Vanquis Banking Group plc (VANQ.L) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Vanquis Banking Group plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to the management team. Ian, good afternoon, sir.

Lily, thank you. Great to be with everybody today and to get a chance to either introduce you to Vanquis or tell you a little bit more about Vanquis depending on your levels of current knowledge about us. We have a busy day today. It was our investor presentation for our interim results this morning. So hopefully, some of you had a chance to see that. If you didn't, it will be on our vanquis.com website later on today. I will use some of the same slides. So for those of you that have seen them before, please bear with me. I'm very conscious that there will be a range of familiarity with us for attendees on the call. So I will start with a brief overview of Vanquis and a bit of context and then get into the detail of our current performance and so on. I should introduce James Cranstoun, our Head of IR. James, do you want to say hi.

Yes. Hi, everyone.

And my trustee side kick that I'm not allowed to go anywhere without, Dave Watts, our CFO.

Good afternoon. Thank you.

So look, let me just do a little bit of context then. If we do who is Vanquis. We started back -- thank you, James. We started back in 1880 as what became Provident Financial. There's a story there all on its own. A wonderful chap, if you read the history called Joshua Waddilove, who was a fascinating combination of careers. He was both a preacher and an insurance agent -- you didn't get much of that these days. But he actually invented a concept around Bradford mainly for the people that were working in factories in sort of mills around there where they got vouchers for essentials like coal, like food, like clothing that they could then repay in weekly installments. And out of that came the history of Provident Financial that is then morphed into Vanquis. So I'm not going to do any more of a history lesson than that, but we have a deep affinity to that sort of part of the world. Our head office is still there. And what we're doing as the new management team of Vanquis is almost going back to those roots of identifying a very clear customer purpose. What do we exist to do? I always think when I'm looking at any investment, companies that have a very clear purpose and vision of what they want to be and who they want to serve often do better than those that are less clear. So what we did, I joined in mid-2023. Dave joined November of the same year. And as we went through sort of getting to grips with what did we inherited, one of the things that really stood out for us was that Vanquis had been becoming more and more like a mainstream bank, just a small one. And what we wanted to do was really reset back to that original purpose of the Joshua Waddilove start-up of how do we actually help customers that other people maybe aren't helping as much as they could. And how do we do that better than any other organization in our space. So if you think of the traditional ESG type, we would be a very, very strong capital S. We have a very strong social purpose. It's deeply rooted in our history, and it's a big part of the government and regulators' agenda around financial inclusion and helping customers that otherwise might struggle to access credit or struggle to get on a savings ladder and build their financial resilience or know where to find the tools that can help them do that. That's what we're really here to do. We anchored that in our purpose of deliver caring banking so that customers can make the most of life's opportunities. And then more recently, we have refreshed our brand with that "Vanquis got your back," which is landing very well. If you are in the Midlands, you will see that on the back of buses. Soon, you will see some signs on bridges and higher places saying, "our bank will never look down on you." So a slightly humorous but very important set of messages about we value every single one of our customers. There are often people that just do normal jobs. These are the police constables, classroom assistants, social workers, bus drivers, people earning on average about GBP 40,000 a year that often have a bit of a blip somewhere in their credit history and therefore, struggle to access credits easily from the mainstream lenders. That's very much where we step in and where we try and help. So if we just flip to the next slide, James, we've got 1.7 million customers currently. You can see at the bottom of the slide, the work that we did in early 2024 to really understand where they wanted our help was around those 3 core needs of help me to borrow healthily, i.e., borrow in a way that I can afford and is appropriate, which means we do say no to some people. I'll come back to that. Help me build a financial safety net. There is nothing worse if you don't have the savings and your car breaks down or your boiler blows up and you can't heat your house or bath your children, and you need to borrow a couple of hundred pounds quickly. If you haven't got either savings or access to credit easily, that's very challenging. And the third part that sort of underpins that is help me to feel in control of my money. And personally, the reason that I joined this organization was I grew up in a family like that. There wasn't any spare money. I remember the collection agent