2nd Feb 2021 09:24
(Alliance News) -Â Virgin Money UK PLC on Tuesday said it had a "profitable and positive" first quarter, with trading in line with board expectations.
Shares in Virgin Money were up 5.9% at 139.67 pence in London on Tuesday, making the stock the top performer in the FTSE 250.
Customer deposits in the three months to December 31 rose 0.9% to GBP68.1 billion from GBP67.5 in the quarter to September 30 as further virus restrictions drove lower personal customer spending, and businesses continued to maintain high levels of liquidity.
"There were early signs of some recovery in customer spending before tighter Covid-restrictions were imposed, however the combination of the most recent restrictions and customers' caution in the context of the economic outlook resulted in continued inflows. The increase in deposits saw the loan-to-deposit ratio fall to 106. The group continues to expect some reduction in deposit balances as we continue our strategy of optimising our deposit mix," Virgin Money said.
The total loan book fell 0.3% to GBP72.2 billion, as Virgin Money focused on margin management and "prudent" underwriting. Mortgage balances contracted 0.2% to GBP58.2 billion.
"The group maintained prudent underwriting and valuation criteria in the quarter against an uncertain economic environment. Over the remainder of the year, the removal of temporary stimulus measures, such as the Stamp Duty holiday, may see market volumes slow," Virgin Money noted.
Virgin Money's net interest margin was 152 basis points, stable on the fourth quarter, and the lender continues to expect a broadly flat full-year result.
The bank said it returned to statutory profit in the first quarter, continues to perform "resiliently", and reaffirmed its full-year guidance.
"Given the current UK-wide restrictions and ongoing uncertainty, we maintain the cautious economic outlook we outlined in November and our full year guidance remains broadly unchanged. Looking ahead, the vaccine roll-out and EU trade deal are encouraging for the UK's economic recovery and we remain focused on disrupting the market through a variety of innovative new products and propositions with a customer and brand experience that is the best in the market," said Chief Executive David Duffy.
By Lucy Heming;Â [email protected]
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