Virgin Money SME Lending Plans Foiled By Brexit (For Now)

The stock exchange and FX markets may have stabilized, but fallout in the wake of the Brexit vote continues.

The latest victim is Virgin Money, which revealed this week that it won’t be moving forward with plans to begin lending to small and medium-sized businesses — for now.

Reports on Tuesday (July 26) said Virgin Money is shelfing the initiative due to economic uncertainties related to Brexit.

According to the company’s chief executive, Jayne-Anne Gadhia, interest rates are expected to drop again by a quarter of a point from its current 0.5 percent — a record low — and are likely to remain at this level for at least the next three years. Those low interest rates have caused Virgin Money to drop its profit guidance for the next year.

Earlier this year, after Virgin Money released its 2016 Q1 figures, the company said it would be exploring the SME banking segment, though Gadhia remained vague on details.

Gadhia announced Virgin’s decision to hold off on SME lending after the company released its 2016 H1 figures. With profits up by 13 percent, share prices increased by 7 percent, according to reports.

The company will also re-shift its focus to all-digital banking services, reports said, instead of previous plans to offer bank accounts from high-street lenders. Virgin’s target for credit cards remains the same, reports said, and the company downplayed concerns over the mortgage market, which makes up 17 percent of Virgin Money’s lending operations.

Further, Brexit hasn’t affected consumer banking behavior, Gadhia said.