Virgin Money’s lending to customers dropped by one per cent last quarter as the group prepares to be taken over by Nationwide imminently.
Britain’s sixth-biggest high street bank reported that lending to customers had fallen from £72.7m in March to £72m by 30 June in a quarterly trading update this morning.
Mortgages also dipped, falling 1.1 per cent over the quarter or 2.7 per cent since a year ago, to just over £56m, while loans to businesses dropped 1.1 per cent as well to £9.2m.
However, there were some strong figures in the group’s results, with customer deposits surging 2.4 per cent over the quarter to £69.8m, while unsecured loans to 1.3 per cent to £6.8m.
Last month, the Competition and Markets Authority gave the takeover by Nationwide the go-ahead, stating the £2.9bn tie-up was a “relevant merger situation” that would “not give rise to a realistic prospect of a substantial lessening of competition”.
First announced in March, the merger is set to create the country’s second biggest mortgage lender after Lloyds Banking Group, but some Nationwide members have set they have been shut out of decision making on the deal.
Virgin Money is set to keep operating as a separate legal entity within the Nationwide group in the medium term, with a separate board and banking licence. However, the two lenders agreed that after four years, the business would have two years to rebrand from the Virgin name.
The rest of Virgin Money’s results today were similarly middling, with net interest margin dropping slightly from 1.94 per cent to 1.89 per cent, while the group’s CET1 ratio ticked down 0.2 per cent to 14.4 per cent.
The group added that it expected between five to 10 per cent growth across its target lending segments of the business and unsecured lending across the rest of the financial year.
David Duffy, CEO of Virgin Money, said that the group’s strategy remained “on track”, as today’s results were in line with guidance provided to the market.
“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,” he said.
“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.”