Virgin Money is maintaining its challenge to the big banks in the mortgage market and has reaffirmed its ambitions in small business lending.
The challenger bank, which employs 200 in Edinburgh, floated last year having absorbed the former Northern Rock assets. It said net mortgage lending had almost doubled to £2.6 bn in the first nine months of the year as it reported strong third-quarter progress.
Gross mortgage lending up was 38 percent to £5.5 billion in the first eight months of 2015, giving it a 3.5 per cent share of the mortgage market, a rise of 25 per cent on its published share for 2014.
The housing market has been buoyant this year and the Royal Institution of Chartered Surveyors last month doubled its forecast for house price gains this year to six per cent.
The bank has hired George Ashworth from ABN Amro to head its small and medium-sized business banking unit and develop an SME strategy.
Virgin Money runs around 75 branches across the UK and has previously identified the SME sector as an area of growth for the business.
Chief executive Jayne-Anne Gadhia said that it was a “natural step for the brand”, having received enquiries from small business owners over the past few years. She said the bank was not now expecting any rise in interest rates for another 12 months.
Virgin, backed by founder Sir Richard Branson and US financier Wilbur Ross, said its retail deposits lifted by 3per cent to £23.7 billion from the end of June.
The lender said asset quality remained strong, with a continuing low level of impairments in the third quarter.
It added that over the last three months its share of the UK's £62 billion credit market lifted to 2per cent from 1.8per cent as it launched new cards.
Ms Gadhia said: “I am particularly pleased with the continuing strength of our mortgage business. The demand for our new range of credit cards has exceeded expectations in the quarter as customers have responded to the quality and breadth of our proposition.
“As a result we remain confident that we can grow our credit card business to our target of £3 billion of balances by the end of 2018.”
Ms Gadhia reiterated the bank's view on free in-credit banking, saying it had caused a distortion in the market-place but was difficult politically. “Taking away from the UK consumer something that is free I think is a challenge,” she said.
In July she warned that the new bank surcharge would slow its progress, and margins were now under pressure. Taxation will dampen its return on tangible equity - the slightly more favourable measure than return on equity now used by many banks.
The group said it “continues to be confident of delivering on its medium term targets as previously guided”.
Gary Greenwood, analyst at Shore Capital, said the lender had demonstrated “strong lending growth and market share gains in its mortgage and credit card businesses, with the latter tracking ahead of our expectations due to stronger than anticipated demand”.
Analysts at Citi said in a note that the bank's growth had been stronger than anticipated, especially in credit cards, and this could led to upgrades of around five percent in earnings forecasts.
The shares were up 3.5p at 406.1p.
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