Virgin Money says it has seen a strong performance in the first quarter of its financial year and said it believes the UK economy is recovering from the pandemic.
The bank - which has its main offices in Newcastle, Leeds and Glasgow - has released a trading update in which it said there was “some scope for greater optimism about the pace of the recovery”.
It said that it was improving its deposit mix, with overall deposits reducing 2% to £65.5bn but ‘relationship deposits’ - where current account customers have a linked savings account - growing slightly to £31bn.
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The bank has seen 140,000 new accounts opened since the start of its Brighter Money Bundles campaign last year, but it closed 28 of its branches, including former Yorkshire and Clydesdale bank sites as the group rebrands entirely to Virgin Money.
Both mortgage and business lending fell during the period, with mortgage lending being hit by the end of stamp duty tax relief and due to stiff competition in the market. It said that business lending had fallen as demand remained “subdued” and as Government’s Covid-19 support schemes began to wind down, though it expected an increase later in the year.
Unsecured lending grew 3% with a significant rise in people spending on credit cards, and Virgin Money increased the outlook for its net interest margin, a key measure of profitability for retail banks.
Chief executive officer David Duffy said: “Virgin Money’s performance in the first quarter has been strong. Our balance sheet is performing well, asset quality remains robust and we have increased guidance on net interest margin for 2022.
“We are optimistic about the pace of recovery of the UK economy based on growing consumer and business confidence, underpinned by lower unemployment.
“We’ve continued our strong delivery of new digital propositions, including the launch of our fee-free digital business current account and innovative new unsecured lending products, with more to come later this year.
“We’ve also launched our new working model, ‘A Life More Virgin’, offering full remote-working flexibility, which is leading the industry in providing a digital-led and future-proof work environment that delivers for our customers.”
The trading update highlighted how it was moving towards a more flexible working model, which led to an announcement in December on partial closures and other changes to its offices in Newcastle, Glasgow and Leeds.
The bank added that it was expecting restructuring charges of £275m over the next three years, with around half of that falling this year.
