	£m	£m
Cost
At 1 January	71.0	80.0	23.0	23.0
Additions and revaluations	1.8	—	0.9	—
Disposals	—	(9.0)	—	—
At 31 December	72.8	71.0	23.9	23.0
Accumulated depreciation and impairment
At 1 January	38.6	32.1	10.3	7.7
Charged to the income statement – continuing operations	6.9	9.3	2.7	2.6
Impairment	4.1	—	—	—
Disposals	—	(2.8)	—	—
At 31 December	49.6	38.6	13.0	10.3
Net book value at 31 December	23.2	32.4	10.9	12.7
Net book value at 1 January	32.4	47.9	12.7	15.3

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162

Financial statements

Notes to the financial statements continued

17 Right of use assets continued

Lease liabilities are disclosed in note 27.

The additions and revaluations in 2023 relate to a revaluation of a property lease and computer equipment which is leased by

the Group.

The disposals in 2022 relate to a partial sub-lease of the Group’s offices as discussed in note 14.

18 Acquisition of Snoop

The Group completed the acquisition of the entire share capital of Usnoop Limited, which trades as Snoop, on 7 August 2023 for

consideration of £8.7m. Snoop is a money-saving financial technology company with customers across the UK.

The acquisition will provide Snoop with significant scale, allowing access to Vanquis Banking Group’s 1.5 million customers who

will benefit from the app, as well as the support to grow the Snoop proposition. The acquisition marks an important step for the

Group as a specialist banking group allowing it to bring a money management and saving app into its customer proposition.

Costs of £3.0m associated with the acquisition including due diligence, legal, advisory and tax fees have been charged as an

exceptional cost in the year.

An assessment of the fair values of the identifiable assets and liabilities of Snoop as at the acquisition date was performed and

they are as follows:

	Book		Recognised
	value on	Fair value	on
	acquisition	adjustments	acquisition
	£m	£m	£m
Intangible assets (note (a))	—	11.1	11.1
Deferred tax liabilities (note (b))	—	(2.8)	(2.8)
Cash and cash equivalents	0.2	—	0.2
Trade and other receivables	0.6	—	0.6
Trade and other payables	(1.6)	—	(1.6)
Net identifiable (liabilities)/assets acquired	(0.8)	8.3	7.5
Goodwill			1.2
Consideration			8.7

The fair value adjustments applied to Snoop’s net assets comprise:

a) £11.1m attributed to intangible assets, recognising £10.1m of internally generated core platform and technology developed

and used by the Snoop business, and £1.0m in relation to the ‘Snoop’ brand name, which is well recognised within the UK

consumer bank/personal finance app market (see note 20); and

b) the tax effect of the fair value adjustments resulting in the recognition of a deferred tax liability of £2.8m assumed over the

expected useful economic life of the intangible assets acquired.

The fair value of the consideration at the acquisition date consists of:

i) £3.1m of cash consideration;

ii) 2,588,253 of ordinary shares in Vanquis Banking Group plc with a nominal value of £0.5m and a market value of £3.3m. £0.5m

has been recognised as an increase in share capital with the remaining £2.8m being recognised in share premium; and

iii) £2.3m of contingent consideration dependent on the performance of the acquiree by the end of 2026. This has been

determined by an independent third party using a Monte Carlo simulation for determining the future revenues of the

acquiree. The range of outcomes in the contingent consideration payable is not considered to be materially different.

The goodwill of £1.2m represents the difference between the consideration and the fair value of the net assets acquired. In

accordance with the Group’s accounting policies, goodwill is not amortised but is subject to an annual impairment review.

None of the goodwill is expected to be deductible for corporation tax purposes.

Snoop has generated revenues of £0.4m and losses of £2.5m in the period from acquisition to 31 December 2023, which are

included in the consolidated statement of comprehensive income for the year. If Snoop had been part of the Group for the

12 months to 31 December 2023, Group total income would be £489.6m and the statutory loss before tax would be £9.2m.

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19 Goodwill

	Group
	2023	2022
	£m	£m
Cost
At 1 January	73.3	73.3
Additions	1.2	—
At 31 December	74.5	73.3
Accumulated impairment
At 1 January and 31 December	2.1	2.1
Net book value at 31 December	72.4	71.2
Net book value at 1 January	71.2	71.2

Goodwill with a net book value of £71.2m relates to the acquisition of the vehicle finance product in August 2014. The addition to

goodwill in the current year relates to the acquisition of Usnoop Limited and reflects the surplus of consideration over identifiable

net assets acquired (see note 18). Goodwill is tested annually for impairment, or more frequently if there are any indications that

goodwill might be impaired. The recoverable amount is determined from a value in use calculation. The key assumptions used

in the value in use calculation relate to the discount rates and growth rates adopted. Management adopts pre-tax discount

rates which reflect the time value of money and the risks specific to the vehicle finance business. The cash flow forecasts are

based on the most recent financial budgets approved by the Group Board for the next five years and extrapolate cash flows

for the following five years using a terminal growth rate of 2% (2022: 2%). The rate used to discount the forecast cash flows

is 11.0% (2022: 11.0%); this represents the Company’s risk-adjusted cost of capital. No reasonably foreseeable reduction in the

assumptions would give rise to an impairment and therefore no further sensitivity analysis has been presented.

20 Other intangible assets

		2023			2022
	Acquisition	Computer		Acquisition	Computer
	intangibles	software	Total	intangibles	software	Total
Group	£m	£m	£m	£m	£m	£m
Cost
At 1 January	75.0	68.5	143.5	75.0	43.5	118.5
Additions	11.1	19.0	30.1	—	29.2	29.2
Disposals	—	(2.4)	(2.4)	—	(4.2)	(4.2)
At 31 December	86.1	85.1	171.2	75.0	68.5	143.5
Accumulated amortisation and impairment
At 1 January	62.5	17.7	80.2	55.0	11.2	66.2
Charged to the income statement – continuing operations	7.9	10.6	18.5	7.5	8.5	16.0
Disposals	—	(1.9)	(1.9)	—	(2.0)	(2.0)
At 31 December	70.4	26.4	96.8	62.5	17.7	80.2
Net book value at 31 December	15.7	58.7	74.4	12.5	50.8	63.3
Net book value at 1 January	12.5	50.8	63.3	20.0	32.3	52.3

Acquisition intangibles represent the fair value of the broker relationships arising on the acquisition of Moneybarn in August

2014. The intangible asset was calculated based on the discounted cash flows associated with vehicle finance core broker

relationships and is being amortised over an estimated useful life of 10 years. Additions to acquisition intangibles in 2023

comprise £10.1m of internally generated core platform and technology, and £1.0m in relation to the ‘Snoop’ brand name

arising on the acquisition of Snoop on 7 August 2023.

Research and development expenditure recognised within operating costs during 2023 was £0.8m (2022: £1.0m).

Additions to computer software in the year of £19.0m (2022: £29.2m) comprise £18.9m (2022: £28.4m) of internally generated

assets and £0.1m (2022: £0.8m) of externally purchased software.

The £18.9m (2022: £28.4m) of internally generated assets predominantly relates to the development of systems and applications

for the credit cards and personal loans businesses.

The charge for continuing operations includes amortisation of £18.5m (2022: £16.0m).

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Financial statements

Notes to the financial statements continued

21 Investment in subsidiaries

	Company
	2023	2022
	£m	£m
Cost
At 1 January	230.7	291.0
Additions	34.8	11.4
Disposals	(0.2)	(71.7)
At 31 December	265.3	230.7
Accumulated impairment losses
At 1 January	23.3	65.6
Charge to the income statement	0.4	29.4
Disposals	—	(71.7)
At 31 December	23.7	23.3
Net book value at 31 December	241.6	207.4
Net book value at 1 January	207.4	225.4

Included within the £34.8m of additions is:

– the subscription of a further £34.4m of shares in Provident Financial Holdings Limited, as part of the pre-liquidation steps in

relation to placing the CCD companies into members’ voluntary liquidation. The disposals in 2023 are in relation to IFRIC 11

adjustment relating to the share options/awards provided to the subsidiary employees. Under IFRIC 11, the fair value of the

share options/awards issued is required to be treated as capital contribution and an investment in the relevant subsidiary,

net of any share options/awards that have vested; and

– the transfer of the full 100% ordinary share capital of Greenwood Personal Credit to the Company from another Group

company equal to the Company’s net asset value of £0.4m.

The movements in 2022 reflect the steps taken to make a number of dormant and non-trading companies solvent in advance

of them entering members’ voluntary liquidation.

Included within the £11.4m of additions in 2022 is:

– £10.3m in relation to capital injections into dormant or non-trading companies as part of the pre-liquidation steps taken.

Dividends were also paid up to the Company and intercompany balances settled, resulting in an impairment charge

of £29.4m in the year before the companies were disposed; and

– £1.1m (2022: £1.9m disposal) in relation to the IFRIC 11 adjustment.

An investment valuation review was performed at the balance sheet date; a £0.4m (2022: £29.4m) impairment charge has been

recognised in the year. The directors consider the remaining carrying value of investments to be supported by their underlying

assets and cash flow forecasts. The cost, accumulated impairment losses and carrying value of investments at 31 December 2023

are shown below:

Company

		Accumulated
		impairment	Carrying
	Cost	losses	value
	£m	£m	£m
Provident Financial Holdings Limited	231.1	—	231.1
Provident Financial Group Limited (previously Yes Car Credit (Holdings) Limited)	29.9	(22.6)	7.3
Other	4.3	(1.1)	3.2
Net book value at 31 December	265.3	(23.7)	241.6

The following are the subsidiary undertakings which, in the opinion of the directors, principally affect the profit or assets of the

Group or are a guaranteeing subsidiary of the Group’s certain borrowings. A full list of subsidiary undertakings will be annexed to

the next annual return of the Company to be filed with the Registrar of Companies (see note 37). All subsidiaries are consolidated

and held directly by the Company except for those noted below, which are held by wholly owned intermediate companies.

			Country of	Class	%
Company		Activity	incorporation	of capital	holding
Vanquis Bank	Vanquis Bank Limited	Financial services	England	Ordinary	100 1
Moneybarn	Duncton Group Limited	Financial services	England	Ordinary	100 1
	Moneybarn Group Limited	Financial services	England	Ordinary	100 1
	Moneybarn No. 1 Limited	Financial services	England	Ordinary	100 1
Central	Provident Financial Holdings Limited	Intermediate holding company	England	Ordinary	100

1 Shares held by wholly owned intermediate companies.

The above companies operate principally in their country of incorporation.

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22 Retirement benefit asset

(a) Pension schemes – defined benefit

The retirement benefit asset reflects the difference between the present value of the Group’s obligation to current and past

employees to provide a defined benefit pension and the fair value of assets held to meet that obligation. As at 31 December 2023,

the fair value of the assets exceeded the obligation and hence a net pension asset has been recorded.

The Group operates a defined benefit scheme: the Provident Financial Staff Pension Scheme. The scheme is of the funded,

defined benefit type. It is now also closed to future accrual.

The scheme provides pension benefits which were accrued on a final salary and, more recently, on a cash balance basis. With

effect from 1 August 2021, it was fully closed to future accrual and benefits are no longer linked to final salary, although accrued

benefits are subject to statutory inflationary increases.

The scheme is a UK registered pension scheme under UK legislation. The scheme is governed by a Trust Deed and Rules, with

trustees responsible for the operation and governance of the scheme. The trustees work closely with the Group on funding and

investment strategy decisions. The most recent actuarial valuation of the scheme was carried out as at 1 June 2021 by a qualified

independent actuary. The valuation used for the purposes of IAS 19 ‘Employee Benefits’ has been based on the results of the 2021

valuation to take account of the requirements of IAS 19 in order to assess the liabilities of the scheme at the balance sheet date.

Scheme assets are stated at fair value as at the balance sheet date.

The Group is entitled to a refund of any surplus, subject to tax, if the scheme winds up after all benefits have been paid.

As a result, the Group recognises surplus assets under IAS 19.

The Group is exposed to a number of risks, the most significant of which are as follows:

– Investment risk – the liabilities for IAS 19 purposes are calculated using a discount rate set with reference to corporate bond

yields. If the assets underperform this yield a deficit will arise. The scheme has a long-term objective to reduce the level

of investment risk by investing in assets that better match liabilities.

