Bank shrugs off referendum
Virgin Money says ‘business as usual’ after Brexit vote
Virgin Money has maintained the strong start it made to the year and has seen no change in customer behaviour since the EU referendum.
Jayne-Anne Gadhia, chief executive said the Edinburgh and Newcastle based business is also on track to meet its credit card target.
In a statement on its third quarter figure, the company said that since the EU referendum, “the near-term momentum of the UK economy has been more positive than initial projections”.
Virgin Money said it has experienced “continued strong customer demand and no evidence of material changes in customer behaviour.
“The board continues to monitor the impact of the referendum and does not believe there will be a material adverse impact on the Group’s results or financial position in the current financial year.”
Ms Gadhia said: “We delivered a record start to the year for mortgages and we have maintained that momentum following the outcome of the EU referendum.
“Our savings franchise is thriving and our credit card business continues to go from strength to strength. We remain on track to meet our target of £3 billion of high-quality card balances by the end of 2017.”
The bank is working with fintech company 10x Future Technologies, founded by former Barclays chief executive Antony Jenkins. It will aim to transform Virgin’s digital offering over the next few years.
“We have been encouraged by the relative strength of the UK economy immediately following the EU referendum result although we continue to look forward with caution,” said Ms Gadhia.
“We are well placed to manage potential economic headwinds and remain confident of achieving a solid double-digit return on tangible equity for 2017.”
- Gross mortgage lending up 19% on the first nine months of 2015 to £6.5 billion resulting in a 3.6% market share of gross mortgage lending to the end of Q3 2016
- Net mortgage lending up 33% on the first nine months of 2015 to £3.5 billion, with £1.3 billion of net mortgage lending in Q3 2016
- Credit card balances increased to £2.2 billion at the end of September 2016, 41% higher than FY 2015
- Virgin Money Lounges welcomed over 50,000 customers per month in Q3
- New partnership with 10x Future Technologies to build Virgin Money’s digital bank
Virgin Money said it has delivered a strong performance in the first nine months of the year. Taking into account the reduction in Bank Rate in August, mortgage growth, cards growth, NIM and RoTE are all performing in line with guidance provided at H1 2016.
It continues to target a 3 to 3.5% share of gross mortgage lending and is well placed to deliver a market share towards the upper end of this range for 2016.
The group said it remains well positioned to serve non-portfolio buy-to-let landlords and expects the share of buy-to-let mortgages in its mortgage book to remain consistent with the share of buy-to-let mortgages in total UK mortgage stock.
Credit card origination moderated, as planned, to protect the credit quality of new credit card lending. Virgin Money continues to be well placed to achieve its target of £3 billion of high-quality credit card balances by the end of 2017.
The 25 basis point cut in Bank Rate impacted net interest income during the third quarter, as guided. As a result, the Group expects a FY16 NIM of just below 160bps.