knocking on the door on a Friday. And it's very important to us that we help customers in that situation to be as well off as we possibly can. I'll talk about Snoop in a minute, which is our AI agent that does that. But the Snoop team had a fantastic phrase, which really resonated with us. These are typically customers who've got more month than they've got money. So that last couple of days or week of the month is often a real struggle, and setting them up that they are better organized and rolled out is very much what we're here to do. So if I just turn to the next slide of our proposition and some of the numbers, and again, many of you will know this, but predominantly, we are a credit card business. We also have a strong vehicle finance business, though that's quite a hot topic at the minute. So I'll come back to that. A growing second charge mortgage business, a much more mature over the last 12 months savings business. We're 84%, 85% retail funded now, which is a real strategic advantage. And then Snoop, which is that money management app that I've just talked about, we bought in August 2023. I actually introduced it to the company as part of my interview process, and we bought it within a couple of days of me restarting as CEO. So that was really nice. And it is open banking and AI to help customers connect all their accounts into one place that then helps them surface spend pattern changes or opportunities to switch utilities or broadband and save themselves some money. So we're genuinely helping not just provide traditional banking products, but actually provide the mechanisms and tools that help customers to build financial resilience by understanding how their money and their income and outgoings is really working. If we turn to the next slide then, what have we been doing? Well, 2024, for those of you that have been tracking us was -- we describe it politely on this slide as a pivotal year. It was a very painful year for Vanquis. We brought in a new management team, refreshed the Board. As I said, Dave and I started at the back end of 2023, but this was a pretty radical reset because not only did we want to refresh the strategy and get back to that purpose, but we find some things in what we'd inherited that just weren't as we expected, and we did have to work through that through 2024. That reset is now behind us. We have addressed all of the issues that were in our book that needed attention. That did cause some challenges in terms of profit warnings and so on through 2024. But as I said, the main message for today is that we are -- that is now in the rearview mirror. We're very much looking forward, and I'll come to our results and pass to Dave to share some of this, but we're actually starting to really show the fruits of all that hard work in the numbers that we're producing. So we have momentum. We have a lot more still to do, but we're on a good path. And that is anchored in are we serving the right customers with the right solutions to their needs? Have we simplified the organization to get our cost base correct. And we've done a lot on cost reduction. We've taken significant amounts. If you add it all up, it will get close to GBP 100 million of cost savings made by the time we get into mid-2026. So that's a significant proportion of the customer base we inherited. But we're also investing in the business. I've talked a lot about Gateway, which is our tech transformation program. It is well progressed. We're spending about GBP 70 million, GBP 70 million on that over the period, and that will be completed in the middle of 2026. And within that, we're also investing a lot in our credit capabilities, our data and analytics and Snoop again and the sort of AI tools. So not just how we make the business more efficient, but how do we surface those for customers to help them, as I said, manage their money. And it is about profitable growth in the end. At the same time, point 5 on this slide, we have had some external factors that have been very challenging for us that we've had to navigate as well. It's well publicized. The claims management company complaint levels have been a real challenge for us again through 2020 -- back end of '23 and into 2024. We are taking one of those claims management companies to the high court as we believe that they have caused us financial harm. So we have a court case progressing on that. There may be some questions on that as we get into your Q&As. But I think that's the right thing to do. If people are behaving in a way that we believe is inappropriate, then it's our job as a management team supported by our Board to stand up and say, sorry, we're just not going to put up with that, which is what we're doing. But that is progressing well. But what has been a big drag on us as an organization, and you'll see in our numbers in a moment that, that unraveling as we go into this year and the first half of this year's performance shows that those costs are dropping significantly, which is very helpful. And the other really hot topic is vehicle finance commissions. Many of you will be aware, the Supreme Court handed down a ruling last weekend, and the FCA are now working through what a redress scheme on vehicle finance. may look like for U.K. lenders and are going to be consulting on that from the middle of October onwards. So as well as issues internally to address and set ourselves on the right