Virgin Money just reported a pretty good year. The U.K.-based lender said its pre-tax profits increased by 53 percent due to strong consumer lending and credit card operations.
Reports on Wednesday (March 2) outlining Virgin Money’s latest financial results also highlighted the corporation’s hints at entering into a new vertical: small business finance.
According to a brief by Reuters, the “challenger bank” — a financial institution competing directly against the U.K.’s mainstream banks — said it will be exploring opportunities in the SME banking segment.
It’s just a small, vague hint, but other remarks by the bank’s chief executive, Jayne-Anne Gadhia, suggest that the company is eyeing the possibility of a Brexit, the nickname used for the U.K. leaving the European Union.
According to the CEO, a Brexit would likely lead to increased consumer finance costs and increased financial product costs due to market uncertainty and volatility, as well as a potential hit on the value of the sterling.
“I would see that prices would probably increase, and we would follow the market in pricing accordingly,” Gadhia stated.
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Could it be possible that a rise in consumer financial product costs would encourage Virgin Money to turn to a new type of client for business? And could that new client be the SME?
It’s entirely hearsay up to now, but an interest in the small business finance industry by the bank is clear, especially as challenger banks emerge in the market, largely to fill the small business lending gap left by mainstream FIs.
