Shares - - MONEY MATTERS -

IF YOU’RE LOOK­ING for value in the bank­ing sec­tor then Vir­gin Money def­i­nitely fits the bill. It is trad­ing on a mere 6.3 times fore­cast earn­ings for 2018 de­spite a very at­trac­tive earn­ing pro­file. As a com­par­i­son, Lloyds

(LLOY) trades on 9.9 times next year’s fore­cast earn­ings.

It is also cheap on other val­u­a­tion met­rics. For ex­am­ple, the shares are trad­ing on 0.8 times to fore­cast tan­gi­ble net as­set value for 2018, ac­cord­ing to


Vir­gin Money serves the re­tail mar­ket pre­dom­i­nantly with res­i­den­tial mort­gages, sav­ings and credit cards. It plans to launch a digital bank­ing ser­vice with more de­tails to be an­nounced in Novem­ber.

Group pre-tax profit is fore­cast to con­sis­tently grow, ad­vanc­ing from £138m in 2015 to £341m by 2019 which adds up to a 147% gain.

In­vestec an­a­lyst Ian Gor­don says the mar­ket is wor­ried about a slow­down in UK mort­gage lend­ing, yet data shows con­tin­ual growth. He is very bullish on Vir­gin Money as an in­vest­ment with a 390p, 12-month price tar­get – im­ply­ing nearly a 50% po­ten­tial gain if you buy to­day.

It is also worth not­ing mar­ket con­cerns about ris­ing con­sumer in­debt­ed­ness and fears about peo­ple not be­ing able to keep up on credit re­pay­ments if the UK econ­omy de­te­ri­o­rated. Vir­gin Money says its cus­tomer in­debt­ed­ness is low and re­duc­ing.

‘We have no con­cerns about the qual­ity of our credit card book,’ said chief ex­ec­u­tive JayneAnne Gad­hia at the bank’s half year re­sults in July. (DC) 300 290 280

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