Virgin boosts SME lending

VIRGIN Money moved to position itself as the leader among the challenger banks, saying it had lent £6 billion to small firms over the past three years.

That included £1.3 billion to SMEs in Scotland and £0.9 billion in Yorkshire, putting it in line with Boris Johnson’s plans to boost regions outside London.

While that lending is lower than its bigger rivals, analysts note that it is significant for a bank of Virgin’s size.

Chief executive David Duffy is the latest to detect a Boris bounce, saying “sentiment improved following December’s election result”, while noting “uncertainty over the final Brexit settlement”.

The strength of the competition in banking is shown in Virgin Money’s profit margin of just 1.6%.

In the three months to December, Virgin’s deposit base grew slightly to £68.4 billion. Mortgage balances fell a little as it chose not to “compete aggressively”.

Duffy, paid £2 million last year, could in theory get £5 million this year. That would include bonus and share awards of nearly £4 million, but would require him to hit some extremely hard targets including a 50% rise in the share price.

Virgin Money shares rose 3.5p to 169p today, which leaves the business valued at £2.4 billion.