– Change in bond yields – a decrease in corporate bond yields will increase the liabilities, although this will be partly offset

by an increase in matching assets.

– Inflation risk – some of the liabilities are linked to inflation. If inflation increases then liabilities will increase, although this will

be partly offset by an increase in assets. As part of a long-term de-risking strategy, the scheme has increased its portfolio

in inflation matched assets.

– Life expectancies – the scheme’s final salary benefits provide pensions for the rest of members’ lives (and for their spouses’

lives). If members live longer than assumed, then the liabilities in respect of final salary benefits increase.

The net retirement benefit asset recognised in the balance sheet of the Group and the Company is as follows:

			Group and Company
	2023		2022
	£m	%	£m	%
Equities	55.5	11	58.4	11
Corporate bonds	191.0	37	216.4	42
Government bonds	145.1	28	143.0	28
Index linked government bonds	110.9	22	101.5	19
Other quoted securities	9.5	2	0.3	—
Cash and money market funds	0.9	—	1.1	—
Total fair value of scheme assets	512.9	100	520.7	100
Present value of funded defined benefit obligation	(474.7)		(490.0)
Net retirement benefit asset recognised in the balance sheet	38.2		30.7

The Company and the pension trustees have agreed a low-risk investment strategy which involves hedging the inflation and

interest rate risks associated with the liabilities of the pension scheme, whilst also holding a modest allocation to growth funds,

such as equities. This position is reviewed periodically by the trustees, who consult the Company as part of this process.

The valuation of the retirement benefit asset has increased from £30.7m at 31 December 2022 to £38.2m at 31 December 2023.

A high-level reconciliation of the movement is as follows:

Group and Company

	2023	2022
	£m	£m
Pension asset as at 1 January	30.7	112.2
Cash contributions made by the Group	0.8	2.2
Return on assets being held to meet pension obligations in excess of discount rate	(7.8)	(366.2)
Change in demographic assumptions	19.3	5.4
(Decrease)/increase in discount rate used to discount future liabilities	(7.4)	279.1
Change in inflation rate used to forecast pensions	1.1	4.1
Actuarial/membership experience	1.2	(6.6)
Other	0.3	0.5
Pension asset as at 31 December	38.2	30.7

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Financial statements

Notes to the financial statements continued

22 Retirement benefit asset continued

(a) Pension schemes – defined benefit continued

The amounts recognised in the income statement were as follows:

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Administration costs and taxes	(1.1)	(1.6)	(1.1)	(1.6)
Interest on scheme liabilities	(23.0)	(14.4)	(23.0)	(14.4)
Interest on scheme assets	24.4	16.5	24.4	16.5
Net credit recognised in the income statement	0.3	0.5	0.3	0.5

The net credit recognised in the income statement of the Group and the Company has been included within operating costs.

Movements in the fair value of scheme assets were as follows:

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Fair value of scheme assets at 1 January	520.7	898.8	520.7	898.8
Interest on scheme assets	24.4	16.5	24.4	16.5
Actuarial movement on scheme assets	(7.8)	(366.2)	(8.7)	(366.2)
Contributions by the Group/Company	0.8	2.2	0.8	2.2
Net benefits paid out	(25.2)	(30.6)	(25.2)	(30.6)
Fair value of scheme assets at 31 December	512.9	520.7	512.0	520.7

The Group contributions over 2024 are expected to be £0.8m.

Movements in the present value of the defined benefit obligation were as follows:

		Group and Company
	2023	2022
	£m	£m
Present value of the defined benefit obligation at 1 January	(490.0)	(786.6)
Administration costs and taxes	(1.1)	(1.6)
Interest on scheme liabilities	(23.0)	(14.4)
Actuarial movement – experience	1.2	(6.6)
Actuarial movement – demographic assumptions	19.3	5.4
Actuarial movement – financial assumptions	(6.3)	283.2
Net benefits paid out	25.2	30.6
Present value of the defined benefit obligation at 31 December	(474.7)	(490.0)

The liabilities of the scheme are based on the current value of expected benefit payments over the next 80 years. The weighted

average duration of the scheme liabilities is approximately 13 years (2022: 14 years).

In June 2023, the UK High Court issued a ruling in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others

relating to the validity of certain historical pension changes. This case may have implications for other defined benefit

schemes in the UK, although is subject to possible appeal in 2024. The Company is aware of this legal ruling and is assessing

whether there is any potential impact upon the Company although currently no conclusion has been reached; therefore,

no quantification of any potential impact has been determined.

Vanquis Banking Group plc Annual Report and Accounts 2023

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22 Retirement benefit asset continued

(a) Pension schemes – defined benefit continued

The principal actuarial assumptions used at the balance sheet date were as follows:

		Group and Company
	2023	2022
	%	%
Price inflation – RPI	3.10	3.25
Price inflation – CPI	2.60	2.75
Rate of increase to pensions in payment	2.95	3.05
Inflationary increases to pensions in deferment	2.60	2.75
Discount rate	4.65	4.80

The pension increase assumption shown above applies to pensions increasing in payment each year in line with RPI up to

5%. Pensions accrued prior to 2000 are substantially subject to fixed 5% increases each year. In deferment increases prior to

retirement are linked to CPI.

The mortality assumptions are based on the self-administered pension scheme (SAPS) series 3 tables (2022: SAPS series 3 tables):

– female non-pensioners: 105% of the ‘Middle’ table (2022: 105% of the ‘Middle’ table);

– male non-pensioners: 105% of the ‘Middle’ table (2022: 105% of the ‘Middle’ table);

– female pensioners: 102% of the ‘Middle’ table (2022: 102% of the ‘Middle’ table); and

– male pensioners: 99% of the ‘All’ table (2022: 99% of the ‘All’ table).

The above multipliers and table types were chosen following a study of the scheme’s membership. Where the multiplier is

greater than 100%, this reflects a shorter life expectancy within the scheme compared to average pension schemes, with the

opposite being true where the multiplier is less than 100%. Also, the use of the ‘Middle’ table typically leads to slightly lower life

expectancy compared to using the corresponding ‘All’ table.

Future improvements in mortality are based on the Continuous Mortality Investigation (CMI) 2022 model with a long-term

improvement trend of 1.00% per annum with a 50% allowance for experience in 2022 and no allowance for experience in 2020

and 2021 in order to lessen the impact of excess deaths due to coronavirus on future assumed mortality. All other available

parameters for the mortality improvements model were adopted at the default (core) level. Under these mortality assumptions,

the life expectancies of members are as follows:

	Male		Female
	2023	2022	2023	2022
Group and Company	years	years	years	years
Current pensioner aged 65	21.2	21.7	22.9	23.3
Current member aged 45 from age 65	21.1	21.6	23.8	24.3

The table below shows the sensitivity on the defined benefit obligation (not including any impact on assets) of changes in the

key assumptions. Depending on the scenario, there would also be compensating asset movements.

		Group and Company
	2023	2022
	£m	£m
Discount rate decreased by 0.5% (2022: 2%)	30.5	160.0
Inflation increased by 0.1%	2.7	3.0
Life expectancy increased by one year	19.5	19.0

The actual return on scheme assets compared to the expected return is as follows:

		Group and Company
	2023	2022
	£m	£m
Interest on scheme assets	24.4	16.5
Actuarial movement on scheme assets	(7.8)	(366.2)
Actual return on scheme assets	16.6	(349.7)

Actuarial gains and losses are recognised through other comprehensive income in the period in which they occur.

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168

Financial statements

Notes to the financial statements continued

22 Retirement benefit asset continued

(a) Pension schemes – defined benefit continued

An analysis of the amounts recognised in the statement of other comprehensive income is as follows:

		Group and Company
	2023	2022
	£m	£m
Actuarial movement on scheme assets	(7.8)	(366.2)
Actuarial movement on scheme liabilities	14.2	282.0
Total movement recognised in other comprehensive income in the year	6.4	(84.2)
Cumulative movement recognised in other comprehensive income	(148.3)	(154.7)

The history of the net retirement benefit asset recognised in the balance sheet and experience adjustments for the Group is

as follows:

			Group and Company
	2023	2022	2021	2020	2019
	£m	£m	£m	£m	£m
Fair value of scheme assets	512.9	520.7	898.8	933.0	842.6
Present value of funded defined benefit obligation	(474.7)	(490.0)	(786.6)	(853.3)	(764.6)
Retirement benefit asset recognised in the balance sheet	38.2	30.7	112.2	79.7	78.0
Experience (losses)/gains on scheme assets:
– amount (£m)	(7.8)	(366.2)	(20.2)	102.8	67.4
– percentage of scheme assets (%)	(1.5)	(70.3)	(2.2)	11.0	8.0
Experience (gains)/losses on scheme liabilities:
– amount (£m)	(1.2)	6.6	10.3	(4.3)	(0.1)
– percentage of scheme liabilities (%)	0.3	1.3	1.3	(0.5)	—

(b) Pension schemes – defined contribution

The Group operates a Group Personal Pension Plan into which Group companies contribute a proportion of pensionable

earnings of the member (typically ranging between 5.1% and 10.6%) dependent on the proportion of pensionable earnings

contributed by the member through a salary sacrifice arrangement (typically ranging between 3% and 8%). The assets of the

scheme are held separately from those of the Group and Company.

The Group also operates a separate pension scheme for auto-enrolment into which the Company and subsidiaries contribute a

proportion of qualifying earnings of the member of 4%. The assets of the scheme are held separately from those of the Group or

the Company. The pension charge in the consolidated income statement represents contributions paid by the Group in respect

of these plans and amounted to £7.1m for the year ended 31 December 2023 (2022: £8.9m). Contributions made by the Company

amounted to £2.2m (2022: £1.9m). £0.6m of contributions were payable to the fund at the year end (2022: £nil).

The Group contributed £nil in 2023 into individual personal pension plans in the year (2022: £nil).

23 Derivative financial instruments

The Group is counterparty to three derivative financial instruments.

The securitisation balance guarantee (front BGS) swap manages the market risk associated with movements in interest rates

in the accounts of the securitisation. The front BGS is a bespoke over-the-counter interest rate swap that resizes in line with

changes to the size and expected maturity profile of the loans in the securitisation. Only the interest rate risk on the portfolio is

hedged; other risks such as credit risk are managed but not hedged.

The Group balance guarantee swap (back BGS) eliminates the front BGS on consolidation in the Group accounts. The front BGS

manages a risk that exists in the SPV accounts, but does not exist upon consolidation. The back BGS was transacted at historical

rates and in compensation the Group received cash consideration for taking on a liability.

The front and back BGS naturally hedge and no hedge accounting is applied. Hedge accounting was discontinued on the front

BGS in September 2022 with the hedging adjustment amortising over the remaining life of the receivables. Until termination, the

hedging arrangement was accounted for under IAS 39 under the portfolio hedging rules.

The Tier 2 swap is a vanilla unamortising swap that manages the Group’s sensitivity to changes in interest rates arising from

long-dated fixed-rate Tier 2 capital and short-dated Bank of England reserves.

The Tier 2 swap pays annually a floating rate of daily compounded SONIA and receives a fixed annual rate of 3.521% bi-annually.

The swap matures in October 2026.

The Company has entered into eight internal retail deposit swaps with Vanquis Bank Limited during 2023. The rationale for

entering into these swaps was to hedge interest rate risk on deposits of Vanquis Bank Limited. At a Group level the swaps are

fully offset.

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23 Derivative financial instruments continued

The Group has elected to apply fair value hedge accounting in the consolidated accounts under IAS 39. The effectiveness of the

hedge is assessed prospectively using matched terms with a single scenario analysis. The swap has been specifically designed

to match the underlying liability. Retrospectively, the swap only experiences ineffectiveness from different interpolation bases.

	Group		Company
	2023	2022	2023	2022
Fair value of derivatives	£m	£m	£m	£m
Securitisation balance guarantee swap	1.3	11.3	—	—
Group balance guarantee swap	(1.8)	(11.9)	(1.8)	(11.9)
Tier 2 swap	—	(3.4)	—	(3.4)
Internal retail deposit swaps	—	—	(0.2)	—

The internal retail deposit swaps held by the Company relate to an asset of £1.0m and liability of £1.2m.

