Member Article

Virgin Money grows mortgage lending by 34% to £1.6bn in first quarter

Newcastle-headquartered Virgin Money has delivered a strong trading performance in the first quarter of 2015, as it continues to create Britain’s leading challenger bank.

The Richard Branson-owned business grew its gross mortgage lending by 34% to £1.6bn in Q1 2015 compared to Q1 2014, while total gross lending in the market is estimated to have fallen by 3% in the same period. This is estimated to represent a 3.6% market share of gross mortgage lending in the first quarter.

Moreover, net mortgage lending increased by 82% to £664 million from £365 million in Q1 2014. Mortgage balances at 31 March 2015 were £22.6 billion, an increase of 3% from £21.9 billion at year end.

As a consequence of the high number of mortgage applications received in Q1 2015, the group has started the second quarter with a strong mortgage pipeline. Asset spreads in the first quarter were moderately below the group’s full year target of around 200bps and the group has taken action to change the business mix within its prudent risk appetite.

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.

Jayne-Anne Gadhia, Chief Executive Officer said: “In the first three months of 2015, we have continued on our trajectory of growth while retaining a high-quality balance sheet. We have also maintained strong momentum in the development of the business across multiple business lines, marking significant progress towards our long-term strategic objectives.

“I am particularly pleased that we successfully completed the migration of the credit cards we acquired from MBNA to our own platform and have launched our proposition to customers. We now have the full capability to originate and service our own cards, and this achievement marks the critical next step in the development of a major business line.

“We are confident that we can continue to build on the strong foundations we have laid for the business, and remain focused on delivering growth, quality and returns for the benefit of all of our stakeholders.”

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