Virgin Money has seen a slowdown in customer lending as it approaches its final months as an independent, publicly-listed company.
The lender is set to be acquired by Nationwide in the final three months of the year, following regulatory clearance last month, with the £2.9billion deal proving controversial as a result of the building society’s decision to refuse members a vote.
Virgin Money saw customer lending fall 0.9 per cent to around £72billion in its third quarter to 30 June, with mortgage and business lending each suffered a 1.1 per cent contraction.
Virgin Money expects its takeover by Nationwide to take place in the final three months of 2024
The lender told investors the slowdown in mortgage lending reflected a ‘disciplined approach to trading to protect overall spreads’ and ‘higher redemptions given the rate environment’, while the business lending dip was the result of ‘seasonal effects’.
Total lending was buffered by 1.3 per cent growth in unsecured lending to £6.8billion on the back of credit card lending strength.
Virgin Money also enjoyed 2.4 per cent deposit growth over the period, bringing its total to £69.8billion, ‘reflecting strong Isa demand at the start of the new tax year’.
Boss David Duffy said: ‘We delivered continued growth in deposits and unsecured lending in Q3 and remain focused on developing innovative new products for customers and maintaining good momentum into Q4.’
Costs grew modestly over the period, with the banks adjusted cost-income ratio climbing from 51 to 53 per cent, as a result of ‘cost headwinds from inflation and deferral of cost savings’.
Virgin Money faces notable expenditure of £32million over the quarter, £10million of which reflected restructuring costs.
It posted a third quarter net interest margin – the difference between interest earned on loans and interest paid to borrow – of 1.89 per cent, down from £1.94 per cent.
Duffy said: ‘Our strategy remains on track, with financial performance in line with guidance.
‘The acquisition by Nationwide is progressing as anticipated with the recent CMA clearance, and we expect it to complete in the final quarter of the calendar year.’
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.