	Group		Company
	2023	2022	2023	2022
Notional value of derivatives	£m	£m	£m	£m
Securitisation balance guarantee swap	304.7	353.8	—	—
Group balance guarantee swap	304.7	353.8	304.7	353.8
Tier 2 swap	200.0	200.0	200.0	200.0
Internal retail deposit swaps	—	—	380.0	—

	Group		Company
	2023	2022	2023	2022
Fair value adjustment for hedged risk	£m	£m	£m	£m
Securitisation balance guarantee swap (hedge accounting terminated in 2022)	(3.2)	(7.9)	—	—
Tier 2 swap	1.0	4.6	1.0	4.6

The unamortised fair value adjustment for the discontinued portfolio hedge of £3.2m (2022: £7.9m) is included within amounts

receivable from customers (see note 13).

The fair value adjustment for the Tier 2 swap of £1.0m (2022: £4.6m) is included within bank and other borrowings (see note 28).

	Group		Company
	2023	2022	2023	2022
Hedge ineffectiveness	£m	£m	£m	£m
Securitisation balance guarantee swap (hedge accounting terminated in 2022)	—	(1.7)	—	—
Tier 2 swap	0.1	0.1	0.1	0.1
Total	0.1	(1.6)	0.1	0.1

Hedge ineffectiveness is recognised within interest expense.

The total Group hedge ineffectiveness in 2023 was £0.1m (2022: £1.6m credit). The only hedging relationship in the Company

relates to Tier 2 swap with £0.1m ineffectiveness charge in the year (2022: £0.1m).

Had hedge accounting not been applied, the Group would recognise a total credit to the income statement of £3.6m (2022:

£4.4m) and the Company would recognise a total charge of £3.6m (2022: £3.6m).

24 Deferred tax

Deferred tax is a future tax liability or asset resulting from temporary differences between the accounting value of assets and

liabilities and their value for tax purposes or from tax losses carried forward at the reporting date.

Deferred tax arises primarily in respect of: (a) property, plant and equipment which is depreciated on a different basis for

tax purposes (accelerated capital allowances); (b) the Group’s retirement benefit asset; (c) Vanquis Bank’s investment in the

preference shares in Visa Inc which are recognised at fair value for accounting purposes but which are taxed only on disposal;

(d) the opening balance sheet adjustments to restate the IAS 39 balance sheet to an IFRS 9 basis for which tax deductions are

available over 10 years; (e) tax losses carried forward to be relieved against profits in future periods; and (f) other temporary

differences including: (i) deductions for employee share awards which are recognised differently for tax purposes; (ii) certain

cost provisions for which tax deductions are only available when the costs are paid; (iii) the opening balance sheet adjustment in

respect of the change of accounting treatment of directly attributable acquisition costs in Vanquis Bank which is taxable over 10

years; (iv) the opening balance sheet adjustment in respect of the adoption of IFRS 16 ‘Leases’ which is deductible over the average

period of the relevant leases; and (v) the balance guarantee swap entered into as part of the vehicle finance securitisation.

In addition, a deferred tax liability is recognised in respect of the acquisition of vehicle finance relating primarily to the intangible

asset in respect of vehicle finance broker relationships which are amortised in future periods but for which tax deductions are

not available. A deferred tax liability also arose on the acquisition of Snoop relating to the intangible asset in respect of software

development costs which are amortised in future periods but for which tax deductions are not available.

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Financial statements

Notes to the financial statements continued

24 Deferred tax continued

In 2021, changes were enacted to increase the mainstream corporation tax rate from 19% to 25% with effect from 1 April 2023.

At 31 December 2021, deferred tax balances were remeasured at 25%, and in the case of credit cards and loans, at the combined

mainstream corporation tax rate (25%) and bank corporation tax surcharge rate (8%) of 33% to the extent that the temporary

differences on which deferred tax had been calculated were expected to reverse, or the tax loss was expected to be utilised,

after 1 April 2023.

In 2022, further changes were enacted which, with effect from 1 April 2023, reduced the bank corporation tax surcharge rate

from 8% to 3% and increased the bank corporation tax surcharge allowance, being the threshold below which banking profits

are not subject to the surcharge, from £25m to £100m.

To the extent the temporary differences on which deferred tax has been calculated are expected to reverse after 1 April 2023,

deferred tax balances at 31 December 2022 and movements in deferred tax balances during the year were re-measured at

25% and, in the case of credit cards and personal loans, at the combined mainstream corporation tax rate (25%) and bank

corporation tax surcharge rate (3%) of 28% except to the extent the temporary differences reverse when profits from credit cards

and personal loans are expected to below the bank surcharge threshold, in which case deferred tax balances were measured

at the combined rate of 25%. Deferred tax balances at 31 December 2023 in respect of credit cards and loans have been re-

measured at 25% to the extent that the temporary differences to which they relate are expected to reverse when profits from

credit cards and loans are expected to be below the surcharge threshold.

A tax charge of £1.3m (2022: charge of £3.2m) represents the income statement adjustment to deferred tax as a result of these

changes and an additional deferred tax credit of £0.1m (2022: credit of £5.0m) has been taken directly to other comprehensive

income in respect of items reflected in other comprehensive income. Of the tax charge of £1.3m (2022: charge of £3.2m) taken

to the income statement, £1.3m (2022: £3.2m) related to continuing operations and £nil (2022: £nil) to discontinued operations.

The movement in the deferred tax balance during the year can be analysed as follows:

	Group		Company
	2023	2022	2023	2022
Asset/(liability)	£m	£m	£m	£m
At 1 January	14.5	6.9	(5.3)	(22.6)
Charge to the income statement	(2.3)	(10.2)	(0.9)	(3.6)
Acquisition of Snoop	(2.8)	—	—	—
(Charge)/credit on other comprehensive income prior to impact of change
in UK tax rate	(1.5)	16.0	(1.5)	16.0
Impact of change in UK tax rate:
– (charge)/credit to the income statement	(1.3)	(3.2)	—	(0.1)
– (charge)/credit to other comprehensive income	(0.1)	5.0	(0.1)	5.0
At 31 December	6.5	14.5	(7.8)	(5.3)

				2023
	Accelerated				Retirement	Other
	capital	Visa	Tax		benefit	temporary
	allowances	shares	losses	IFRS 9	obligations	differences	Total
Group – asset/(liability)	£m	£m	£m	£m	£m	£m	£m
At 1 January	1.6	(3.0)	0.6	26.3	(7.7)	(3.3)	14.5
(Charge)/credit to the income statement	(0.1)	1.2	(0.6)	(4.6)	(0.3)	2.1	(2.3)
Acquisition of Snoop	—	—	—	—	—	(2.8)	(2.8)
Credit/(charge) on other comprehensive income
prior to change in UK tax rate	—	—	—	—	(1.5)	—	(1.5)
Impact of change in UK tax rate:
– (charge)/credit to the income statement	(0.1)	0.4	—	(2.1)	—	0.5	(1.3)
– credit/(charge) to other comprehensive income	—	—	—	—	(0.1)	—	(0.1)
At 31 December	1.4	(1.4)	—	19.6	(9.6)	(3.5)	6.5

There was no deferred tax asset or liability in relation to discontinued operations at 1 January 2023 and 2022 and 31 December

2023 and 2022.

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24 Deferred tax continued

					2022
					Continuing operations
	Accelerated				Retirement	Other
	capital	Visa	Tax		benefit	temporary
	allowances	shares	losses	IFRS 9	obligations	differences	Total
Group – asset/(liability)	£m	£m	£m	£m	£m	£m	£m
At 1 January	1.9	(3.0)	3.7	35.0	(28.0)	(2.7)	6.9
Charge to the income statement	(0.1)	(0.4)	(3.1)	(4.9)	(0.5)	(1.2)	(10.2)
Credit on other comprehensive income prior to change in UK tax rate	—	—	—	—	16.0	—	16.0
Impact of change in UK tax rate:
– (charge)/credit to the income statement	(0.2)	0.4	—	(3.8)	(0.2)	0.6	(3.2)
– credit to other comprehensive income	—	—	—	—	5.0	—	5.0
At 31 December	1.6	(3.0)	0.6	26.3	(7.7)	(3.3)	14.5

Deferred tax assets on losses and other temporary differences

At 31 December 2023, there were £32.0m of pre-acquisition carried forward UK tax losses in Snoop for which a deferred tax asset

has not been recognised as there are restrictions that apply to the utilisation of pre-acquisition tax losses and therefore the

offset against future profits is not sufficiently certain at this stage. No deferred tax asset has been recognised in respect of the

Group’s capital losses carried forward of £127.4m (2022: £133.1m) as it is not probable that future chargeable gains will be realised

against which these losses can be utilised.

An analysis of the deferred tax liability for the Company is set out below:

			2023					2022
	Accelerated		Other	Retirement		Accelerated		Other	Retirement
	capital	Tax	temporary	benefit		capital	Tax	temporary	benefit
	allowances	losses	differences	obligations	Total	allowances	losses	differences	obligations	Total
Company – asset/(liability)	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January	0.4	0.5	1.5	(7.7)	(5.3)	0.4	3.6	1.4	(28.0)	(22.6)
(Charge)/credit to the income statement	(0.1)	(0.5)	—	(0.3)	(0.9)	—	(3.1)	—	(0.5)	(3.6)
Credit/(charge) on other comprehensive income
prior to impact of change
in UK tax rate	—	—	—	(1.5)	(1.5)	—	—	—	16.0	16.0
Impact of change in UK
tax rate:
– credit/(charge) to the income statement	—	—	—	—	—	—	—	0.1	(0.2)	(0.1)
– Credit/(charge) to other comprehensive income	—	—	—	(0.1)	(0.1)	—	—	—	5.0	5.0
At 31 December	0.3	—	1.5	(9.6)	(7.8)	0.4	0.5	1.5	(7.7)	(5.3)

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172

Financial statements

Notes to the financial statements continued

25 Trade and other payables

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Trade payables	7.5	6.0	—	—
Amounts owed to Group undertakings	—	—	228.7	287.6
Other payables including taxation and social security	5.0	4.6	1.2	1.4
Accruals	31.6	52.2	5.5	15.3
Total trade and other payables	44.1	62.8	235.4	304.3

The amounts owed to Group undertakings are unsecured and accrue interest at rates linked to SONIA. Included within the

amounts owed to Group undertakings is £208.6m (2022: £272.8m) of funding provided from the vehicle finance securitisation

via Provident Financial Holdings Limited.

Included within accruals are £4.8m (2022: £1.2m) of Finance Ombudsman Service (FOS) case fees for amounts payable on cases

referred to FOS.

26 Provisions

						Group
			2023					2022
			Customer					Customer
	Scheme	ROP	compliance	Others	Total	Scheme	Others	compliance	Others	Total
Provisions	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January	1.2	2.0	1.4	0.6	5.2	53.5	2.1	3.4	13.1	72.1
Created in the year	—	—	10.7	0.3	11.0	2.6	—	1.1	—	3.7
Reclassified in the year	—	—	—	0.6	0.6	—	—	1.6	—	1.6
Utilised in the year	(0.2)	—	(8.4)	(0.2)	(8.8)	(54.9)	(0.1)	(1.5)	(7.5)	(64.0)
Released in the year	—	(2.0)	(0.2)	—	(2.2)	—	—	(3.2)	(5.0)	(8.2)
At 31 December	1.0	—	3.5	1.3	5.8	1.2	2.0	1.4	0.6	5.2

		Company
	2023		2022
	Scheme	Total	Scheme	Total
Provisions	£m	£m	£m	£m
At 1 January	0.1	0.1	3.5	3.5
Created in the year	—	—	2.6	2.6
Reclassified in the year	—	—	—	—
Utilised in the year	(0.1)	(0.1)	(6.0)	(6.0)
Released in the year	—	—	—	—
At 31 December	—	—	0.1	0.1

The Scheme of Arrangement (the Scheme): Group: £1.0m (2022: £1.2m); Company: £nil (2022: £0.1m)

The Scheme of Arrangement was sanctioned on 30 July 2021 with the objective to ensure all customers with redress claims are

treated fairly and outstanding claims are treated consistently for all customers who submit a claim under the Scheme.

