TIDMVM.
RNS Number : 1866D
Virgin Money Holdings (UK) PLC
25 April 2017
VIRGIN MONEY HOLDINGS (UK) PLC: Q1 2017 TRADING UPDATE
VIRGIN MONEY MAKES CONTINUED STRONG PROGRESS IN Q1 2017
-- Improvement in overall Net Promoter Score to +39
-- Recognised as the "Best Mortgage Lender" at the Mortgage Strategy awards
-- Highest ranked high street bank for customer satisfaction at the British Bank Awards
Key Highlights
* Gross mortgage lending of GBP2.0 billion, a market
share of 3.4 per cent (1)
* Net mortgage lending of GBP0.9 billion, a market
share of 12.3 per cent (2)
* Credit card balances of GBP2.7 billion with stable
customer behaviour and arrears levels
* Net interest margin in line with FY 2016
* Continued strong credit performance
* Full year guidance for 2017 reaffirmed
------------------------------------------------------------
Jayne-Anne Gadhia, Chief Executive Officer said:
"I am delighted with the ongoing momentum and performance of the
business so far in 2017. Our customer-focused strategy of growth,
quality and returns continues to deliver excellent results and
demonstrates the benefits of our low-risk business model, strong
balance sheet and ongoing focus on operational excellence.
"Our mortgages and savings business continue to flourish with
gross mortgage lending of GBP2.0 billion and a GBP0.9 billion
increase in deposits during the quarter. Whilst maintaining our
strong focus on asset quality, credit card balances grew by GBP0.2
billion to GBP2.7 billion. Our approach, including the strict and
consistent application of underwriting standards, continues to
support a low and stable cost of risk.
"Our focus on customer service has led to new highs in customer
satisfaction with our overall Net Promoter Score improving to +39,
making us one of the best-rated retail banks in the UK. We remain
committed to delivering growth, quality and returns and to ensuring
our strategy delivers long-term success for the benefit of all of
our stakeholders."
Business review
(GBP million) As at 31 March As at 31 December Growth
2017 2016
------------------- --------------- ------------------ -------
Mortgage balances 30,676 29,741 +3%
------------------- --------------- ------------------ -------
Credit cards
balances 2,651 2,447 +8%
------------------- --------------- ------------------ -------
Deposit balances 28,977 28,106 +3%
------------------- --------------- ------------------ -------
1 Estimate based on Bank of England data to the end of February
2017 plus the Council of Mortgage Lenders gross lending estimate
for March 2017
2 Based on Bank of England data to the end of February 2017
Mortgages
* Gross lending of GBP2.0 billion represented a market
share of 3.4 per cent(1)
* Net lending of GBP0.9 billion represented a market
share of 12.3 per cent(2)
* Pipeline at the end of Q1 2017 of GBP2.3 billion, 14
per cent higher than at the end of Q4 last year
* Mortgage asset quality remained strong with credit
metrics consistent with FY 2016
* Mortgage lending delivered at spreads in line with
expectations.
------------------------------------------------------------------------
Credit cards
* Credit card balances of GBP2.7 billion with stable
customer behaviour and arrears levels
* Credit card asset quality remained strong with
arrears improving modestly from FY 2016
* Customer usage and transaction behaviours unchanged
and in line with our modelled expectation
* We support the proposals in the recent FCA
consultation paper CP17/10 and do not expect there
will be any material financial impact when the draft
remedies are implemented if they remain as currently
proposed.
------------------------------------------------------------------------
Funding
* Deposits increased by GBP0.9 billion during the
quarter to GBP29.0 billion
* Cash ISA inflows were 39 per cent higher than Q1 2016
* Reprice of approximately GBP5 billion of balances
concluded with retention of over 97 per cent
* TFS drawings stood at GBP2.5 billion at 31 March
2017.
------------------------------------------------------------------------
Profitability and capital ratios
* Costs in line with expectations and the cost:income
ratio improved further
* Cost of risk consistent with FY 2016 and well within
full year guidance
* Profitability, earnings and underlying return on
tangible equity in line with expectations
* Capital ratios remained strong and well above
regulatory requirements.
------------------------------------------------------------------------
Digital Bank
* The development of a new digital banking platform in
partnership with 10x Future Technologies is
progressing according to plan and expectations. The
proposition is being designed to deliver a
market-leading customer experience driven by
best-in-class next generation analytics. The Group
looks forward to updating the market with an update
presentation later in the year.
------------------------------------------------------------------------
2017 Outlook
* The UK economy has remained stronger than expected
following the referendum result. A reduction in
unemployment and the continued, if slower, growth in
house prices since June 2016 have been positive for
Virgin Money. We watch the increase in consumer
indebtedness closely and continue to lend responsibly
to our prime books of mortgage and credit card
customers who are showing no signs of strain in the
current environment
* Mortgage competition remains strong in certain
segments and our nimble approach to distribution and
pricing enables us to manage product price and volume
in accordance with expectations
* Cards competition has increased and we have not
followed competitors into top of the table pricing.
