1st May 2015 07:04
LONDON (Alliance News) - Virgin Money Holdings (UK) PLC Friday said that profitability improved in the first quarter as mortgage lending increased.
It grew its gross mortgage lending in the first quarter of the year, and said it received a "high number" of applications in the three months.
In a statement, Virgin Money said it it grew mortgage lending by about a third in the three months ended March 31, compared with the corresponding quarter of the prior year, equivalent to a 3.6% share of the market. The lender said its growth took place against the backdrop of a 3% fall in lending in the market as a whole.
First-quarter net mortgage lending increased to GBP664 million from GBP365 million. Mortgage balances increased to GBP22.6 billion from GBP21.9 billion over the course of the three months.
Virgin Money said the level of applications received in the first quarter has given it a "strong mortgage pipeline" going into the second quarter.
However, asset spreads in the first quarter were "moderately below" the full-year target of about 200 basis points, prompting the company to "take action to change the business mix within its prudent risk appetite", it said.
Virgin Money said that credit card balance amounted to more than GBP1.0 billion at the end of March, after migrating 675,000 accounts acquired from MBNA. The credit card business is now "fully operational" on the company's own platform. It has a target of GB3 billion of credit card outstandings by the end of 2018.
"Virgin Money continues to expect to achieve a net interest margin for 2015 of up to 160 basis points. Profitability improved during the quarter with an acceleration of operating leverage benefits resulting in an underlying cost:income ratio moderately ahead of the group's expectations which increases confidence in achieving a 50% cost:income ratio in 2017," Virgin Money said in a statement.
"Cost flexibility remains an opportunity to offset potential headwinds and continue to drive returns in the medium term. Longer-term guidance given at full-year results remains unchanged," the company added.
By Samuel Agini; [email protected]; @samuelagini
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