Virgin Money UK (VMUK) Q3 2024 TU earnings summary

Executive summary

• Strategy remains on track with Q3 financial performance in line with guidance; deposit and unsecured lending growth continued, while mortgage and business lending declined slightly.

• Nationwide acquisition progressing as planned, with CMA clearance received and completion expected in Q4 2024.

Financial highlights

• Customer loans down 0.9% in Q3 to £72.0bn, mainly due to lower mortgage balances; unsecured lending up 1.3% to £6.8bn.

• Customer deposits rose 2.4% in Q3 to £69.8bn, driven by strong ISA demand.

• Net interest margin (NIM) at 1.89% in Q3, down from 1.94% in H1, reflecting lower card EIR adjustments.

• Adjusted cost:income ratio increased to 54% in Q3 (Q3 23: 51%) due to inflation and deferred cost savings.

• Q3 impairment charge was £45m, with annualised cost of risk at 25bps; credit provisions reduced to £611m.

Outlook and guidance

• FY24 guidance reiterated: 5-10% growth expected in business and unsecured lending segments.

• NIM for FY24 expected in the 190-195bps range, with H2 lower than H1.

• Adjusted cost:income ratio anticipated to be higher in H2; cost of risk expected at 30-35bps for FY24.

• No further share buybacks or dividends planned due to the pending acquisition.