Lending leaps at Virgin Money but it’s cautious over Brexit
Challenger bank Virgin Money shrugged off post-Brexit vote volatility, increasing mortgage and credit card lending – although it warned it was exercising caution.
The figures
Gross mortgage lending rose 19 per cent to £6.5bn in the nine months to the end of September, putting its total mortgage balances at £28.9bn. That pushed Virgin's share of total mortgage lending up to 3.6 per cent.
Credit card balances rose 41 per cent to £2.2bn, while deposit balances rose 12 per cent to £28.3bn.
It added that the Bank of England's decision to cut the interest rate resulted in a headwind to net interest income of £5m.
Why it's interesting
The lender was reasonably positive about the aftermath of the Brexit vote, with chief executive Jayne-Anne Gadhia saying she was encouraged by the relative strength of the UK economy – although she added the lender was continuing to look forward "with caution".
Indeed, Virgin Money said following the vote it had tightened credit scores for new card applications "to protect the credit quality of new credit card lending" – and it also passed on the Bank of England's cut of 0.25 percentage points in the interest rate.
But it added it although it was continuing to monitor the impact of the referendum, it doesn't believe there will be a material impact in its financial position.
It's also worth adding that Gadhia announced today Virgin Money has signed a deal with the snappily-titled 10x Future Technologies, a new firm unveiled by former Barclays boss Antony Jenkins yesterday, which will provide lenders with insights into customer data.
“The digital age provides banks with the opportunity to overhaul their technology systems and approach business in a different way," said Jenkins yesterday. Try telling that to RBS…
What Virgin Money said
Jayne-Anne Gadhia said:
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. We are well placed to manage potential economic headwinds and remain confident of achieving a solid double-digit return on tangible equity for 2017.
In short
Cautious optimism from one of the UK's most recognisable challenger banks.