Virgin Money UK has announced its results for the first quarter of fiscal 2024, highlighting a stable net interest margin and an increase in deposits. The financial-services company posted a net interest margin of 189 basis points for the three-month period ending December 31, which remained flat compared to the same period in the previous year. Virgin Money UK expects the net interest margin to remain "resilient" throughout the rest of the year, and it maintains its guidance of 190 to 195 basis points for fiscal 2024.

During the period, the company experienced a slight decline of 0.7% in mortgage balances, amounting to £57.11 billion ($71.59 billion). However, it has observed early signs of market activity improving in January. On the other hand, business lending witnessed a rise of 3.2% to reach £9.02 billion, fueled by strong demand in specialist sectors. Unsecured lending also saw an increase of 2.8% to £6.70 billion, driven by credit card growth.

Virgin Money UK stated that it maintained a stable customer deposit mix, with deposits growing by 1.0% to £67.31 billion. Chief Executive David Duffy expressed optimism, stating, "We are encouraged by both our customers' resilience and improving sentiment in the mortgage market as interest rates have peaked. We carry good momentum into 2024."

Furthermore, Virgin Money UK ended the period with a common equity Tier 1 ratio of 14.0%, compared to 14.7% three months prior. The company expects this ratio to range between 13% and 13.5% for the full year, indicating a strong balance-sheet strength.

Virgin Money UK Focuses on Restructuring and Job Cuts in Q1

Virgin Money UK has announced its reduction of full-time employees by approximately 150 during the first quarter. The company plans for further job cuts throughout the year as part of its efforts to achieve GBP200 million in annualized savings from restructuring and digitization initiatives.

Store closures have also been a priority for Virgin Money UK, with 39 store closures in the period, leaving a network of 91 stores. Additionally, the company has reduced its office property footprint by around 35%. The company believes it still has more opportunities for rationalization.

To increase cost-effectiveness, Virgin Money UK aims to leverage other geographies for outsourced activities.

Looking forward to fiscal 2024, the company intends to maintain capital distribution at the fiscal 2023 nominal level and plans to announce buybacks in the second half of the year. According to estimates from a company-compiled consensus, Virgin Money UK is expected to implement a GBP162 million program with a 7.8 pence per share dividend for the year.

Virgin Money UK has confirmed that it has minimal exposure to the U.K. regulator's review into historical motor finance commission arrangements.

In further news, the company has granted approval for Board Chair David Bennett to continue in his role for up to two more years until October 2026. Bennett's tenure will reach nine years in October.

Shares in Virgin Money UK were up 1.6% at 152.1 pence as of 0830 GMT. However, over the past 12 months, the stock has experienced a decline of 22%.

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