Virgin Money delivered a rise in mortgage lending and ate up a larger chunk of market share during the first quarter, cementing its position as one of the UK's fastest growing challenger banks.
The lender said it enjoyed a 34 per cent rise in gross mortgage lending to £1.6bn at a time when mortgage lending in the market actually fell by three per cent. During the period it accounted for 3.6 per cent of all gross mortgage lending.
Credit card balances stood at over £1bn at the end of the quarter as 675,000 credit cards were migrated to the bank's own platform from MBNA after its acquisition of £1bn of Virgin Money assets from the holding company.
Virgin Money said the continuing migration is helping to grow its credit card business and the wider company through "simple, transparent products supported by strong risk management and excellent service".
Shares were up just short of two per cent on the news.
Pension sales recorded "modest" growth according to the company - that came in above expectations.
Why it's interesting
Retail deposits increased by three per cent from a year ago to £22.2bn, signifying the UK public's continued interest in moving away from larger, more distrusted banks to a challenger option. In November last year, Virgin Money floated on the London Stock Exchange, enjoying a successful IPO that valued the company at £1.25bn.
What's interesting about it approach is the variety of avenues it is taking to reach and attract those new customers. The company's "Virgin Money Lounges" which offer a cafe environment with wi-fi, tea and newspapers were visited by over 100,000 customers during the first quarter with a net promoter score (a measure of a customer's likeliness to recommend a service to a friend) of +85.
Yet arguably the most important aspect of its differentiated customer service is its digitally-led distribution model - an area the company continues to invest in. Virgin Money now has over 300,000 customers who access services from a mobile device.
What Virgin Money said:
In the first three months of 2015, we have continued on our trajectory of growth while retaining a high-quality balance sheet. We have also maintained strong momentum in the development of the business across multiple business lines, making significant progress towards our long-term strategic objectives.
I am particularly pleased that we successfully completed the migration of the credit cards we acquired from MBNA to our own platform and have launched our proposition to customers. We now have the full capability to originate and service our own cards, and this achievement marks the critical next step in the development of a major business line.
- Chief executive Jayne-Anne Gadhia
After underlying pre-tax profit doubled last year, Virgin Money well and truly laid down the gauntlet to the UK's "big five" banks. That challenge is increasingly impossible to ignore from the bank with a strong balance sheet, growing credit card business and a foreboding growth in market share.