Virgin Money said it had a strong performance in the first quarter of its financial year and said it believed the UK economy was recovering from the pandemic.
The bank – which has its main offices in Newcastle, Leeds and Glasgow – issued a business update in which it said there was “some scope for optimism about the pace of recovery”.
It said it was improving its deposit mix, with overall deposits falling 2% to £65.5bn, but “relational deposits” – where current account customers have a linked savings account – increasing slightly to £31 billion.
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The bank has seen 140,000 new accounts opened since its Brighter Money Bundles campaign began last year, but it has closed 28 of its branches, including former banking sites in Yorkshire and Clydesdale as the group rebrands itself entirely in Virgin Money.
Mortgage and business lending fell over the period as mortgage lending was impacted by the end of stamp duty relief and stiff market competition. He said business lending fell as demand remained ‘subdued’ and the government’s Covid-19 support programs began to taper, although he expects a rise later in the year. .
Unsecured lending rose 3% with a significant increase in people’s spending on credit cards, and Virgin Money raised the outlook for its net interest margin, a key measure of retail bank profitability.
Chief Executive David Duffy said: “Virgin Money’s first quarter performance was strong. Our balance sheet is healthy, asset quality remains strong and we have increased our net interest margin guidance for 2022.
“We are optimistic about the pace of recovery in the UK economy based on growing consumer and business confidence, supported by falling unemployment.
“We continued our strong offering of new digital propositions, including the launch of our no-fee digital business checking account and innovative new unsecured lending products, with more to come later this year.
“We have also launched our new working model, ‘A Life More Virgin’, offering full remote working flexibility, which leads the industry in providing a scalable digital working environment that meets the needs of our customers. .”
The business update highlighted how it was moving towards a more flexible working model, which led to an announcement in December of partial closures and other changes to its offices in Newcastle, Glasgow and Leeds.
The bank added that it expects restructuring charges of £275million over the next three years, with around half down this year.