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Highlights

  • Virgin Money provides banking products and services
  • In 1QFY24, the company witnessed increase in new accounts, deposits and target lending segments
  • Underlying net interest income increased by 8% YoY in FY23

Dual listed company, Virgin Money UK PLC (ASX: VUK) provides banking products and services in the United Kingdom. The AUD 3.94 billion market-cap company made a strong start to the financial year 2024 (FY24) as its first quarter results were in line with guidance. During the reported period, the company witnessed growth in deposits, new accounts and target lending segments at stable margins. In 1QFY24, mortgages dropped by 2.2% YoY, while the business and unsecured lending segments saw an increase of 6.7% and 7.8%, respectively. Customer deposits during the period grew by 1.7% YoY and the net interest margin and CET1 ratio stood at 1.89% and 14%, respectively.

Financial performance

In FY23, the company registered an 8% YoY rise in underlying net interest income to GBP 1,716 million and a 0.3% YoY rise in total customer lending. During the reported period, net interest margin stood at 1.91%, driven by early management of deposit migration, hedge re-investment and lending mix.

Statutory profit during the reported period dropped by 42% YoY due to higher impairments and adjusting items.

Top 10 shareholders of VUK

The top 10 shareholders of VUK have around 11.96% shareholding in the company, while the top four have around 10.11% shareholding. Ubique Asset Management Pty Ltd and Vanguard Investments Australia Ltd. have the maximum stake in the company, with a shareholding of ~5.28% and ~2.69%, respectively.

Recent business update

On 6 February 2024, the company notified that David Bennett would continue as the Board Chair for a further period of maximum two years to October 2026.

Outlook

In FY24, NIM is expected to be in a range of 190bps – 195bps and CET1 is anticipated to reach 13-13.5%. In unsecured and BAU business, continued loan growth is anticipated.

In FY23, provision coverage strengthened, and this is anticipated to take cost of risk in the range of 30-35bps in FY24.

By the end of the three-year period ending in 2024, the company is expected to deliver a distribution of GBP 800 million.

The focus is on maintaining balance sheet resilience, cost-efficiency through digitization and register growth in return-accretive segments. Moreover, the company is committed to registering growth in relationship deposits and target lending segments.

Share performance of VUK

Shares of VUK closed 0.32% up at AUD 3.11 apiece on 19 February 2024. Including today’s gain, in the past one year, VUK’s share price has decreased by 0.96%, while in the past nine months, it has increased by 7.24%.

The 52-week high of VUK is AUD 3.51, recorded on 4 August 2024, and the 52-week low is AUD 2.52, recorded on 29 March 2023.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 19 February 2024. The reference data in this report has been partly sourced from REFINITIV.