Customer settlements in relation to the Scheme of Arrangement commenced in 2H22 and the majority of the provision has been

utilised, with only £0.9m of provision remaining as at December 2023. The remaining balance represents unpresented low-value

customer cheques.

Other provisions predominantly include:

ROP provision: £nil (2022: £2.0m)

The Repayment Option Plan (ROP) provision principally reflects the estimated cost of the forward flow of ROP complaints more

generally which may be received and in respect of which compensation may need to be paid. During 2023 it was determined

that no further amounts were expected to be paid and the remaining £2.0m was released through exceptionals in the year.

Customer compliance: £3.5m (2022: £1.4m)

The customer compliance provision relates to general customer compliance matters and includes an element to cover

spurious, speculative complaints submitted by claims management companies (see page 135 for further detail).

Other: £1.3m (2022: £0.6m)

This predominantly relates to onerous contracts which originally related to CCD and the dilapidations provisions.

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27 Lease liabilities

A maturity analysis of the lease liabilities is shown below:

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Due within one year	10.7	11.1	3.7	4.4
Due between one and five years	21.2	28.7	5.3	8.7
Due in more than five years	12.7	14.2	6.4	5.7
Total	44.6	54.0	15.4	18.8
Unearned finance cost	(3.7)	(4.7)	(1.8)	(2.1)
Total lease liabilities	40.9	49.3	13.6	16.7

Right of use assets are disclosed in note 17.

Lease payments for the Group of £11.2m (2022: £10.3m) include: (i) capital repayments of £10.2m (2022: £9.0m); (ii) interest of £1.0m

(2022: £1.2m); and (iii) short-term lease cash outflows of £nil (2022: £0.1m). At 31 December 2023, the Group is also committed

to £nil (2022: £nil) for short-term leases. Total cash outflows for the Company amounted to £4.4m (2022: £2.6m) and include: (i)

capital repayments of £4.0m (2022: £2.2m); and (ii) interest of £0.4m (2022: £0.4m).

28 Borrowings

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Retail deposits	1,950.5	1,100.6	—	—
Bank and other borrowings	583.5	820.0	206.7	370.4
Total	2,534.0	1,920.6	206.7	370.4
Fair value adjustment for hedged risk	(1.0)	(4.6)	(1.0)	(4.6)
Total reported borrowings	2,533.0	1,916.0	205.7	365.8

(a) Facilities and borrowings

A breakdown of borrowings is shown below:

	Group
	2023	2022
	£m	£m
Retail deposits:	1,924.9	1,092.2
– accrued interest	25.6	8.4
Total retail deposits (note (b))	1,950.5	1,100.6
Bank and other borrowings:
– senior bonds (note (e))	—	103.5
– vehicle finance securitisation (note (f))	200.0	275.0
– retail bonds (note (g))	—	60.0
– Tier 2 (note (h))	200.0	200.0
– TFSME (note (i))	174.0	174.0
– bank overdrafts	1.5	1.0
– accrued interest	10.8	10.8
– arrangement fees	(2.8)	(4.3)
Total bank and other borrowings	583.5	820.0
Total borrowings	2,534.0	1,920.6

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174

Financial statements

Notes to the financial statements continued

28 Borrowings continued

(b) Retail deposits

Vanquis Bank Limited is a PRA-regulated bank and is majority funded through retail deposits. As at 31 December 2023, £1,950.5m

(2022: £1,100.6m) of primarily term deposits and some notice and easy access account deposits had been taken. The deposits in

issue at 31 December 2023 have been issued at rates of between 0.1% and 6%.

A reconciliation of the movement in retail deposits is set out below:

Group

	2023	2022
	£m	£m
At 1 January	1,100.6	1,018.5
New funds received	1,100.0	330.0
Maturities	(529.6)	(400.5)
Retentions	313.4	155.5
Cancellations	(68.6)	(13.4)
Interest	34.7	10.5
At 31 December	1,950.5	1,100.6

The maturity of borrowings, together with the maturity of facilities, is as follows:

	2023			2022
	Borrowing		Borrowing
	facilities		facilities
	available	Borrowings	available	Borrowings
Group	£m	£m	£m	£m
Repayable:
On demand (uncommitted)	1.5	1.5	1.0	1.0
In less than one year	1,115.4	1,115.4	966.6	916.6
Between one and two years	803.8	803.8	307.0	307.0
Between two and five years	379.7	379.7	481.1	481.1
In more than five years	200.0	200.0	200.0	200.0
Accrued interest	—	36.4	—	19.2
Arrangement fees	—	(2.8)	—	(4.3)
Total Group	2,500.4	2,534.0	1,955.7	1,920.6

Borrowings are stated after deducting £2.8m (2022: £4.3m) of unamortised arrangement fees and the addition of accrued

interest of £36.4m (2022: £19.2m).

	2023			2022
	Borrowing		Borrowing
	facilities		facilities
	available	Borrowings	available	Borrowings
Company	£m	£m	£m	£m
Repayable:
On demand (uncommitted)	—	—	—	—
In less than one year	—	—	163.5	163.5
Between one and two years	—	—	—	—
Between two and five years	—	—	—	—
In more than five years	200.0	200.0	200.0	200.0
Accrued interest	—	8.2	—	9.3
Arrangement fees	—	(1.5)	—	(2.4)
Total Company	200.0	206.7	363.5	370.4

As at 31 December 2023, the weighted average period to maturity of the Group’s committed facilities, including retail deposits,

was 1.8 years (2022: 2.0 years) and for the Company’s committed facilities was 8.0 years (2022: 5.2 years). Excluding retail

deposits, the weighted average period to maturity of the Group’s committed facilities was 3.7 years (2022: 2.9 years).

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28 Borrowings continued

(d) Interest rate and currency profile of borrowings

The interest rate exposure on borrowings is as follows:

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Fixed	2,157.2	1,471.0	206.7	370.4
Floating	376.8	449.6	—	—
Total	2,534.0	1,920.6	206.7	370.4

All borrowings in 2023 and 2022 are in sterling; therefore, there is no foreign exchange exposure in the current or prior year.

(e) Senior public bonds

On 4 June 2018, the Group issued £250m of five-year fixed-rate bonds carrying a semi-annual coupon of 8.25%. The remaining

£103.5m of bonds were repaid in 2023.

(f) Vehicle finance securitisation

The Group renegotiated the bilateral securitisation facility in July 2023, the facility has a 12-month amortisation period (if not re

financed) commencing in January 2025 and an ultimate maturity date in January 2026.

(g) Retail bonds

The £60m retail bond issued in 2015 with a rate of 5.125% on the Order Book for Retail Bonds (ORB) platform established by the

London Stock Exchange was repaid on its maturity date in October 2023.

(h) Tier 2

On 7 October 2021, the Group issued Tier 2 subordinated bonds for a total amount of £200m. The bonds have a 10.25-year

maturity that is callable at the Group’s discretion between 5 and 5.25 years, and that pays a coupon of 8.875%. The issuance was

written from the Group’s £2bn EMTN Programme.

(i) TFSME

In January 2021, Vanquis Bank Limited, via a special purpose entity, issued a series of asset backed floating rate notes as part

of the securitisation of credit card receivables. The senior notes issued in the transaction have been rated AAAsf/Aaa(sf)/AAAsf

by Fitch Ratings, Kroll Bond Rating Agency and Standard & Poor’s, respectively, and the bonds are listed on the London Stock

Exchange. The majority of the senior rated notes have been placed as collateral with the Bank of England to support borrowing

of £174m from the Bank of England Term Funding Scheme with additional incentives for Small and Medium-sized Enterprises

(TFSME) during 2021, at a rate of 21bps over bank rate.

(j) Undrawn committed borrowing facilities

The undrawn committed borrowing facilities at 31 December were as follows:

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
Expiring within one year	—	50.0	—	—
Expiring within one to two years	—	—	—	—
Expiring in more than two years	—	—	—	—
Total undrawn committed borrowing facilities	—	50.0	—	—

The Group and Company have no undrawn committed borrowing facilities at the end of 2023. In 2022 the Group had undrawn

borrowing facilities of £50m, expiring within one year and the Company had £nil of undrawn committed facilities.

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176

Financial statements

Notes to the financial statements continued

28 Borrowings continued

(k) Weighted average interest rates and periods to maturity

The weighted average interest rate and the weighted average period to maturity of the Group and Company’s fixed-rate

borrowings are as follows:

		Group					Company
		2023	2022		2023		2022
	Weighted	Weighted	Weighted	Weighted	Weighted	Weighted	Weighted	Weighted
	average	average	average	average	average	average	average	average
	interest	period to	interest	period to	interest	period to	interest	period to
	rate	maturity	rate	maturity	rate	maturity	rate	maturity
	%	years	%	years	%	years	%	years
Sterling	5.0	1.8	4.1	2.3	8.9	8.0	8.1	5.2

(l) Fair values

The fair values of the Group and Company’s borrowings are compared to their book values as follows:

		Group 2023		Company 2023
	Book value	Fair value	Book value	Fair value
	£m	£m	£m	£m
Retail deposits	1,950.5	1.916.2	—	—
Bank loans and overdrafts	1.5	1.5	—	—
Securitisation	200.2	200.8	—	—
Tier 2	205.7	184.1	205.7	184.1
TFSME	175.1	175.1	—	—
Total	2,533.0	2,477.7	205.7	184.1

		Group 2022		Company 2022
	Book value	Fair value	Book value	Fair value
	£m	£m	£m	£m
Retail deposits	1,100.6	1,068.7	—	—
Bank loans and overdrafts	1.0	1.0	—	—
Senior public bonds	104.0	104.6	104.0	104.6
Retail bonds	60.6	60.0	60.6	60.0
Securitisation	274.9	286.6	—	—
Tier 2	201.2	187.5	201.2	187.5
TFSME	173.7	173.7	—	—
Total	1,916.0	1,882.1	365.8	352.1

All the above numbers include interest, fees and fair value adjustment for hedged risk.

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29 Financial instruments

(a) Classification and measurement

The following table sets out the carrying value of the Group’s financial assets and liabilities in accordance with the categories of

financial instruments set out in IFRS 9. Assets and liabilities outside the scope of IFRS 9 are shown within non-financial assets/liabilities:

			2023
	Items	Amortised	Non-financial
	held at FVTPL	cost	assets/liabilities	Total
Group	£m	£m	£m	£m
Assets
Cash and cash equivalents	—	743.3	—	743.3
Amounts receivable from customers	—	2,171.9	—	2,171.9
Trade and other receivables	—	15.1	40.8	55.9
Investments held at fair value through profit and loss	5.4	—	—	5.4
Current tax asset	—	—	8.1	8.1
Property, plant and equipment	—	—	8.1	8.1
Right of use assets	—	—	23.2	23.2
Goodwill	—	—	72.4	72.4
Other intangible assets	—	—	74.4	74.4
Retirement benefit asset	—	—	38.2	38.2
Derivative financial instruments	1.3	—	—	1.3
Deferred tax assets	—	—	6.5	6.5
Total assets	6.7	2,930.3	271.7	3,208.7
Liabilities
Trade and other payables	—	44.1	—	44.1
Provisions	—	—	5.8	5.8
Lease liabilities	—	40.9	—	40.9
Retail deposits	—	1,950.5	—	1,950.5
Bank and other borrowings	—	582.5	—	582.5
Derivative financial instruments	1.8	—	—	1.8
Total liabilities	1.8	2,618.0	5.8	2,625.6

The carrying value for all financial assets represents the maximum exposure to credit risk.

