Virgin Money Holdings (LON:VM.) shares rose on Tuesday as the challenger bank maintained its full-year guidance after achieving first-quarter growth in mortgages, credit cards and deposits.
The lender said mortgage balances at the end of March came to £33.8bn, up 10.4% on the previous year, despite tough competition in mortgage lending.
Credit card balances rose 13.9% to £3.1bn as the launch of its Virgin Atlantic frequent flyer cards were well received by customers.
The start of the group’s small and medium enterprises deposit account in January helped deposit balances to rise 7.4% to £31.2bn.
In March, Virgin Money announced it was forming a joint venture with Aberdeen Standard Investments (ASI) to provide asset management services to customers of the challenger bank.
ASI, the asset management arm of Standard Life Aberdeen (LON:SLA), is to buy 50% of Virgin Money Unit Trust Managers for an upfront payment of £40mln. The deal is expected to be completed by the end of this year.
READ: Virgin Money and Standard Life Aberdeen investment arm form asset management services joint venture
In Virgin Money’s first quarter update on Tuesday, chief executive Jayne-Anne Gahdia said the company believes the new partnership will “drive significant growth” in assets under management.
The bank has £3.7bn in assets under management and 200,000 customers.
Gahdia added: “We remain on track to deliver on the targets we set at the end of last year."
In late morning trading, Virgin Money shares were 4.6% higher at 291.5p.
In a note to clients, analysts at Shore Capital reiterated a ‘buy’ stance on the stock with a fair value price target of 360p, offering 29% upside.
They said: “While we recognise the risks associated with the group’s relatively high exposure to interest free balance transfer credit cards utilisation of the Term Funding Scheme (which has now closed to new drawings today), we believe these are already more than fairly reflected in the current share price, while delivery on the strategic plan set out at the November 2017 Capital Markets Day suggests significant upside potential, in our view.”
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