By Charlie Conchie
Virgin Money warned of further cost-cutting and layoffs to come today after slashing its headcount in the first quarter of the year.
In a trading update this morning, the London-listed lender said it was on track to deliver £200m of annualised savings after “accelerating restructuring and digitisation activity” at the start of its financial year.
The firm has followed scores of high-street lenders in closing branches and slashing its headcount in recent years in a bid to contain costs and account for the shift to digital banking. A total of 39 stores were shuttered in the first quarter, a reduction of 30 per cent to 91 stores.
Some 150 staff were laid off as a result of the restructuring and bosses said they “expect further reductions in [full time employees] during the year”.
“We are also looking to make increasing use of other more cost-effective geographies for outsourced activities,” they added.
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In its first quarter trading update today, the bank predicted a rebound in the mortgage market despite its overall lending to customers dipping 0.3 per cent to £72.83bn in the first three months of its financial year.
Overall mortgage lending to customers fell 2.2 per cent to £57.1bn on the back of what it said reflected a “disciplined approach to trading in subdued market”.
The housing market has been hammered over the past 18 months as the Bank of England has hiked rates aggressively to tame inflation. City analysts are pricing in rate cuts this year and banks have begun cutting rates across the board on their mortgage products.
In a statement, the bank said it was seeing “early signs that market activity has improved in January” and was climbing back to 2019 levels.
“We are encouraged by both our customers’ resilience and improving sentiment in the mortgage market as interest rates have peaked,” said chief David Duffy. “We carry good momentum into 2024 as we continue to successfully execute our strategy.”
The slide in mortgages was softened by an uptick in Virgin’s business and unsecured lending.
Business lending grew 6.7 per cent on last year on the back of “strong demand at good margins in our sector specialisms”, the firm said. Credit card borrowing also provided a boost to its unsecured business as lending increased 7.8 per cent on the same period in 2023.