We prioritise asset quality over balance growth,
despite which we remain confident of achieving GBP3
billion of prime credit card balances by the end of
2017
* The Group remains well placed and confident of
delivering against guidance for full year 2017 which
is reaffirmed today.
-------------------------------------------------------------------------
Analyst and investor call
An analyst and investor call will be held as
follows:
Date: Tuesday 25 April 2017
Time: 9.30am
Dial: +44 20 3059 8125
An operator will assist you in joining the call.
---------------------------------------------------
Enquiries:
Virgin Money Press Office
Scott Mowbray / Simon Hall
0191 279 4676 or press.office@virginmoney.com
FTI Consulting
John Waples / Mitch Barltrop
07717 814520 / 07807 296032
john.waples@fticonsulting.com /
mitch.barltrop@fticonsulting.com
Virgin Money Investor Relations
Adam Key
020 7111 1311 or adam.key@virginmoney.com
NOTES TO EDITORS
About Virgin Money
-- Virgin Money offers savings, mortgages, credit cards, current
accounts, currency services, pensions, investments and protection
products to customers across the UK
-- Virgin Money's business ambition is to make "everyone better
off" - this philosophy underpins our approach to business by
offering good value to customers, treating employees well, making a
positive contribution to society and delivering a profit to
shareholders
-- More than 12,500 charities have registered with Virgin Money
Giving and, by the end of Q1 2017, over GBP530 million had been
raised for charity through the service since its launch in 2009,
resulting in an estimated GBP16 million more raised for charity
because of its not-for-profit model.
Note: all figures contained in this trading update are
unaudited
Alternative performance measures
The Group uses a number of alternative performance measures, in
the discussion of its business performance and financial position.
Further information on these measures is set out on page 267 of the
Annual Report and Accounts 2016.
Forward looking statements
This document contains certain forward looking statements with
respect to the business, strategy and plans of Virgin Money Group
and its current goals and expectations relating to its future
financial condition and performance. Statements that are not
historical facts, including statements about Virgin Money Group's
or its directors' and/or management's beliefs and expectations, are
forward looking statements. By their nature, forward looking
statements involve risk and uncertainty because they relate to
events and depend upon circumstances that will or may occur in the
future. Factors that could cause actual business, strategy, plans
and/or results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward
looking statements made by the Group or on its behalf include, but
are not limited to: general economic and business conditions in the
UK and internationally; inflation, deflation, interest rates and
policies of the Bank of England, the European Central Bank and
other G8 central banks; fluctuations in exchange rates, stock
markets and currencies; the ability to access sufficient sources of
capital, liquidity and funding when required; changes to Virgin
Money's credit ratings; the ability to derive cost savings;
changing demographic developments, including mortality, and
changing customer behaviour, including consumer spending, saving
and borrowing habits; changes in customer preferences; changes to
borrower or counterparty credit quality; instability in the global
financial markets, including Eurozone instability, the exit by the
UK from the European Union (EU) and the potential for one or more
other countries to exit the Eurozone or EU, and the impact of any
sovereign credit rating downgrade or other sovereign financial
issues; technological changes and risks to cyber security; natural
and other disasters, adverse weather and similar contingencies
outside Virgin Money's control; inadequate or failed internal or
external processes, people and systems; terrorist acts and other
acts of war or hostility and responses to those acts; geopolitical,
pandemic or other such events; changes in laws, regulations,
taxation, accounting standards or practices, including as a result
of the exit by the UK from the EU, regulatory capital or liquidity
requirements and similar contingencies outside Virgin Money's
control; the policies and actions of governmental or regulatory
authorities in the UK, the EU, the US or elsewhere including the
implementation and interpretation of key legislation and
regulation; the ability to attract and retain senior management and
other employees; the extent of any future impairment charges or
write-downs caused by, but not limited to, depressed asset
valuations, market disruptions and illiquid markets; market
relating trends and developments; exposure to regulatory scrutiny,
legal proceedings, regulatory investigations or complaints; changes
in competition and pricing environments; the inability to hedge
certain risks economically; the adequacy of loss reserves; the
actions of competitors, including non-bank financial services and
lending companies; and the success of Virgin Money in managing the
risks of the foregoing.
Any forward-looking statements made in this document speak only
as of the date they are made and it should not be assumed that they
have been revised or updated in the light of new information of
future events. Except as required by the Prudential Regulation
Authority, the Financial Conduct Authority, the London Stock
Exchange plc or applicable law, Virgin Money expressly disclaims
any obligation or undertaking to release publicly any updates of
revisions to any forward-looking statements contained in this
document to reflect any change in Virgin Money's expectations with
regard thereto or any change in events, conditions or circumstances
on which any such statement is based.
Virgin Money Holdings (UK) plc - Registered in England and Wales
(Company No. 03087587). Registered Office: Jubilee House, Gosforth,
Newcastle upon Tyne NE3 4PL.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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