path, we've also had to deal with, as I said, some pretty challenging external issues, but that was 2024. If I turn to 2025 then, and if we go to just a summary, and again, this is one of the slides I used this morning, we have now delivered 3 consecutive quarters of book growth. So we are back to growth. Q4, Q1 and Q2, all growing in our asset products and matched pretty much, as I've said earlier, by our liabilities on the savings side. So running the business as efficiently as we can. And we've now posted 2 consecutive quarters in the first half of this year of profitability and all our products are profitable. So one of the really key themes that Dave and the rest of the management team and I have driven is that pricing discipline about making sure that we understand the credit risk that we're taking on and that we're pricing appropriately for that so that we make a return that allows us to be sustainable as a business to accrete capital. And then in the end, to pay dividends, hopefully pay variable comp to some of our teams who haven't had a bonus for 2 years as we've gone through this restructuring, but also invest in being able to serve more customers, which fundamentally is what we want to do. So back to our purpose. So balances are growing. Technology transformation is on track, really happy with that. Cost savings are tightly controlled. And we've seen impairments look pretty good as well in the first half of the year. Our customers, again, because we are being careful in terms of the credit underwriting and what we're taking on, our customers' credit quality is good and suggest that we are lending responsibly, which is very good. And then at the bottom of the slide, we're starting to win some awards now for our proposition and getting good recognition from our customers as well through things like Trustpilot that we're looking after them in the right way. So not perfect, lots still to do, but good momentum and lots to like in terms of what we put out in the first half of this year, and you can see that reflected. We've had a nice bounce in the share price since we put that out this morning. If I drop into a little bit more of the how are we doing all of that? This first slide, I'll cover, if you look on the left-hand side, we've got 5 initiatives in total. I'll do the first 2 on this page. But getting the proposition right and making sure, as I said, we're priced correctly and we're targeting the right type of customers with the right type of solutions. I'll not do the detail of what we've delivered down in the middle. You can read that for yourself. But we are growing each product, each product is profitable, as I said, but we're also experimenting with varieties of products tailored to individual subgroups of customers that we're doing -- we describe it as test and learn, but this is just good experimentation of will a travel card work for Vanquis customers. A lot of people might have said, no, maybe they don't do that much travel. Actually, it's turned out to be very successful. So we are testing things that we haven't done before. On the savings or liability side, we've introduced a whole range of shorter-dated or instant access products. That's better for us in terms of cost of funds, but it does mean we're learning how customers use that type of product. And I think a big theme of what we'll talk about with you today is that we are learning as we go. We're doing well. We're on the right track, but there's lots of experimentation going on, and that will underpin our future success, which I think is very healthy for us as a business. One thing I did really want to draw is that third from the bottom bullet that you can see in the middle, which is our not yet proposition, and this is a bit of an unusual one, Ni, until I explain it hopefully clearly enough. But there are still -- even with our risk appetite, there are still customers that we have to say, I'm sorry, we just don't think we can lend to you within that risk appetite right now. But rather than just say no to them, which is what we would have done previously and what banks tend to do, what we're trying to do is say "not yet" rather than a hard no. So we'll give them Snoop and that will help them hopefully manage their money better and then be able to come back to us. But we'll also refer them to partners, and we're building a partnership strategy or a marketplace, if you like, where Fair Finance would be a very good example, but we talked before about H&T pawn brokers as well. If there are trusted partners and providers that can look after customers when we can't, then we are very happy to refer those customers over and let them get access to credit, for example, Fair Finance, we've 2,600 customers that we've referred to them so far this year. And as I mentioned this morning, part of that process is they get a review of whether they're claiming all the government benefits that they're entitled to and nearly 10 million of benefits have been find this year that weren't being claimed by those customers. So again, in terms of helping support them to be more financially resilient, that sort of partner like Fair Finance is extremely helpful. And so I just thought that was -- it's something that we'll talk more about over time as we add more people to the partnership strategy, but it's really important to -- even if Vanquis can't help, we'll find help for our customers and that