			2022
	Items	Amortised	Non-financial
	held at FVTPL	cost	assets/liabilities	Total
Group	£m	£m	£m	£m
Assets
Cash and cash equivalents	—	464.9	—	464.9
Amounts receivable from customers	—	1,905.4	—	1,905.4
Trade and other receivables	—	29.2	21.4	50.6
Investments held at fair value through profit and loss	10.7	—	—	10.7
Current tax asset	—	—	—	—
Property, plant and equipment	—	—	8.3	8.3
Right of use assets	—	—	32.4	32.4
Goodwill	—	—	71.2	71.2
Other intangible assets	—	—	63.3	63.3
Retirement benefit asset	—	—	30.7	30.7
Derivative financial instruments	11.3	—	—	11.3
Deferred tax assets	—	—	14.5	14.5
Total assets	22.0	2,399.5	241.8	2,663.3
Liabilities
Trade and other payables	—	62.8	—	62.8
Provisions	—	—	5.2	5.2
Lease liabilities	—	49.3	—	49.3
Retail deposits	—	1,100.6	—	1,100.6
Bank and other borrowings	—	815.4	—	815.4
Derivative financial instruments	15.3	—	—	15.3
Total liabilities	15.3	2,028.1	5.2	2,048.6

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178

Financial statements

Notes to the financial statements continued

29 Financial instruments continued

(a) Classification and measurement continued

Assets and liabilities outside the scope of IFRS 9 are shown within non-financial assets/liabilities:

		2023
			Non-
	Items		financial
	held at	Amortised	assets/
	FVTPL	cost	liabilities	Total
Company	£m	£m	£m	£m
Assets
Cash and cash equivalents	—	14.7	—	14.7
Trade and other receivables	—	911.5	3.4	914.9
Property, plant and equipment	—	—	0.7	0.7
Right of use assets	—	—	10.9	10.9
Other intangible assets	—	—	1.7	1.7
Investment in subsidiaries	—	—	241.6	241.6
Retirement benefit asset	—	—	38.2	38.2
Derivative financial instruments	1.0	—	—	1.0
Total assets	1.0	926.2	296.5	1,223.7
Liabilities
Trade and other payables	—	235.4	—	235.4
Provisions	—	—	—	—
Lease liabilities	—	13.6	—	13.6
Bank and other borrowings	—	205.7	—	205.7
Derivative financial instruments	3.0	—	—	3.0
Current tax liabilities	—	—	3.1	3.1
Deferred tax liabilities	—	—	7.8	7.8
Total liabilities	3.0	454.7	10.9	468.6

		2022
			Non-
	Items		financial
	held at	Amortised	assets/
	FVTPL	cost	liabilities	Total
Company	£m	£m	£m	£m
Assets
Cash and cash equivalents	—	4.1	—	4.1
Trade and other receivables	—	1,196.0	1.9	1,197.9
Property, plant and equipment	—	—	0.9	0.9
Right of use assets	—	—	12.7	12.7
Other intangible assets	—	—	2.3	2.3
Investment in subsidiaries	—	—	207.4	207.4
Retirement benefit asset	—	—	30.7	30.7
Total assets	—	1,200.1	255.9	1,456.0
Liabilities
Trade and other payables	—	304.3	—	304.3
Provisions	—	—	0.1	0.1
Lease liabilities	—	16.7	—	16.7
Bank and other borrowings	—	365.8	—	365.8
Derivative financial instruments	15.3	—	—	15.3
Deferred tax liabilities	—	—	5.3	5.3
Total liabilities	15.3	686.8	5.4	707.5

(b) Fair values of financial assets and liabilities held at fair value

The Group and Company hold certain financial assets and liabilities at fair value, grouped into Levels 1 to 3 of the fair value

hierarchy on the degree to which the fair value is observable.

Vanquis Banking Group plc Annual Report and Accounts 2023

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29 Financial instruments continued

(b) Fair values of financial assets and liabilities held at fair value continued

The following financial assets and liabilities are held at fair value:

				Group						Company
		2023			2022			2023			2022
	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Investments held at fair value through P&L:
– Visa Inc shares	—	—	5.4	6.1	—	4.6	—	—	—	—	—	—
Derivative held at fair value through P&L:
– securitisation balance guarantee
swap	—	—	1.3	—	—	11.3	—	—	—	—	—	—
– Group balance guarantee swap	—	—	(1.8)	—	—	(11.9)	—	—	(1.8)	—	—	(11.9)
– Tier 2 swap	—	—	—	—	(3.4)	—	—	—	—	—	(3.4)	—
– Internal retail deposit swaps	—	—	—	—	—	—	—	(0.2)	—	—	—	—
Total	—	—	4.9	6.1	(3.4)	4.0	—	(0.2)	(1.8)	—	(3.4)	(11.9)

Level 1 fair value measurements are those derived from quoted market prices in active markets for identical assets and liabilities.

The Group holds Visa Class A Common Stock in Level 1, which was converted from the preferred stock after the sixth anniversary

conversion event. The common stock (35,200 Class A Common shares) was fully sold on 24 February 2023 for $219.13 per share.

Level 2 fair value measurements are those derived from inputs other than quoted market prices included in Level 1 that are

observable for the asset or liability either directly or indirectly. The Tier 2 Swap and internal deposit swaps, which are over-

the-counter vanilla swaps that are not publicly traded, are classified as Level 2 instruments as their valuation can be easily

reproduced with publicly available information.

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are

not based on observable market data (unobservable inputs). The Group holds Visa preferred stock and the balance guarantee

swap in Level 3.

The SPV and Group balance guarantee swaps are classed as Level 3 instruments as, whilst the swaps are linked to SONIA,

they have a non-standard repayment curve that is tailored to match the expected repayment profile of the vehicle finance

receivables. This is a combination of the remaining contractual term and an assumption about prepayment rates. Both of these

are deemed to be unobservable inputs with the prepayment rate being the significant input.

Transfers between the different levels of the fair value hierarchy would be made when the inputs used to measure the fair value

no longer satisfy the conditions required to be classified in a certain level within the hierarchy. There has been a transfer of £6.1m

of Visa Inc shares from Level 3 to Level 1 in 2022, following the conversion and subsequent sale of Class A Common shares.

A 5% movement on the prepayment rate would not have a material impact on the Group’s and Company’s profit before tax.

Visa Inc shares

The valuation has been determined using a combination of observable and non-observable inputs. As the common stock share

price of Visa Inc is readily available, this input is deemed to be observable. However, certain assumptions have been made in

respect of the illiquidity adjustment to the share price and the likelihood of future litigation costs. These inputs are therefore

deemed to be a significant unobservable input.

The following table sets out their movement during the year:

	Group
	2023	2022
	£m	£m
At 1 January	10.7	9.1
Gain recognised in income statement	0.9	1.6
Disposal of investment	(6.2)	—
At 31 December	5.4	10.7

The illiquidity adjustment for the shares still held has been estimated at around 6% and the expected future litigation costs have

been estimated at around 15% of the Visa Inc share price. These assumptions are consistent with 2022.

The higher the illiquidity and future litigation costs the lower the fair value. The sensitivity to the unobservable inputs, in isolation,

is set out in the table below:

	Group
	2023	2022
	£m	£m
Illiquidity +/-1%	0.1	0.1
Future litigation costs +/-1%	0.1	0.1

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Financial statements

Notes to the financial statements continued

29 Financial instruments continued

(b) Fair values of financial assets and liabilities held at fair value continued

Interest rate swap

The Group is counterparty to three external swaps, two of which were entered into in 2022. Three swaps are detailed below:

– Tier 2 swap: transacted to manage the interest rate risk on the Tier 2 capital;

– SPV balance guarantee swap: transacted to manage the interest rate risk on the vehicle finance securitisation in the SPV’s

accounts; and

– Group balance guarantee swap: transacted to reverse the interest rate risk position in the Group accounts created by the

SPV balance guarantee swap.

The Group balance guarantee swap was transacted at historical rates and, in compensation, the Group received cash

consideration for taking on a liability.

The following table sets out the movement during the year:

	Group		Company
	2023	2022	2023	2022
	£m	£m	£m	£m
At 1 January	(4.0)	3.1	(15.3)	—
Additions at historical rates	—	(11.8)	—	(11.8)
Fair value gain/(loss) recognised in income statement	3.5	4.7	13.3	(3.5)
At 31 December	(0.5)	(4.0)	(2.0)	(15.3)

The fair value gain recognised in the Group’s income statement of £3.5m (2022: £4.7m) is before the application of hedge

accounting. The effect of applying hedge accounting reduced the gain to £1.1m (2022: £1.6m). The fair value loss recognised in

the Company’s income statement of £13.3m (2022: £3.6m) is before the application of hedge accounting. The effect of applying

hedge accounting resulted in a gain of £9.7m (2022: £0.1m).

The Company accounts do not include the securitisation balance guarantee swap, therefore do not benefit from natural

hedging that is achieved on consolidation.

The table below shows the fair value of financial assets and liabilities not presented at fair value in the balance sheet:

		2023		2022
	Fair value	Book value	Fair value	Book value
Group	£m	£m	£m	£m
Assets
Cash and cash equivalents	743.3	743.3	464.9	464.9
Amounts receivable from customers	2,780.5	2,171.9	2,485.8	1,905.4
Trade and other receivables	55.9	55.9	50.6	50.6
Total assets	3,579.7	2,971.1	3,001.3	2,420.9
Liabilities
Retail deposits	1,916.2	1,950.5	1,068.7	1,100.6
Bank and other borrowings	561.5	582.5	813.4	815.4
Trade and other payables	44.1	44.1	62.8	62.8
Lease liabilities	40.9	40.9	49.3	49.3
Total liabilities	2,562.7	2,618.0	1,994.2	2,028.1

		2023		2022
	Fair value	Book value	Fair value	Book value
Company	£m	£m	£m	£m
Assets
Cash and cash equivalents	14.7	14.7	4.1	4.1
Trade and other receivables	914.9	914.9	1,197.9	1,197.9
Total assets	929.6	929.6	1,202.0	1,202.0
Liabilities
Bank and other borrowings	184.1	205.7	352.1	365.8
Trade and other payables	235.4	235.4	304.3	304.3
Lease liabilities	13.6	13.6	16.7	16.7
Total liabilities	433.1	454.8	673.1	686.8

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29 Financial instruments continued

Key considerations in the calculation of fair values of those financial assets and liabilities not presented at fair value in the

balance sheet are set out on the next page. Where there is no significant difference between carrying value and fair value

no additional information has been presented.

The fair value of amounts receivable from customers has been derived by discounting expected future cash flows (net of

collection costs) at the credit risk-adjusted discount rate at the balance sheet date. They are categorised within Level 3 as

the expected future cash flows and discount rate are deemed to be significant unobservable inputs.

The fair value of retail deposits has been calculated by discounting the expected future cash flows at the relevant market

interest rate yield curves prevailing at the balance sheet date and they are categorised within Level 3 of the fair value hierarchy

as the expected future cash flows are deemed to be significant unobservable inputs.

Within bank and other borrowings, the Tier 2 capital, senior public bonds and retail bonds are classed as Level 1 as they are

valued within quoted market prices. The TFSME is a floating rate instruments with a fair value equivalent to book value. The fair

value of the securitisation was calculated using a discounted cash flow and is classed as Level 3. Whilst it uses publicly available

information for the discount rate, the cash flow forecast is not publicly available.

30 Share capital

Group and Company

		2023	2022
		Issued and	Issued and
		fully paid	fully paid
Ordinary shares of 20 8⁄11p each	– £m	53.2	52.6
	– number (m)	256.5	253.8

The movement in the number of shares in issue during the year was as follows:

Group and Company

	2023	2022
	m	m
At 1 January	253.8	253.7
Shares issued pursuant to the exercise/vesting of options and awards	0.1	0.1
Shares issued on acquisition of Snoop	2.6	—
At 31 December	256.5	253.8

The shares issued pursuant to the exercise/vesting of options and awards comprised 54,638 ordinary shares (2022: 140,448)

with a nominal value of £11,325 (2022: £29,111) and an aggregate consideration of less than £0.1m (2022: £0.1m).

On 7 August 2023, 2,588,523 ordinary shares with a nominal value of £536,747 were issued as part of the consideration paid

in the acquisition of Snoop.

Vanquis Banking Group plc sponsors the Provident Financial plc 2007 Employee Benefit Trust (EBT) which is a discretionary

trust established for the benefit of the employees of the Group. The Company has appointed SG Kleinwort Hambros Trust

Company (CI) Limited to act as trustee of the EBT. The trustee has waived the right to receive dividends on the shares it holds.

As at 31 December 2023, the EBT held 1,869,980 (2022: 2,946,015) shares in the Company with a cost of £0.4m (2022: £0.6m)

and a market value of £2.4m (2022: £5.6m). The shares have been acquired by the EBT to meet obligations under the Provident

Financial Deferred Bonus Plan, the Restricted Share Plan and the Company Share Option Plan.

