Virgin Money takes bigger slice of mortgage market as gross lending increased to £1.6bn

The Newcastle-based bank pushed gross mortgage lending up 34% in the first quarter of this year, as the overall market shrank

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Virgin Money chief executive Jayne-Anne Gadhia

Newcastle bank Virgin Money is set to take on credit card giants Barclaycard after an encouraging set of financial results.

The Gosforth-based bank took a bigger bite of the UK mortgage lending market in the first quarter of 2015, as it reported a 34% rise in gross lending to £1.6bn.

It estimates it held a 3.6% market share of UK mortgage lending in the period, at a time when the market shrank overall.

Speaking to The Journal, chief executive Jayne-Anne Gadhia said improved customer retention and the bank’s work with mortgage intermediaries had helped the rise — which was at the top end of expectations.

Ms Gadhia said: “We’ve achieved this in two ways. The first is through our strong relationships with intermediary partners and their support for our products.

“The second is through the service that we’re able to give those intermediaries — and that’s really a Newcastle story. It’s down to the people in Gosforth and their hard work that we’ve been able to achieve that.”

Retail deposits increased to £22.2bn, a 3% rise year-on-year, and credit card balances totalled more than £1bn following the successful integration of Virgin’s recently acquired from MBNA.

Virgin migrated around 657,000 credit card accounts in March from MBNA, the Chester-based company that had managed Virgin Credit Card assets since 2002.

Ms Gadhia outlined the bank’s ambitions to challenge market leaders Barclaycard now that it has its own platform for the credit cards business in place.

The bank also said a TV advertising campaign, designed to build consumer awareness, and the first since Virgin’s takeover of Northern Rock, had “surpassed expectations”. Homepage traffic increased on the back of the activity and the adverts were watched more than five million times on social media.

Elsewhere modest growth in pension sales were said to have surpassed expectations thanks to the impact of auto enrolment and a new life insurance product was launched, following an agreement with Friends Life.

A roll-out of Virgin’s current account completed in March — making the product available in all of the bank’s 75 branches.

The bank reiterated its mission to challenge the “anti-competitive” nature of the current account market, particularly the free-if-in-credit model.

More than 100,000 customers were said to have used “Virgin Money Lounges” — the lender’s relaxation areas which offer Wi-Fi, tea, coffee and newspapers.

Ms Gadhia added: “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, marking 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.

“We are confident that we can continue to build on the strong foundations we have laid for the business, and remain focused on delivering growth, quality and returns for the benefit of all of our stakeholders.”

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