builds loyalty, and that obviously helps us over time as they can come back to us down the line. If I turn to the next page, then the next 3 key initiatives were tech transformation, I've talked about operational efficiency and then our people who are, as always in any business, it's your motivated team that make the difference. If I just drill into the people bit for a second, we are seeing our engagement scores go up and up, and we've just done a pulse survey for the half year. Our employee engagement is up another 5 points. And slightly amusingly, but maybe not depending on your perspective on this, we had a 21-point increase in the question, Management is competent at running the business. So that's a lot of feedback for us as management, but we're really pleased that our people are with us. They're seeing the benefits of what we're doing. It has been painful for them at various stages and many have been made redundant and are no longer with us, and that's pretty challenging for an organization. But we've done the right thing to get our cost base under control and the colleagues that are still with us are echoing that they also see that we're doing the right things. So that's really important. In terms of tech transformation, as I said, I've touched on that already, but this is really important, particularly when it comes to vehicle finance. So it's -- there's a lot of AI usage being built in there but actually, we're doing the fundamentals first. I mentioned in my presentation this morning that we've moved 30 billion rows of data in February this year of 15 legacy systems onto one core data warehouse platform that we can now access speedily and efficiently and accurately, and that allows us to have a single view of the customer for the first time ever. So if we had customers with multiple products, we couldn't see that easily before. We had to go into each subsystem. So that's a huge bedrock in place now that we can then start building clever activities on top of. And one of those will be a new vehicle finance onboarding and management system that we will build between October and July next year, and that will allow us to scale that business up a bit more as well. But lots going on in there and a very capable tech team doing great things and driving that forward. We are on track. at the minute. And I have a lot of banking IT platform changes and upgrades over the years and not all of them go exactly the way that you think they're going to. So the team are doing a super job on that at the minute. And in terms of operational efficiency, if I just touch on that, I mean, there's a whole range of things that we're doing, complaints, I mentioned earlier, in claims management companies. We've had a lot of experience of handling high volumes of complaints. We've used artificial intelligence to triage that, and that's proved very successful. So there's a lot of embedded capability now in those teams that we can apply to more positive opportunities across the business. So a lot more to come on that as everyone is grappling with what Agentic AI will do to our business processes. We're no different, and we're very excited that we've got some good learning to draw on as we go forward. I'll just touch quickly on external factors because I referenced this briefly. You can read the slide, and it's all over the press, so you don't need me to tell you about it. I think the key message from me on vehicle finance commissions and potential FCA redress is we believe Vanquis is differentiated from the market in a positive way, i.e., we are better positioned against this. We never did discretionary commission arrangements, which is the core of this challenge for the industry and the redress scheme. And also even in the nondiscretionary commissions, we were very clear with our customers the whole way through about our disclosures and that there was a commission that was going to be paid. We never operated what was described as the first refusal type lending. We were actually at the other end that customers often would have been rejected by the first refusal lenders, and we would almost be the lender of last resort. And our amount of lend is generally lower so the amount of commissions associated are generally lower. So we think we're in a pretty good position. But obviously, we've got to go through that consultation with the FCA that I mentioned earlier. And if I go to the next slide, one of the things that has been a drag on us, but has really fallen away is the Financial Ombudsman Service introduced a fee charging on claims management companies. That means they've got to pay upfront GBP 250 to submit a claim. And on average, they would win less than that from us if their claim was successful. And a lot of the claims were not successful so that has really reduced the flow of those claims and therefore, has had a very positive benefit on our costs. And as I said, we are suing one of the claims management companies that we didn't think validated those claims properly at all and cost us a very big amount of money. So look, that's probably the main bit for me. I'm going to hand to Dave now, who will talk you through 2 things, our guidance and then our sort of key messages from a CFO perspective. And then we'll be really happy to open up and get into what you want to talk about, which is the questions that you want to ask us. So Dave, let me hand over to you.

