Virgin Money deposits up to £65bn in first quarter

David Duffy

Shares of Glasgow-based Virgin Money UK, owner of Clydesdale and Yorkshire banks, rose almost 5% on Tuesday after it issued a first quarter trading update confirming its trading in the three months to December 31, 2019, was in line with the board’s expectations.

Virgin Money UK, formerly called CYBG, said customer deposits grew 1.6% in Q1 to £64.8 billion but its mortgage book had a reduction of 0.8% to £59.6 billion in Q1 as it remained “disciplined in a competitive market.”

It said Q1 business lending grew 2.5% to £8.1 billion, reflecting “good organic business lending growth and a strong contribution during the period from customers switching from RBS.”

Virgin Money CEO David Duffy said: “The group continues to perform well.

“In a difficult market, our own performance has remained on track and we continue to make strong progress on our ambition to disrupt the status quo.

“We are attracting relationship deposits and delivering growth in customer balances across business and personal, while maintaining our discipline in a competitive mortgage market.  

“We have also now delivered on our commitment to lend £6bn to SMEs over the three years to the end of 2019, with £6.5bn lent in total.

“This included lending of £1.3bn in Scotland, £0.9bn in Yorkshire, £0.9bn in the North West and £0.5bn in the Midlands, demonstrating our support for SMEs across the regions of the UK.

“We’ve launched the first Virgin Money digital personal current account and unveiled three new Virgin Money concept stores as planned in December.

“We are also progressing at pace with our plans to launch new and exciting Virgin Money products for personal and business customers throughout 2020.

“While sentiment improved following December’s election result, the UK banking market continues to face competitive pressures and uncertainty over the final Brexit settlement.

“However, we continue to focus on supporting our customers in their everyday lives, delivering on our strategic priorities and meeting our medium-term financial targets.”

John Moore, senior investment manager at Brewin Dolphin, said: “Virgin Money’s share price bounced significantly late last year on the back of results deemed to be ‘not as bad as expected’ – they have, however, drifted lower since and have nearly halved in the past two years.

“There is some evidence of stabilisation in today’s results – the bank’s net interest margin has remained at 160 basis points against a challenging market, while business lending, customer deposits, and personal lending have grown.

“The integration of CYBG and Virgin also appears to be on track.

“Nevertheless, there are still challenges ahead for Virgin Money: the mortgage market continues to be tough for most UK banks and, until there is a resolution to Brexit, political uncertainty will likely hang over domestically-focussed lenders.”