31 Share-based payments

The Group issues share options and awards to employees as part of its employee remuneration packages. The Group operates

five equity-settled share schemes: the Long Term Incentive Scheme (LTIS), the Restricted Share Plan (RSP), the Company Share

Option Plan (CSOP), employees’ savings-related share option schemes typically referred to as Save As You Earn schemes (SAYE),

and the Deferred Bonus Plan (DBP).

When an equity-settled share option or award is granted, a fair value is calculated based on the share price at grant date, the

probability of the option/award vesting, the Group’s recent share price volatility, and the risk associated with the option/award.

A fair value is calculated based on the value of awards granted and adjusted at each balance sheet date for the probability

of vesting against performance conditions.

The fair value of all options/awards is charged to the income statement on a straight-line basis over the vesting period of the

underlying option/award.

During 2023, awards/options have been granted under the RSP/CSOP, DBP, LTIS and SAYE (UK) schemes (2022: awards/options

have been granted under the RSP/CSOP and SAYE (UK) schemes).

Vanquis Banking Group plc Annual Report and Accounts 2023

182

Financial statements

Notes to the financial statements continued

31 Share-based payments continued

(a) Equity-settled schemes

The charge to the income statement in 2023 for equity-settled schemes was £4.6m for the Group (2022: £5.1m) and £2.4m for

the Company (2022: £2.9m).

The fair value per award/option granted and the assumptions used in the calculation of the equity-settled share-based

payment charges for the Group and the Company are as follows:

		2023				2022
Group	RSP/CSOP	DBP/PSP	LTIS	SAYE	RSP/CSOP	DBP/PSP	SAYE
	8 Sep 2023 &
Grant date	11 Apr 2023	11 Apr 2023	8 Sep 2023	3 Oct 2023	7 Apr 2022	7 Apr 2022	5 Oct 2022
Share price at grant date (£)	1.17 & 2.31	2.31	1.17	1.19	2.89	2.89	1.75
Exercise price (£)	—	—	—	0.87	—	—	1.43
Vesting period (years)	3	3	4	3 and 5	3	3	3 and 5
Expected volatility	—	—	—	52.0%–56.7%	—	—	60.7%–61.9%
Award/option life (years)	3	3	4	Up to 5	3	3	Up to 5
Expected life (years)	3	3	4	Up to 5	3	3	Up to 5
Risk-free rate	—	—	—	4.7%–4.9%	—	—	4.1%–4.2%
Expected dividends expressed as a dividend yield	—	—	—	3.4%–6.9%	—	—	8.6%–10.9%
Fair value per award/option (£)	0.75 & 1.84	1.84	0.75	0.25–0.26	2.59	2.59	0.43–0.51

The expected volatility is based on historical volatility over the last three or five years depending on the length of the option/

award. The expected life is the average expected period to exercise. The risk-free rate of return is the yield on zero coupon

UK Government bonds of a similar duration to the life of the share option.

A reconciliation of award/share option movements during the year is shown below:

		RSP/CSOP	DBP		LTIS		SAYE
		Weighted		Weighted		Weighted		Weighted
		average		average		average		average
		exercise		exercise		exercise		exercise
		price		price		price		price
Group	Number	£	Number	£	Number	£	Number	£
Outstanding at 1 January 2023	5,106,736	—	586,104	—	8,407	—	2,980,151	1.77
Awarded/granted	4,593,575	—	315,661	—	2,821,336	—	4,739,225	0.87
Lapsed	(2,055,397)	—	—	—	(8,407)	—	(1,869,066)	1.73
Vested	(313,610)	—	(237,193)	—	—	—	—	—
Exercised	(851,703)	—	—	—	—	—	(54,638)	1.82
Outstanding at 31 December 2023	6,479,601	—	664,572	—	2,821,336	—	5,795,672	1.04
Exercisable at 31 December 2023	12,870	—	—	—	—	—	38,292	1.65

Vanquis Banking Group plc Annual Report and Accounts 2023

183

Governance Financial statementsStrategic Report Shareholder information

31 Share-based payments continued

(a) Equity-settled schemes continued

		RSP/CSOP		DBP/PSP	LTIS			SAYE
		Weighted		Weighted		Weighted		Weighted
		average		average		average		average
		exercise		exercise		exercise		exercise
		price		price		price		price
Group	Number	£	Number	£	Number	£	Number	£
Outstanding at 1 January 2022	3,588,001	—	322,991	—	840,192	—	2,935,310	2.15
Awarded/granted	2,376,546	—	348,911	—	—	—	1,447,968	1.43
Lapsed	(857,811)	—	—	—	(831,785)	—	(1,303,236)	2.24
Vested	—	—	(85,798)	—	—	—	—	—
Exercised	—	—	—	—	—	—	(99,891)	1.83
Outstanding at 31 December 2022	5,106,736	—	586,104	—	8,407	—	2,980,151	1.77
Exercisable at 31 December 2022	—	—	—	—	—	—	20,427	2.04

The amounts included in the RSP/CSOP table reflect the total amount of shares awarded under both schemes.

Share awards outstanding under the LTIS at 31 December 2023 had an exercise price of £nil (2022: £nil) and a weighted average

remaining contractual life of 3.8 years (2022: 0.2 years). Share options outstanding under the SAYE schemes at 31 December 2023

had exercise prices ranging from 87p to 323p (2022: 143p to 501p) and a weighted average remaining contractual life of 1.8 years

(2022: 1.8 years). Share awards outstanding under the DBP schemes at 31 December 2023 had an exercise price of £nil (2022: £nil)

and a weighted average remaining contractual life of 1.4 years (2022: 1.43 years). Share awards outstanding under the RSP at 31

December 2023 have an exercise price of £nil (2022: £nil) and a weighted average remaining contractual life of 1.7 years (2022: 1.7

years). Share awards outstanding under the CSOP schemes at 31 December 2023 had exercise prices ranging from 75p to 334p

(2022: 241p to 334p) and a weighted average remaining contractual life of 1.7 years (2022: 1.7 years).

		RSP/CSOP		DBP/PSP		LTIS		SAYE
		Weighted		Weighted		Weighted		Weighted
		average		average		average		average
		exercise		exercise		exercise		exercise
		price		price		price		price
Company	Number	£	Number	£	Number	£	Number	£
Outstanding at 1 January 2023	3,110,201	—	429,067	—	—	—	510,019	1.74
Awarded/granted	3,099,161	—	315,661	—	—	—	888,996	0.87
Lapsed	(1,360,464)	—	—	—	—	—	(362,957)	1.67
Vested	(117,589)	—	(172,863)	—	—	—	—	—
Exercised	(445,254)	—	—	—	—	—	(17,032)	1.82
Outstanding at 31 December 2023	4,286,055	—	571,865	—	—	—	1,019,026	1.10
Exercisable at 31 December 2023	—	—	—	—	—	—	—	—

		RSP/CSOP		DBP/PSP	LTIS		SAYE
		Weighted		Weighted		Weighted		Weighted
		average		average		average		average
		exercise		exercise		exercise		exercise
		price		price		price		price
Company	Number	£	Number	£	Number	£	Number	£
Outstanding at 1 January 2022	1,851,182	—	242,170	—	533,449	—	331,032	2.05
Awarded/granted	1,545,768	—	256,204	—	—	—	338,746	1.43
Lapsed	(299,197)	—	—	—	(533,449)	—	(159,759)	2.00
Vested	—	—	(69,307)	—	—	—	—	—
Transferred	12,448	—	—	—	—	—	—	—
Exercised	—	—	—	—	—	—	—	—
Outstanding at 31 December 2022	3,110,201	—	429,067	—	—	—	510,019	1.74
Exercisable at 31 December 2022	—	—	—	—	—	—	—	—

Vanquis Banking Group plc Annual Report and Accounts 2023

184

Financial statements

Notes to the financial statements continued

31 Share-based payments continued

(a) Equity-settled schemes continued

Share options outstanding under the SAYE schemes at 31 December 2023 had exercise prices ranging from 87p to 323p

(2022: 143p to 323p) and a weighted average remaining contractual life of 1.4 years (2022: 2.2 years). Share awards outstanding

under the DBP/PSP schemes at 31 December 2023 had an exercise price of £nil (2022: £nil) and a weighted average remaining

contractual life of 1.8 years (2022: 1.5 years). Share awards outstanding under the RSP schemes at 31 December 2023 had an

exercise price of £nil (2022: £nil) and a weighted average remaining contractual life of 1.7 years (2022: 1.7 years). Share awards

outstanding under the CSOP schemes at 31 December 2023 had exercise prices ranging from 75p to 334p (2022: 241p to 334p)

and a weighted average remaining contractual life of 1.7 years (2022: 1.7 years).

32 Other reserves

Group

			Share-
	Profit	Capital	based	Total
	retained by	redemption	payment	other
	subsidiary	reserve	reserve	reserves
	£m	£m	£m	£m
At 1 January 2022	0.8	3.6	5.4	9.8
Share-based payment charge (note 31)	—	—	5.1	5.1
Transfer of share-based payment reserve on vesting of share awards	—	—	(2.5)	(2.5)
At 31 December 2022	0.8	3.6	8.0	12.4
At 1 January 2023	0.8	3.6	8.0	12.4
Share-based payment charge (note 31)	—	—	4.6	4.6
Transfer of share-based payment reserve on vesting of share awards	—	—	(4.9)	(4.9)
At 31 December 2023	0.8	3.6	7.7	12.1

The capital redemption reserve represents profits on the redemption of preference shares arising in prior years, together with

the capitalisation of the nominal value of shares purchased and cancelled, net of the utilisation of this reserve to capitalise the

nominal value of shares issued to satisfy scrip dividend elections.

The share-based payment reserve reflects the corresponding credit entry to the cumulative share-based payment charges

made through the income statement as there is no cash cost or reduction in assets from the charges. When options and awards

vest, that element of the share-based payment reserve relating to those awards and options is transferred to retained earnings.

Company

		Share-
	Capital	based	Total
	redemption	payment	other
	reserve	reserve	reserves
	£m	£m	£m
At 1 January 2022	3.6	5.4	9.0
Share-based payment charge (note 31)	—	2.9	2.9
Transfer of share-based payment reserve on vesting of share awards	—	(1.4)	(1.4)
Share-based payment movement in investment in subsidiaries	—	1.1	1.1
At 31 December 2022	3.6	8.0	11.6
At 1 January 2023	3.6	8.0	11.6
Share-based payment charge (note 31)	—	2.5	2.5
Transfer of share-based payment reserve on vesting of share awards	—	(2.6)	(2.6)
Share-based payment movement in investment in subsidiaries	—	(0.2)	(0.2)
At 31 December 2023	3.6	7.7	11.3

Company distributable reserves include: (i) retained earnings, adjusted to reflect the unrealised gain on the retirement

benefit asset; (ii) share-based payment reserve, net of deferred tax and the IFRIC 11 adjustment; and (iii) merger reserve.

The distributable reserves do not include distributable reserves currently held within subsidiary companies.

Vanquis Banking Group plc Annual Report and Accounts 2023

185

Governance Financial statementsStrategic Report Shareholder information

33 Related party transactions

The Company recharges the pension scheme referred to in note 22 with a proportion of the costs of administration and

professional fees incurred by the Company. The total amount recharged during the year was £0.4m (2022: £0.3m) and the

Company amount payable to the pension scheme at 31 December 2023 was £0.2m (2022: £0.2m).

Details of the transactions between the Company and its subsidiary undertakings, which comprise management recharges and

interest charges on intra-group balances, along with any balances outstanding at 31 December, are set out below:

		2023			2022
	Management	Interest	Outstanding	Management	Interest	Outstanding
	recharge	credit	balance	recharge	credit	balance
Company	£m	£m	£m	£m	£m	£m
Vanquis Bank	34.1	(2.6)	37.4	19.9	1.0	114.2
Moneybarn	14.4	—	—	8.5	—	—
CCD	—	—	—	—	—	25.2
Provident Financial Holdings	—	(55.6)	651.7	—	(56.6)	778.0
Other central companies	(15.5)	0.2	62.4	(12.6)	0.3	72.6
Total related party transactions	33.0	(58.0)	751.5	15.8	(55.3)	990.0

The outstanding balance represents the gross intercompany balance receivable to/(payable by) the Company.