Thanks very much, Ian. And turn to Slide 4. Thanks, James. This is almost very much our score. We put some guidance out in the marketplace in March '25 this year, what we thought we would deliver in full year '25 and full year '26. And in the middle column shows where we are in the first half year. As I said, we've had a profit for the first half year, GBP 6.2 million after quite a sizable loss in the prior year. So that's a good achievement from there. In terms of the 5 key metrics, the gross customer interest-only balances, this is where we generate income from. We got in a number of GBP 2.459 billion of gross customer interest-earning balances. What we have done as part of today's presentation, we've upped our guidance there from the year-end being approximately GBP 2.6 billion to just being above GBP 2.6 billion. So I think that's quite in the marketplace. We're not going to touch on '26 at this time. We have a further update to the marketplace for '26 out to probably '28, probably coming in late February next year, and we'll further guide on that one. Net interest margin is showing a 17.4% number. You may ask why that's coming down over our guidance period to greater 17% and 16%. In essence, what we've got, we've got 3 key lending products, credit card by far our biggest book and Vehicle Finance and Second Charge Mortgages. And Second Charge Mortgages, a new initiative we kicked off in earnest halfway through '24. It's growing quite quickly, but it's a business where the risk is lower. Capital requirements are lower, therefore, there's a lower margin. So that brings down the margin in place. That said, 17.4% we're still guiding that we will be above 17% by the end of this year. Cost/income ratio, that's our measure of efficiency. You'll see a number of 62.5%. We're still guiding to be into the high 50s by the end of this year. We expect to achieve that both from growing our income in the second half of the year and having a lower cost base in the second half of the year. So we're pretty comfortable with that one. What you will see as you go through our journey, we got to high 50s in '25, the low 50s in '26 and then 4% to 9% or lower in '27. In essence, we want to become a much more efficient organization. Turning to tangible equity, very much a common banking metric of success is the principal #1 measure. You'll see 3.1% may seem a low number, but given the fact we've made losses in prior years, it's good to see a positive number. And that's why we've guided to low single digits in '25. '26 is going to be low double digits, and then the medium-term goal is to get to mid-teens ROTE in '27, and we believe we are on track for those at this point in time. Tier 1 capital ratio, key thing for any bank is how much capital you hold and how is that measured against your risk-weighted assets. We're at 18.5%, which is comfortably above our 17.5% guidance. This is to be an opportunity to grow our business as we go further forward. And we've actually got possibilities to actually optimize our capital stack, which actually has even more growth on that. So we move on to the next slide, James. So this is how we wrapped up the presentation this morning. And we're here to focus on creating long-term shareholder value. We're not running this for the next quarter or the next half or next year. We want to build something that's going to be incredibly successful in the years to come. So please hold that thought there. This is delivering for our customers to drive ongoing sustainable profitable growth. As Ian touched on profit in the first half, balance has grown, improved adjusted risk-adjusted margin. It doesn't get any better than that. We've got sufficient capital to grow our business, which is great to see. The credit quality is getting better. Those of you are familiar with IFRS 9, unfortunately it's a tortious accounting standard. But what we've got in what's in Stage 1 was a better quality, it continues to grow and what's in Stage 3 was viewed as the less quality and has reduced the proportion of our book. So that is getting better. And we have an amazing resilient customer base who we're currently ranking. We have to be focused on our cost base, the one thing you can always control. We've taken -- as Ian mentioned, we took GBP 64 million worth of cost out in '23 and '24. We're committed to doing GBP 15 million out in '25 and fully on track to do that. And as we go through into '26 and '27, as part of our Gateway IT strategic transformation, we expect to take another GBP 23 million to GBP 28 million of cost out of the organization. Complaint costs were a meaningful drag on our business last year, GBP 47 million worth of costs. What we talked about this morning, the GBP 60 million cost base of complaint costs. It's markedly down in the second quarter, and we expect the second half cost for complaints to be lower from there. So that's -- we see it now being in a sort of rearview mirror, should we say, I hope that's the case. We talked about on the motor finance commission. Those of you who read the press over sort of Friday night, the Supreme Court rulings and the FCA's judge from that one. Look, we believe we're differentiated in terms of the Johnson Supreme Court outstanding case in place there having the fiduciary duty and they are the ones stuck out by Supreme Court. But we look to see what the FCA comes through in probably late October, early maybe late November on that one. As I say, we put out -- we have very few -- we think we have a very good position against, and that's what we put in the market this morning. How you manage your bank is your capital, liquidity and your funding. We have a very good liquidity and funding profile, which I think is the envy of many other lending organizations of our size. So that's something we continue to develop over the last 12 to 24 months, puts us in great stead. 84% retail funded, 97% of that is covered by the FCA scheme. So it's very safe money for the investors who put deposits with us. It's continued to grow. Snoop is something they launch a deposit aggregator -- deposits with us gone from nothing to over GBP 100 million in less than 7 months. So it's a great utilization of our Snoop app. And then the last thing is everything we do is to maximize our return on capital for the long term. So once you book a Vehicle Finance, it's there for 5 years. You've got to make sure you book the right business and use our capital in the most accretive way possible. And that's the discipline we've been -- we've put on board ever since myself, Ian and the rest of the management team has come on board. So that's our overall goal, drive operational efficiency, deploying capital, invest in a capital accretive way we can.

