Virgin Money has increased its business lending and has reported a strong contribution from customers joining through the Banking Competition Remedies (BCR) incentivised switching scheme.
According to figures in Virgin Money’s trading update report, the bank saw its business balance grow by 2.5% during the last three months of 2019. While Virgin Money accredits the BCR switching scheme as contributing to its strong performance, it highlighted that the overall pace of both asset and liability switching through the scheme was slower than expected.
In addition to a strong business performance, the report also highlighted strong growth in the personal lending sector, however it acknowledged a weaker performance in the mortgage sector.
Commenting on the figures, David Duffy, CEO at Virgin Money UK PLC, said: “The Group continues to perform well. In a difficult market, our own performance has remained on track and we continue to make strong progress on our ambition to disrupt the status quo.
“We are attracting relationship deposits and delivering growth in customer balances across business and personal, while maintaining our discipline in a competitive mortgage market.
“We have also now delivered on our commitment to lend £6bn to SMEs over the three years to the end of 2019, with £6.5bn lent in total. This included lending of £1.3bn in Scotland, £0.9bn in Yorkshire, £0.9bn in the North West and £0.5bn in the Midlands, demonstrating our support for SMEs across the regions of the UK.”
The BCR incentivised switching scheme was established to encourage businesses with an annual turnover of up to £25m to switch their business current accounts and loans away from Royal Bank of Scotland to participants of the scheme. The scheme allows funding of up to a maximum total of £275m to participants of the scheme to encourage business customers to switch to using their products. £225m of the fund is available to participants as dowries for customers who switch their business current account, while £50m is available for loan-related dowries. The dowries are distributed quarterly and are required to be used for the benefit of the transferring customer. The amount received will depend on the customer’s turnover and outstanding loan balance. The scheme is due to end on 25 August 2020, however if the £225m fund has been paid out before this time it will end earlier.
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