(Reuters) - Britain’s Virgin Money UK (VMUK.L) said on Tuesday it had increased its business loan book, adding that it had kept its costs from an industry-wide mis-selling scandal in check.
Shares in the owner of Clydesdale and Yorkshire banks, which became Britain’s sixth-biggest bank after CYBG bought Virgin Money in 2018, were up 1.6% at 0930 GMT.
Virgin Money said its first quarter business lending had risen 2.5%, adding that sentiment improved after Prime Minister Boris Johnson won a parliamentary majority in December.
However, Virgin Money warned the banking industry still faced uncertainty over the terms on which Britain will trade with the European Union after Brexit.
The bank, which had its market debut in 2016, has gone through a rebranding since the takeover, betting on the high profile brand of Richard Branson’s Virgin empire to challenge larger rivals such as Lloyds (LLOY.L).
Virgin Money said its mortgage business dropped 0.8% to 59.6 billion pounds ($78 billion). It had previously said it will adopt a more cautious approach in the highly competitive home loan market, prioritizing business lending and credit cards.
The bank, which assured investors in November that the worst of an industry-wide scandal of mis-selling payment protection insurance was behind it, said costs relating to the mishap were in line with its provisions.
Net interest margin (NIM), the difference between what banks earn from loans and pay for deposits, was unchanged at 160 basis points, and the lender Virgin Money said it continues to target a NIM for the year of between 160 and 165 bps.
KBW analysts said the update was “somewhat lackluster”.
“The challenge is that while management talk the talk business performance is more in line with a traditional incumbent,” KBW analysts said in a note.
Reporting by Muvija M in Bengaluru, Additional reporting by Iain Withers in London; Editing by Bernard Orr and Alexander Smith