(Alliance News) - Virgin Money UK PLC said Tuesday its trading in the final three months of 2019 was in line with board expectations.
Virgin Money UK - formerly known as CYBG - said it continued to perform well in the first quarter of its financial year, despite a "difficult market".
The FTSE 250-listed bank ended December 31 with a loan book of GBP72.9 billion, down slightly from GBP73.0 billion at the end of September. Virgin Money's Mortgage book slipped 0.8% in the three months to GBP59.6 billion from GBP60.1 billion.
"Mortgages saw a small reduction in balances, as expected, with lower first-quarter originations as we chose not to compete aggressively in the seasonally competitive period during which peers typically seek to meet year-end targets. The group expects to maintain its about 4% market share as we optimise for value," the Glasgow-headquartered lender explained.
Business and Personal lending rose 2.5% and 3.7% to GBP8.1 billion and GBP5.2 billion, respectively.
Customer deposits rose in the 1.6% quarter to GBP64.8 billion.
"The group continues to perform well. In a difficult market, our own performance has remained on track, and we continue to make strong progress on our ambition to disrupt the status quo," Chief Executive David Duffy said.
He continued: "We are attracting relationship deposits and delivering growth in customer balances across business and personal, while maintaining our discipline in a competitive mortgage market."
Virgin Money said its net interest margin in the first quarter was stable at 1.60%, flat on the fourth quarter of financial 2019. The lender continues to expect its NIM in financial 2020 to be between 160 and 165 basis points.
The lender's CET1 ratio fell 20 basis points in the quarter to 13.1%, which was attributed to a rise in risk-weight assets - blamed on Business lending "seasonality". Virgin Money kept its target CET1 ratio of about 13%.
Virgin Money also said its payment protection insurance claim costs are "tracking in line with provision assumptions".
The lender took an additional GBP385 million PPI provision for the fourth quarter of financial 2019. Virgin Money processed a further 100,000 PPI requests in the first quarter and said fewer than 50,000 requests remain.
"Information request conversion and complaint uphold rates are trending in line with our assumptions and the group assesses its remaining provision as sufficient to complete the programme," the bank said.
Duffy added: "While sentiment improved following December's election result, the UK banking market continues to face competitive pressures and uncertainty over the final Brexit settlement. However, we continue to focus on supporting our customers in their everyday lives, delivering on our strategic priorities and meeting our medium-term financial targets."
Shares in Virgin Money UK were 2.8% higher in London on Tuesday morning at 170.05 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Virgin Money Uk (VMUK)