Virgin Money has hailed strong performance in the first quarter of its financial year and believes that the UK economy is recovering from the pandemic.
The rebranded Clydesdale Bank, with offices in Glasgow, released a trading update in which it said there was “some scope for greater optimism about the pace of the recovery”.
The bank said its deposit mix is improving, with overall deposits reducing 2% to £65.5bn, but ‘relationship deposits’ growing slightly to £31bn.
It has seen 140,000 new accounts opened since the start of its Brighter Money Bundles campaign last year, but 28 Virgin Money branches have closed during the period, including former Yorkshire Bank and Clydesdale sites.
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.
Business lending fell as demand remained “subdued” and the UK 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 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.”
The trading update also highlighted how the bank 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 Glasgow, Newcastle 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.
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