Virgin Money sees business lending rise as mortgages dip

● Update comes as group phases out Clydesdale brand ● Delivers on SME lending pledge of more than £6bn

Clydesdale Bank owner Virgin Money has revealed a hit to its mortgage business but companylendinghasbeenboosted by customers switching from Royal Bank of Scotland.

The group – formerly known as CYBG – reported a 0.8 per cent fall in mortgages to £59.6 billion in the final three months of 2019 as it held off from trimming rates to attract borrowers.

It said the drop was expected as it looked to focus on higher growth areas, such as business and personal lending, and attract more savings business.

The trading update, covering the lender’s first quarter, revealed that customer deposits had grown 1.6 per cent to £64.8bn.

Business lending jumped 2.5 per cent to £8.1bn as it was boosted by customers switching from RBS after it took a slice of the part-nationalised lender’s fund aimed at increasing competition in Britain’s banking sector. However, Virgin Money said the switching demand from RBS customers was weaker than expected.

The group has rebranded from CYBG in the wake of the £1.7bn merger between the owner of the Clydesdale and Yorkshire banks and Virgin Money.

A re-branding programme will see the phasing out of the centuries-old Clydesdale Bank name, along with the Yorkshire Bank brand. Re-branded flagshipvirginmoneybranches are being rolled out in several locations.

Virgin Money chief executive David Duffy said: “The group continues to perform well. In a difficult market, our own performance has remained on track and we continue to make strong progress on our ambition to disrupt the status quo.

“We are attracting relationship deposits and delivering growth in customer balances across business and personal, while maintaining our discipline in a competitive mortgage market.

“We have also now delivered on our commitment to lend £6bn to SMES [small and medium-sized enterprises] over the three years to the end of 2019, with £6.5bn lent in total. This included lending of £1.3bn in Scotland.

“We’ve launched the first Virgin Money digital personal current account and unveiled three new Virgin Money concept stores as planned in December.

“We are also progressing at pace with our plans to launch new and exciting Virgin Money products for personal and business customers throughout 2020.”

He added: “While sentiment improved following December’s election result, the UK banking market continues to face competitive pressures and uncertainty over the final Brexit settlement.

“However, we continue to focus on supporting our customers in their everyday lives, delivering on our strategic priorities and meeting our medium-term financial targets.”