Lender Virgin Money has revealed a hit to mortgage lending amid a “difficult” market and intense competition.
The group – formerly known as CYBG – reported a 0.8% fall in mortgages to £59.6 billion in the final three months of 2019 as it held off from slashing rates to attract borrowers.
It said the first quarter drop was expected as it looked to focus on higher growth areas, such as business and personal lending, and attract more savings business.
Chief executive David Duffy cautioned that ongoing Brexit uncertainties were also taking their toll on the wider banking sector.
The group, which is rebranding its Clydesdale and Yorkshire Bank businesses as Virgin Money – saw customer deposits grow 1.6% to £64.8 billion over its first quarter.
Business lending also surged 2.5% to £8.1 billion as it was boosted by customers switching from Royal Bank of Scotland after it took a slice of the part-nationalised lender’s fund aimed at increasing competition in Britain’s banking sector.
But Virgin Money said the switching demand from RBS customers was weaker than expected.
Mr Duffy said: “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.”
He added: “While sentiment improved following December’s election result, the UK banking market continues to face competitive pressures and uncertainty over the final Brexit settlement.”