Dave, thank you. One number I'll ask you to add just to the relativity point of GBP 6.2 million doesn't sound like a lot for a bank to make in the first half of the year. If you did the year-on-year increase from where we were last -- this time last year, you got that number?

Last year, we lost GBP 135 million.

So I think if I've got it right, it's a GBP 53.6 million improvement in the first half. So what I didn't want to do is give any sort of sense that we think GBP 6 million of profit in a half year is good. It's better than making a loss, but it's a step on a journey, and I just think that's really important to reiterate. So look, if I go to the last slide before we open for questions because we said we'd sort of do 30 minutes of presentation. The most important thing, if you're thinking why would I buy and hold Vanquis, it's a new management team with a passion for this business anchored in the needs of the customers that don't get served well elsewhere, combined with a banking experience and discipline, as David has just described, because all 3 of us have worked in big clearing banks in the U.K. but we're bringing that level of discipline to this bank and this customer base. And I think that should play out very nicely going forward. So we've got a clear purpose and strategy. We are differentiated both by being retail funded and with Snoop. We've got a growth opportunity in that. We've got 1.7 million customers, total addressable market, depending how you cut it, somewhere between 15 million and 22 million. So call it a 10x opportunity in terms of customer. We've got momentum. We are back to profitability. We are back to growth, but there's lots of upside still. We have a lot more to do to get this organization into the shape that we believe that we can do, which we're very excited about. So we're not at all complacent. We're very excited. People are working flat out. We've just come off an all colleague call doing a version of this, and they're very excited as well. There was little emojis of rounds of applause and hearts on the screen, which is always nice to see from your colleagues. So we are on a bit of a journey here, not to use that hack needle phrase, but we are taking this business to somewhere much better than we find it, and I think that's very exciting. And hopefully, you guys will agree. So we will pause there and open up for questions.

[Operator Instructions] As you can see, we received a number of questions throughout today's presentation. I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

Great. Thank you very much. So I'll come for the questions. And just looking through the list that we put from investors so far, the most common theme is around growth. So I'll couple a few of those together and ask Ian and Dave to comment. So the first one is, what do you feel are the biggest growth opportunities within the current product set and your customer base? And I suppose on a more longer-term view, what are the growth ambitions for the business in the longer term? Obviously, we've laid out our plan out to 2026 and the growth aspirations there on balances but if I could ask Ian to comment on.

Well, look, why don't I kick off on that and then Dave jump in. But I think for me, it's not just growth, right? I mean anyone can sell pine coins for 50p. It's sustainable growth at the right margin with the right risk appetite is what we're aiming for. So we have been cautious as we've understood what was in the book and learned from that about what we want our flow of new customers to be, i.e. the growth going forward. So we could grow a lot faster, but we are growing in a way that we believe is safe and sustainable. As Dave said, sustainable returns, not the sort of boom-bust type thing is what we're all about as a management team. In terms of the aspect of the question around in our existing customer base, we are doing a huge amount of work with the new cards team to just take apart the existing cards portfolio that we've got, and it broadly splits into 1/3, 1/3, 1/3. There's a proportion of the book up to about 2019 that is very good, decent returns, and we're very, very pleased about that. There's then a proportion from 2019 to kind of 2023 that is patchier, let's say, and then 2024 onwards looks good again. So we're just going, well, what are the various treatment strategies and initiatives that you can apply, particularly to that middle book to try and get them to the right price for the risk that we're taking on and make sure that it is sustainable or that we have a debt sale or charge-off strategy that is appropriate. So we are doing a great. A presentation like this, you do 30 minutes of what's your strategy. But actually, that's not the key. The key is the level of work and depth underneath that because that's what makes your strategy successful and sustainable. So we like cards. You saw 6% growth in the first half, mainly in Q2. So that is encouraging. Vehicle Finance, we think there's a real opportunity there once the noise clears away, but we're not pushing that harder in the very short term because we've got a very inefficient platform that we're running that on. And until that Gateway platform is in place that allows us to be scalable and efficient in that scalability, then we're not going to move massively on volumes. And second charge mortgages, as Dave referenced, has been very successful for us. We built with our partners in that market, a brand-new tech stack, really good broker support and a really nice proposition that allowed us to get to pretty much #1 by volume in that market from a standing start within a year, which is great. That's not easy to do. So it shows that we can develop, launch and be successful with new propositions in this team, which I think should give us great confidence for the future. And savings we've talked about. I mean, equally, we've expanded that proposition significantly over the last year. So we're feeling pretty good that there's upside in our existing product range, but we actually -- we are also looking at where the other areas that our customers are using financial services products and should we look at trying to serve them there as well. But I'll pause on that. Dave, anything you'd like to add?

