Virgin Money has customer boom as higher interest rates benefit Branson’s bank
Virgin Money’s customer base continued to grow in the first quarter of its financial year as the challenger bank said it expects to benefit from higher interest rates for the remainder of the year.
There were around 27,000 new personal current accounts opened in the period, 44 per cent more than last year. This, the company said, was “a strong performance in a competitive environment”.
The company also opened around 9,000 new business current accounts, up 92 per cent year-on-year, growing accounts on a net basis for the thirteenth consecutive month.
Overall deposits increased 1.2 per cent in the period.
Virgin Money continued to benefit from higher interest rates with its net interest margin increasing three basis points in the first quarter to 189 basis points.
Net interest margin is expected to remain in the 185-190bps range for the 2023 financial year.
Richard Branson’s banking offering also reported lending growth across a variety of sectors. Mortgage lending grew at 0.4 per cent despite the slower mortgage market in the first quarter.
Business lending was up 2.4 per cent with a four per cent increase in ‘business as usual’ lending more than offsetting a run-off in government schemes.
The company says it expects more moderate growth in business lending through the rest of the 2023 financial year.
Like many banks, Virgin Money increased provisions slightly to £485 from £457m, but noted that arrears remained “broadly stable”. It said it expects arrears will “normalise from low levels”.
CEO David Duffy said: “”We’ve had a positive first quarter with continued good progress on digitisation and growth in lending across the business as more customers choose Virgin Money.
“Arrears remain broadly stable but we’ve increased the support available to those who need it and remain prudently provisioned for an uncertain economic outlook. Looking ahead, we have good financial momentum and a number of exciting digital product launches to come which will support our continued growth,” Duffy said.