During 2022 funds were placed on deposit via Vanquis Bank with the Bank of England. The amount as at 31 December 2023

of £15m (2022: £90m) is included in the amounts receivable from Vanquis Bank.

The outstanding balance represents the gross intercompany balance receivable to/(payable by) the Company. The amounts

receivable from Vanquis Bank include £15m (2022: £90m) in relation to amounts placed on deposit via Vanquis Bank, with the

Bank of England, the year-end management recharges and Group relief on trading losses which were settled shortly after the

year end by Vanquis Bank.

The following facilities are provided from the Company via Provident Financial Holdings (PFH), the intermediate holding company,

to its subsidiaries: (i) £684m facility provided to Moneybarn No. 1 Limited and an upwards funding facility of £396m provided from

Moneybarn No. 1 Limited to PFH; and (ii) £85m facility to PFG Corporate Services Limited. £50m and £114m facilities were provided

directly to PFH from the Company. The intercompany loans accrue interest at the Company’s monthly weighted average cost of

funds plus a margin.

The net credit (2022: charge) to the income statement for both intercompany and investment provisions in 2023 is £25.9m

(2022: £28.8m).

Dividends were received totalling £0.4m in 2023 as part of the CCD pre-liquidation steps before they were placed into members’

voluntary liquidation. In 2022 £20.2m of dividends were received in relation to non-trading and dormant companies as part

of similar steps. Additionally, in 2022, PFH approved and paid dividends to the Company totalling £95.1m and PFH received

equivalent dividends from Vanquis Bank.

There are no transactions with directors other than those disclosed in the Directors’ Remuneration Report.

34 Contingent liabilities

During the ordinary course of business the Group is subject to other complaints and threatened or actual legal proceedings

(including class or group action claims) brought by or on behalf of current or former employees, customers, investors or third

parties. This extends to legal and regulatory reviews, challenges, investigations and enforcement actions combined with tax

authorities taking a view that is different to the view the Group has taken on the tax treatment in its tax returns. It also extends to

tax authorities taking the view that VAT exempt supplies received by the Group from UK-based suppliers should be subject to VAT.

All such material matters are periodically assessed, with the assistance of external professional advisors, where appropriate, to

determine the likelihood of the Group incurring a liability.

In those instances where it is concluded that it is more likely than not that a payment will be made, a provision is established for

management’s best estimate of the amount required at the relevant balance sheet date.

In some cases it may not be possible to form a view, for example because the facts are unclear or because further time is

needed to properly assess the merits of the case, and no provisions are held in relation to such matters.

Vanquis Banking Group plc Annual Report and Accounts 2023

186

Financial statements

Notes to the financial statements continued

35 Reconciliation of (loss)/profit after taxation to cash (used in)/generated from operations

		Group		Company
		2023	2022	2023	2022
	Note	£m	£m	£m	£m
(Loss)/profit after taxation		(6.0)	77.4	34.5	64.1
Adjusted for:
– tax charge/(credit)	7	1.6	22.0	3.7	(4.0)
– finance costs	4	113.4	65.0	57.3	35.7
– finance income		(30.3)	(7.5)	(90.6)	(57.2)
– dividends received	33	—	—	(0.4)	(115.3)
– share-based payment charge	31	4.6	5.1	2.5	2.9
– retirement benefit (credit)/charge	22	(0.3)	(0.5)	(0.3)	(0.5)
– amortisation of intangible assets	20	18.5	16.0	0.4	—
- exceptional impairment of ROU asset		4.1	—	—	—
– provisions created in the year	26	11.0	3.7	—	2.6
– provisions released in the year	26	(0.2)	—	—	—
– exceptional release of provisions	26	(2.0)	(8.2)	—	—
– provisions utilised in the year	26	(8.8)	(64.0)	(0.1)	(6.0)
– depreciation of property, plant and equipment and right of use assets	16	9.1	12.1	2.9	2.9
– loss on disposal of property, plant and equipment	16	1.3	0.9	—	—
– loss on disposal of intangible assets	20	0.5	2.2	0.5	—
– provision for investment impairment		—	—	0.4	29.4
– provision for intercompany impairment		—	—	(26.3)	(1.8)
– hedge ineffectiveness	23	—	—	—	(1.1)
– proceeds from derivatives		—	11.8	—	11.8
– fair value movements on Visa shares	15	(1.1)	(1.6)	—	—
– contributions into the retirement benefit scheme	22	(0.8)	(2.2)	(0.8)	(2.2)
Changes in operating assets and liabilities:
– amounts receivable from customers		(261.8)	(226.3)	—	—
– trade and other receivables		(5.8)	(22.8)	344.7	(55.5)
– trade and other payables		(22.0)	(31.2)	(80.4)	(12.4)
Cash (used in)/generated from operations		(175.0)	(148.1)	248.0	(106.6)

The increase in amounts receivable from customers of £261.8m (2022: £226.3m) includes the non-cash movement in the

impairment provision as set out below.

Group

	2023	2022
	£m	£m
Cash movement in amounts receivable from customers	(231.1)	(217.2)
Non-cash provision movement – allowance account	(30.7)	(9.1)
Net movement in amounts receivable from customers	(261.8)	(226.3)

Vanquis Banking Group plc Annual Report and Accounts 2023

187

Governance Financial statementsStrategic Report Shareholder information

35 Reconciliation of profit/(loss) after taxation to cash (used in)/generated from operations

continued

The table below details changes in the Group and Company’s liabilities arising from financing activities, including both cash and

non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be,

classified in the cash flow statement as cash flows from financing activities.

					2023
			Cash changes				Non-cash changes
								Lease
						Included		additions
	1 January	Financing	Lease	Amortised	Interest	within		and	31 December
	2023	cash flows	payments	fees	paid	overdrafts	Derivatives	disposals	2023
Group	£m	£m	£m	£m	£m	£m	£m	£m	£m
Total borrowings (note 28)	(1,916.0)	(576.7)	—	(1.5)	(34.7)	(0.5)	(3.6)	—	(2,533.0)
Lease liabilities (note 27)	(49.3)	—	11.2	—	(1.0)	—	—	(1.8)	(40.9)
Total	(1,965.3)	(576.7)	11.2	(1.5)	(35.7)	(0.5)	(3.6)	(1.8)	(2,573.9)

					2022
			Cash changes				Non-cash changes
								Lease
						Included		additions
	1 January	Financing	Lease	Amortised	Interest	within		and	31 December
	2022	cash flows	payments	fees	paid	overdrafts	Derivatives	disposals	2022
Group	£m	£m	£m	£m	£m	£m	£m	£m	£m
Total borrowings (note 28)	(1,863.7)	(41.6)	—	(7.4)	(10.5)	2.6	4.6	—	(1,916.0)
Lease liabilities (note 27)	(58.9)	—	10.8	—	(1.2)	—	—	—	(49.3)
Total	(1,922.6)	(47.4)	10.8	(7.4)	(4.3)	2.6	4.6	—	(1,963.7)

				2023
			Cash changes		Non-cash changes			Lease
							Included	additions
	1 January	Financing	Lease	Amortised	Interest		within	and	31 December
	2023	cash flows	payments	fees	paid	Derivatives	overdrafts	disposals	2023
Company	£m	£m	£m	£m	£m	£m	£m	£m	£m
Total borrowings (note 28)	(365.8)	163.5	—	(0.8)	1.0	(3.6)	—	—	(205.7)
Lease liabilities (note 27)	(16.7)	—	4.4	—	(0.4)	—	—	(0.9)	(13.6)
Total	(382.5)	163.5	4.4	(0.8)	0.6	(3.6)	—	(0.9)	(219.3)

				2022
			Cash changes		Non-cash changes
							Included
	1 January	Financing	Lease	Amortised	Interest		within	31 December
	2022	cash flows	payments	fees	paid	Derivatives	overdrafts	2022
Company	£m	£m	£m	£m	£m	£m	£m	£m
Total borrowings (note 28)	(395.3)	30.0	—	(1.5)	(3.6)	4.6	—	(365.8)
Lease liabilities (note 27)	(18.9)	—	2.6	—	(0.4)	—	—	(16.7)
Total	(414.2)	30.0	2.6	(1.5)	(4.0)	4.6	—	(382.5)

36 Post-balance sheet events

There were no post balance sheet events to disclose.

Vanquis Banking Group plc Annual Report and Accounts 2023

188

Financial statements

Notes to the financial statements continued

37 Details of subsidiary undertakings

The subsidiary undertakings of the Group at 31 December 2023 are shown below. The Company is the parent or ultimate parent

of all subsidiaries and they are all 100% owned by the Group.

	Company
Company name	number
Registered at No. 1 Godwin Street, Bradford BD1 2SU:
Provident Financial Holdings Limited	13061852
Provident SPV Limited	12988335
Vanquis Bank Limited	2558509
N&N Simple Financial Solution Limited	3803565
Cheque Exchange Limited	2927947
Provident Investments Limited	4541509
PFG Corporate Services Limited	13423666
Provfin Limited	1879771
Provident Yes Car Credit Limited	4253314
Provident Financial Group Limited	194214
Yes Car Credit Limited	3459042
Aquis Cards Limited	7036307
Provident Financial Trustees (Performance Share
Plan) Limited	4625062
Provident Personal Credit Limited	00146091
Provident Financial Management Services Limited	00328933
Greenwood Personal Credit Limited	00125150
HT Greenwood Limited	00954387

, 2

1, 2

	Company
Company name	number
Registered at Athena House, Bedford Road, Petersfield, Hampshire GU32 3LJ:
Moneybarn No. 1 Limited	4496573
Duncton Group Limited	6308608
Moneybarn Group Limited	4525773
Moneybarn Limited	2766324
Registered at 10 Norwich Street, London EC4A 1BD:
Usnoop Limited	11797870
Registered at 1 Bridgewater Place, Water Lane, Leeds, West Yorkshire, LS11 5QR:
Provident Limited	00575965
Provident Print Limited	02211204
Provident Family Finance Limited	00912244
Provfin Investments Limited	00953919
Provfin No.1 Limited	00642504
Moneybarn No.4 Limited	08582214
Registered at C/O Dwf LLP, 2 Semple Street, Edinburgh EH3 8BL:
Lawson Fisher Limited	SC004758

1, 2

1 Companies whose immediate parent is not Vanquis Banking Group plc.

2 As part of the continued rationalisation of the Group these companies

have been placed into members voluntary liquidation.

The following companies act as a vehicle to allow the securitisation of the Moneybarn customer receivables and Vanquis Bank

Limited’s TFSME. These companies are not owned by Vanquis Banking Group plc but form part of the consolidated Group due to

meeting the requirements of IFRS 10 ‘Consolidated Financial Statements’.

Company name

Company

number

Registered at 5th Floor, 100 Wood Street, London, England EC2V 7EX:

Moneybarn Financing Limited 12323134

Company name

Company

number

Registered at 5th Floor, 5 Churchill Place, London, England E14 5HU:

Oban Cards 2021-1 Holdings Limited 12754762

Oban Cards 2021-1 PLC 12757121

Oban Cards Receivables Trustee Limited 12756504

The following subsidiaries are taking an audit exemption and are therefore exempt from the requirement to the audit of

accounts under section 479A of the Companies Act 2006.

Company name

Company

number

Provident Investments Limited 4541509

N&N Simple Financial Solution Limited 3803565

Provfin Limited 1879771

Provident Yes Car Credit Limited 4253314

Provident Financial Group Limited 194214

Duncton Group Limited 6308608

Moneybarn Group Limited 4525773

Cheque Exchange Limited 2927947

Lawson Fisher Limited SC004758

On 21 December 2023, the Company sold 12 of their subsidiaries, First Tower (LP) 1 - 12 for consideration equal to their net asset values.

Vanquis Banking Group plc Annual Report and Accounts 2023

189

Governance Financial statementsStrategic Report Shareholder information

In addition to statutory results and KPIs reported under International Financial Reporting Standards (IFRS), the Group

provides certain alternative performance measures (APMs). These APMs are used internally by management and

are also deemed helpful in understanding the Group’s performance. These non-statutory measures should not be

considered as replacements for IFRS measures.

