Virgin Money Holdings (UK) plc (LON: VM.) today updated the market with its Q3 results. The company has seemingly shrugged off the Brexit vote and recorded strong growth in line with previous guidance.
The company said that its net mortgage lending is up 19% for the first 9 months of 2016 compared to 2015 figures to stand at £6.5bn. Market share of the mortgage market is 3.6%
Credit card balances have risen to £2.2 billion as at the end of September 2016, 41 per cent higher than FY 2015, once again in line with the company’s previously issued forecast. Balances are well on their way to the targeted £3bn for FY2017
The 25 basis point cut in the banks base rate did impact net interest income during the third quarter. As a result, the Group states that it expects a FY16 NIM of just below 160bps.
Despite all results falling in line with company expectations, the markets have so far shrugged off the news, with the share price down 9.2p (2.77%) in early afternoon trading.
My target price on the share remains unchanged at £4.00
I am impressed by Virgin Money’s response to the current economic outlook. Jayne-Anne Gadhia, Chief Executive Officer said “Having tightened our credit scores for new card applications following the EU referendum to protect the credit quality of new credit card lending, growth slowed in the last quarter, as planned”. The company is prioritising quality lending over a quick return, and if the bank can keep this up and maintain double digit growth, well maybe £4.00 will prove conservative.
I hold a position in Virgin Money.