Virgin Money sees lending dip ahead of Nationwide mega-deal

The bank said it lent less to customers but saw stronger demand for savings in recent months.

Virgin Money has said it lent less to customers in recent months but reported stronger demand for savings (Mike Egerton/PA) (PA Archive)

Virgin Money has said it lent less to customers in recent months but reported stronger demand for savings, as the bank prepares to be taken over by Nationwide by the end of the year.

Total lending to customers fell by 0.9% to £72 billion between April and June, compared with the first six half of its financial year.

Mortgages shrunk by 1.1% which the bank said was partly driven by the impact of more customers paying off their mortgage in full, as people took steps to avoid rolling on to deals with higher interest rates.

It also reflected more “disciplined” lending as the bank tried to protect its finances.

On the other hand, unsecured lending, including credit cards, grew by 1.3% in recent months.

And customer deposits jumped by 2.4% as more people opened ISA accounts at the start of the new tax year, it said.

Meanwhile, Virgin Money said it expects its business costs to be higher than previously expected after putting its restructuring plans on ice ahead of the proposed £2.9 billion takeover by Nationwide.

The restructuring formed part of wider cost-saving plans, which included job reductions and scaling back its branches, announced earlier in the year.

But the plans were paused after it reached a deal with Nationwide in March, with the acquisition expected to be completed by the end of the year.

Virgin Money also said it had incurred about £10 million worth of costs related to the deal so far, which it anticipates to be “significantly higher” during the rest of the year.

The UK’s competition watchdog cleared the deal last month after launching an inquiry to see if it had any concerns about the impact on banking customers.

The takeover still needs approval from the UK’s financial regulators.