Definitions, numerical reconciliations and relevance of APMs presented within this report are set out below. The definition of these

non-statutory measures may not be comparable to similarly titled measures reported by other companies. All the below APMs

are on a continuing operations basis.

APM Method of calculation Relevance

Adjusted profit

before tax

A reconciliation of adjusted profit before tax from statutory (loss)/profit for the

year attributable to equity shareholders is provided on the income statement;

see page 124.

Adjusted profit before tax for

continuing operations excludes

the impact of amortisation of

acquisition intangibles and

exceptional items and is used

to provide further clarity on the

ongoing, underlying financial

performance of the divisions

and Group.

Net interest

margin (NIM)

Interest income less interest expense for the 12 months ended 31 December

as a percentage of average gross receivables.

2023

£m

2022

£m

Interest income 556.0 491.5

Interest expense (113.4) (58.8)

Net interest income 442.6 432.7

Average gross receivables 2,325.0 2,039.4

NIM (%) 19.0% 21.2%

This measure shows the returns

generated from customers to allow

comparison to other banks and

banking groups.

Risk-adjusted

margin

Total income less impairment charges for the 12 months ended 31 December

as a percentage of average gross receivables.

2023

£m

2022

£m

Total income 488.8 480.7

Impairment (166.1) (66.1)

Risk-adjusted income 322.7 414.6

Average gross receivables 2,325.0 2,039.4

Risk-adjusted margin (%) 13.9% 20.3%

This measure shows the

returns from customers after

impairment charges.

Asset yield Interest income received from customers for the 12 months ended 31

December as a percentage of average gross receivables.

2023

£m

2022

£m

Interest income 556.0 491.5

Less: Non-customer interest income (30.0) (7.5)

Customer interest income 526.0 484.0

Average gross receivables 2,325.0 2,039.4

Asset yield (%) 22.6% 23.7%

This measure shows the returns

generated from customer

receivables to allow comparison to

other banks and banking groups.

Alternative performance measures

Vanquis Banking Group plc Annual Report and Accounts 2023

190

Financial statements

APM Method of calculation Relevance

Cost of funds

Interest expense including allocation to discontinued operations, less non

funding items, as a percentage of average funding balances. Average

funding balances are defined as average principal balances owed to

lenders, excluding tier 2 debt capital and capitalised fees for the 13 months

ended 31 December 2023.

2023

£m

2022

£m

Interest expense 113.4 58.8

Less: Interest on tier 2 (17.7) (17.8)

Less: Swap interest (3.2) 1.2

Less: Fees and IFRS 16 interest (3.2) (4.1)

Add back: Discontinued operations — 6.2

Funding interest 89.3 44.3

Funding balances (average) 2,025.3 1,567.5

Cost of funds (%) 4.4% 2.8%

This measure shows the cost of

funding the business (primarily

our customer receivables) to allow

comparison to other banks and

banking groups.

Cost of risk Impairment charges for the 12 months ended 31 December as a percentage

of average gross receivables.

2023

£m

2022

£m

Impairment charges (166.1) (66.1)

Average gross receivables 2,325.0 2,039.4

Cost of risk (%) 7.1% 3.2%

This measure shows the cost of

impairment charges on customer

receivables to allow comparison to

other banks and banking groups.

Average gross

receivables

Average of gross customer interest earning balances for the 13 months

ended 31 December.

2023

£m

2022

£m

Credit cards 1,416.9 1,331.9

Vehicle finance 784.7 656.6

Personal loans 123.1 50.9

Second charge mortgages 0.3 —

Total average gross receivables 2,325.0 2,039.4

This is used to smooth the

seasonality of receivables across

the divisions in calculating

performance KPIs.

Cost:income

ratio

Operating costs, excluding exceptional items, as a percentage of total income

for the 12 months ended 31 December.

2023

£m

2022

£m

Total income 488.8 480.7

Operating costs (297.8) (288.0)

Cost:income ratio 60.9% 59.9%

This ratio is a measure of the

efficiency of the Group’s cost base.

Adjusted basic

earnings per

share (EPS)

Profit after tax, excluding the amortisation of acquisition intangibles and

exceptional items, divided by the weighted average number of shares in issue

(see note 8 for more details).

This is used to assess the Group’s

operational performance from

continuing operations per ordinary

share. It removes the effect

of amortisation of acquisition

intangibles and exceptional items.

Adjusted return

on required

equity (RORE)

Adjusted profit after tax for the 12 months ended 31 December as a

percentage of the Group’s average PRA regulatory capital requirement

including PRA buffers for the 13 months ended 31 December.

2023

£m

2022

£m

Adjusted profit before tax 24.9 126.6

Tax charge (7.7) (29.4)

Adjusted profit after tax 17.2 97.2

Average equity requirement 425.5 438.1

RORE 4.0% 22.2%

This demonstrates how well the

Group’s returns are reinvested

and is an indicator of its

growth potential.

Alternative performance measures continued

Vanquis Banking Group plc Annual Report and Accounts 2023

191

Governance Financial statementsStrategic Report Shareholder information

APM Method of calculation Relevance

Adjusted return

on tangible

equity (ROTE)

Adjusted profit after tax net of fair value gains for the 12 months ended

31 December as a percentage of average adjusted tangible equity for the

13 months ended 31 December. Adjusted tangible equity is stated as equity

after deducting the Group’s pension asset, net of deferred tax, and the fair

value of derivative financial instruments, net of deferred tax less intangible

assets and goodwill.

2023

£m

2022

£m

Adjusted profit before tax 24.9 126.6

Tax charge (7.7) (29.4)

Net fair value gains (4.7) (3.7)

Tax on net fair value gains 1.2 0.7

Adjusted profit after tax net of fair value gains 13.7 94.2

Average tangible equity

Average equity as per balance sheet 585.2 617.8

Average pension asset (28.5) (75.9)

Average deferred tax on pension asset 7.1 19.0

Average derivative financial instruments 8.2 (2.6)

Average deferred tax on derivative financial

instruments (2.1) 0.7

Average adjusted equity 569.9 559.0

Average intangible assets (67.7) (55.8)

Average goodwill (71.7) (71.2)

Average tangible equity 430.5 432.0

ROTE 3.2% 21.8%

This demonstrates how well the

Group’s returns are generated from

its tangible equity, removing the

impact of whether development

has occurred through organic

or inorganic growth.

Funding

headroom

Committed bank and debt facilities less borrowings on those facilities and

amounts committed to further syndicated bank facility reduction, plus

available cash and liquid resources (see note 28 for more details).

This represents the difference

between the total amount of

committed contractual debt

facilities provided by banks, bond

holders and other lenders and the

amount of funds drawn on those

facilities plus cash held on deposit.

Liquidity Liquidity is the sum of all liquid resources held by Vanquis Bank Limited in

the Bank of England reserve account, cash held with the relationship banks

(net of restricted funds) and available undrawn committed borrowing facilities

(in 2022).

Customer

satisfaction

The rate at which surveyed customers were satisfied (or more than satisfied)

with the service they have been provided.

Common

Equity Tier 1

(CET1) ratio

The ratio of the Group’s CET1 to the Group’s risk-weighted assets measured

in accordance with the CRR (see page 140 for more details).

The CET1 ratio is a key measure of

whether a firm has adequate CET1

to cover the risks associated with

its assets.

Total capital

ratio (TCR)

The ratio of the Group’s total regulatory capital (own funds) to the Group’s

risk-weighted assets measured in accordance with the CRR.

The total capital ratio is a key

measure of whether a firm has

adequate total regulatory capital

to cover the risks associated with

its assets.

Regulatory

capital

Common Equity Tier 1 (CET1) capital is the sum of the Group’s equity as

calculated in accordance with IFRS, an accrued foreseeable dividend and

regulatory adjustments. Tier 2 is the sum of capital instruments meeting

the criteria for Tier 2 as set out in the Capital Requirements Regulation (CRR).

Total available regulatory capital is the sum of these two elements for the

Group (as the Group does not hold any additional Tier 1 instruments). The

calculation is set out under capital risk management on page 140.

1 Management has discontinued the use of interest margin in the current year and replaced this with cost of funds. Cost of funds provides a more appropriate

measure and calculation of funding the Groups business than the previous measure.

2 In the current year management took the decision to no longer present Return on equity (ROE) or Return on assets (ROA) as they no longer consider them to

be appropriate measures of the Group’s performance.

Vanquis Banking Group plc Annual Report and Accounts 2023

192

Shareholder information

Information for shareholders

Share price

The Company’s shares are listed

on the London Stock Exchange

under share code ‘VANQ’. The share

price is quoted daily in a number

of national newspapers and is

available on the Group’s website

at www.vanquisbankinggroup.com.

Tax on dividends

Please refer to HMRC guidance

regarding the taxation of dividends paid

by the Company.

Registrar

The Company’s registrar is:

Link Group

Central Square

29 Wellington Street

Leeds

LS1 4DL

Shareholder helpline

For information relating to your shares call:

+44 (0)371 664 0300

Website helpline

For information on using our website call:

+44 (0)371 664 0391

Calls to 0371 are charged at the

standard geographic rate and will

vary by provider.

Calls outside the United Kingdom

are charged at the applicable

international rate.

We are open between 9.00am and

5.30pm, Monday to Friday excluding

public holidays in England and Wales.

Link Signal Shares

Link Asset Services offers a share

portal service which enables

registered shareholders to manage

their shareholdings quickly and

easily online. Once registered for this

service, you will have access to your

personal shareholding and a range

of services including: setting up or

amending dividend bank mandates,

proxy voting and amending personal

details. For further information visit

www.signalshares.com.

Link Dividend Reinvestment

Plan

Link Asset Services offers a Dividend

Reinvestment Plan whereby

shareholders can acquire further shares

in the Company by using their cash

dividends to buy additional shares.

For further information contact Link

Asset Services:

Telephone: 0371 664 0381

(from within the UK)

Calls are charged at the standard

geographic rate and will vary by

provider. Calls outside the UK will be

charged at the applicable international

rate. Lines are open between 9.00am

and 5.30pm, Monday to Friday excluding

public holidays in England and Wales.

Telephone: +44 371 664 0381

(from outside the UK)

Special requirements

A PDF version of the full Annual Report

and Financial Statements is available

on our website.

Advisors

Independent auditor

Deloitte LLP

4 Brindley Place

Birmingham

B1 2HZ

Company advisors and stockbrokers

Barclays

2 Churchill Place

Canary Wharf

London

E14 5RB

Numis Securities Limited

10 Paternoster Square

London

EC4M 7DX

Shore Capital

Cassini House

55-59 St. James’s Street

London

SW1A 1LD

Fenchurch Advisory Partners LLP

110 Bishopsgate

London

EC2N 4AY

Solicitors

Clifford Chance LLP

10 Upper Bank Street

London

E14 5JJ

Herbert Smith Freehills LLP

Exchange House

12 Primrose Street

London

EC2A 2EG

Addleshaw Goddard LLP

Milton Gate

60 Chiswell Street

London

EC1Y 4AG

TLT LLP

1 Redcliff Street

Bristol

BS1 6TP

Company details

Registered office and contact details:

Vanquis Banking Group PLC

No. 1 Godwin Street

Bradford

West Yorkshire

England

BD1 2SU

Telephone:

+44 (0)1274 351 351

Fax:

+44 (0)1274 730 606

Website:

www.vanquisbankinggroup.com

Company number

668987

Vanquis Banking Group plc’s commitment to environmental issues is reflected in this Annual Report,

which has been printed on Magno Satin, an FSC

certified material. This document was printed by Park

Communications using its environmental print technology, which minimises the impact of printing on

the environment, with 99% of dry waste diverted from landfill. Both the printer and the paper mill are

registered to ISO 14001.

CBP024118

Vanquis Banking Group plc Annual Report and Accounts 2023

Vanquis Banking Group

No. 1 Godwin Street

Bradford

BD1 2SU

United Kingdom

+44 (0)1274 351 351

www.vanquisbankinggroup.com

Company number 668987

View and download the online

version here:

www.vanquisbankinggroup.com/

shareholder-hub/annual-report-2023

Vanquis Banking Group plc Annual Report and Accounts 2023