Just 2 or 3 points second charge mortgages, as you said, we had a great successful start for that, and it's a growing business and a growing marketplace, mid-teens growth in the last 2 or 3 years. So it's a good place to be. Even vehicle finance, we've been holding back a little bit of the growth because of the new tech stack we come '26. The income from that business has actually gone up half-on-half. So we shouldn't lose sight of that. I think come down to credit cards. There's lots of different varieties of credit card in place. One of the things we launched in the last couple of months has been a travel card, for example. You wouldn't think our people on it. They do all of it, you want to spend it. It's suited to the actual need. So that's been a very successful development in our product suite.

Great. So that was touching on the asset side, but this next question is on the deposit side and obviously, very topical given the rate decision today. And the question is, how is customer behavior shifting across our deposit products given the evolving rate environment?

Okay. Let's do the same order again. I'll give you some headlines. I think we're learning on this being really frank. There wasn't a great deal of experience. deposits here, liabilities were really seen as a kind of treasury activity, whereas we're now running it as a proper P&L. We brought in a very talented team leader from one of the big clearing banks and a bunch of new people into that team, and they're learning really quickly and bringing great experience to us. We're up -- we're about GBP 2.4 billion of deposits. So as I said, 85% retail funded as a bank overall to our assets. But about 40% of that book now is not the traditional 3-, 5-year fixed-term bonds that we were doing in the treasury function. We are now moving into, I think, where our questioner is coming from the shorter dated or instant access products where that behavioral economics of the customer, you've got to really understand that for our customer base. But so far, we're really pleased. It's looking good. Our cost of funds is coming down. Our customer retention is good. People do use us for the financial services compensation scheme cover. We're another bank. If you've got lots of deposits with the main banks, then using Vanquis for that cover is good as well and maybe they're a little bit less price sensitive. But that side of the business, I think, is working really well. Again, Dave, anything you want to add?

I mean just one thing to add. I think what we've been doing in the credit card portfolio, we've been testing and learning new offers in place there to see how it works out. We're doing the same things in our savings deposits. We look at bank rate changes has come through today. We see how customers react. We adapt on the new business, look at how our back book looks from there, and we move on from there. It's being managed as a pure business, the overall goal to reduce that cost of funding, and that has proven successful with a 20% reduction in cost of funding this year.

Yes. And the only thing I'd come back on that is we're also testing and learning from the customers' perspective as well as our own funding costs. So a Snoop savings account will take from GBP 1 of a deposit. We're just trying to get customers to get into the habit of putting some money away so that when those events happen as they do to us all in life, they've got a bit of a buffer. And Snoop has gone from sort of nothing because it was brand new with a different deposit provider than Vanquis had been using. So we're testing there as well to over GBP 100 million of deposits very quickly. So again, lots of experimentation going on, drawing on the skills and experience and knowledge of the people that we brought into the team, but applying that to how it works in Vanquis so that we're learning our customers as we go. And we're really pleased with what we're seeing so far.

Just to add on that the Snoop point, everybody is cool. look at Snoop, use the deposit application. You'll see the technology in place. We're looking to build and come out very shortly in our credit card space, and it's quite slick.