Virgin Money UK has reported a stable net interest margin for its first quarter, along with an increase in deposits, indicating a positive start to fiscal 2024.
Net Interest Margin Maintains Stability
During the three-month period, Virgin Money UK achieved a net interest margin of 189 basis points, remaining flat compared to the same period last year. The company expects this margin to remain resilient throughout the year and reaffirms its guidance of 190 to 195 basis points for fiscal 2024.
Mortgage Balances and Market Activity
Although the mortgage balances slipped by 0.7% to £57.11 billion ($71.59 billion) during the period, the company noted signs of improvement in market activity, particularly in January.
Business Lending and Unsecured Lending
Business lending experienced a growth of 3.2% to reach £9.02 billion, driven by demand in sector specialisms. Meanwhile, unsecured lending witnessed a 2.8% increase, amounting to £6.70 billion, thanks to credit card growth.
Stable Customer Deposits
Virgin Money UK maintained a stable customer deposit mix, with deposits rising by 1.0% to reach £67.31 billion.
Chief Executive David Duffy expressed optimism about the future, stating, “We are encouraged by both our customers’ resilience and improving sentiment in the mortgage market as interest rates have peaked. We carry good momentum into 2024.”
Virgin Money UK ended the period with a common equity Tier 1 ratio of 14.0%, compared to 14.7% three months prior. The company expects this ratio to range between 13% and 13.5% for the full year.
Capital Distribution and Buybacks
In fiscal 2024, the company plans to distribute capital at the fiscal 2023 nominal level and announce buybacks in the second half of the year. According to estimates from a company-compiled consensus, a £162 million program with a 7.8 pence dividend per share is expected for the year.
Board Chair’s Extension
Board Chair David Bennett has received approval to continue in his role for up to two more years until October 2026. Bennett’s tenure will reach nine years in October.