Virgin Money hails ‘strong’ Q1 with mortgages and savings in good health

● CEO highlights launch of SME savings account with further products on cards

Virgin Money, which has one of its main UK bases in Edinburgh, has celebrated a “strong” performance at the start of the year as it posted rising mortgage lending and better-than-expected growth in savings deposits.

The challenger bank said it delivered £200 million of net mortgage lending – loans less redemptions – in a “competitive” market during the first three months of the year.

Total mortgage lending stood at £1.4 billion, with its overall mortgage book showing a 10.4 per cent year-on-year increase to reach £33.9bn.

Additionally, growth in retail savings was ahead of expectations with a 7.4 per cent yearon-year rise in overall deposits to £31.1bn.

Chief executive Jayne-anne Gadhia said: “Our customerfocused strategy of growth, quality and returns continues to drive strong business performance. We have also made good progress in delivering on the strategic initiatives we announced last year.”

She added that the lender is also focused on growing assets at the right price and quality in a “competitive” mortgage market.

And Gadhia flagged the January launch of an SME savings account, with Virgin Money entering this part of the market as it seeks to narrow the gap with Britain’s biggest lenders, setting its sights on securing £5bn of SME deposits within five years.

Virgin Money is also looking forward to additional product launches later in the year, and continues to make “good progress” in the development of its digital bank, Gadhia added. “We remain on track to deliver on the targets we set at the end of last year.”

The group, which has more than 3.3 million customers, confirmed it remained on track with full-year guidance as it ploughs ahead with its business-boosting strategy.

It announced a proposed fund management joint venture with Aberdeen Standard Investments in March, while it teamed up with Virgin Atlantic for a frequent flyer credit card offer last month. Gadhia said the group had seen a “stronger-than-expected” response to the latter.

Furthermore, its overall credit card balances experienced a 13.9 per cent year-onyear jump to £3bn in the quarter. The figures follow a solid 2017 for the lender, when it achieved a 28 per cent rise in underlying profits to £273.3m.

Analyst Gary Greenwood of Shore Capital, which has a “buy” rating on the stock, said delivery on the strategic plan set out at the November 2017 Capital Markets Day “suggests significant upside potential, in our view”.