Vanquis shares saw a bounce on Thursday after analysts at Panmure Liberum upgraded their stance on the stock, suggesting the beleaguered lender may finally be poised for a turnaround.
Once riding high at over 2,600p in 2015, shares in Vanquis have since plummeted by more than 96 per cent. The decline followed mounting customer complaints and scrutiny from regulators, largely due to its involvement in the sub-prime credit and payday lending sectors.
Analysts at Panmure Liberum now believe the worst might be behind the firm. They have issued a ‘Buy’ rating, describing Vanquis as offering “value to be had” and setting a price target of 100p. Shares rose more than five per cent on Thursday to around 80p in response to the endorsement.
On Wednesday, Vanquis reported a return to profitability, fuelled by a 6.7 per cent year-on-year increase in net receivables, which reached £2bn. Net receivables measure the total amount the company expects to collect from its customers.
In a note to clients, analysts Rae Maile, Ross Luckman and James Allen cited the firm’s strong positioning in a market where credit demand is underserved. They forecast that Vanquis’s pre-tax profit would “step up materially” by 2026, driven by robust growth in its loan book.
Should the market fail to grasp the extent of the company’s recovery, analysts cautioned that Vanquis may become a target for acquisition. “If the market fails to appropriately recognise the opportunity and the progress made, others may well,” the analysts said, implying that potential buyers might swoop in.
They added that it was vital for Vanquis, under new leadership, to deliver a consistent series of stable trading updates to rebuild trust among investors. This, they noted, would mark a departure from several years in which the lender had consistently “surprised investors for all the wrong reasons”.
Formerly known as Provident Financial Group, Vanquis has seen its reputation battered by controversy. Its subsidiary, Satsuma Loans, came under fire for high-cost, short-term credit products, often targeted at borrowers who were unable to repay. In response, the group introduced a redress scheme approved by the High Court, covering the period from April 2007 to December 2020. As many as 30 per cent of the firm’s 4.2 million borrowers during that time were thought to have valid claims.
However, the Financial Conduct Authority (FCA) criticised the scheme, arguing that it provided far less compensation than consumers were entitled to. In a separate case in 2018, the FCA fined what was then Provident £2m for failing to disclose fees on its repayment option plans. The fine came alongside a £169m compensation package for customers.
More challenges arrived in 2024, when Vanquis saw complaints costs surge by 66 per cent to £47.4m. Fees paid to the Financial Ombudsman Service also climbed sharply to £24.8m. The lender topped the list for customer grievances in the second half of the year, logging 17,614 complaints – well ahead of competitors Newday and Ford’s FCE Bank, which received 8,345 and 6,530 complaints respectively.
A significant portion of the complaints spike has been attributed to a surge in filings by claims management companies (CMCs). Vanquis said in a statement this week that legal proceedings are ongoing against one such CMC, which it identified as being responsible for the largest number of “unmerited claims” in recent years.
