Davy Research

Virgin Money Holdings

Virgin Money: Double-digit returns on operational leverage drive 'Outperform' rating
Banks
Virgin Money Holdings

DAVY VIEW

Virgin Money enjoys a privileged position in the UK challenger landscape with its robust capital and liquidity and influential brand enabling strong growth. Yet it also profits from some incumbent-like benefits (e.g. internal ratings-based (IRB) risk models, wide broker reach) without their legacy issues. We believe our assumptions around volumes, net interest margin and impairments are relatively cautious (Brexit-driven), yet the bank’s powerful operating leverage still ensures that it generates attractive double-digit returns on equity. We view the current price as attractive and initiate coverage with an ‘Outperform’ rating and a 12-month price target of 375p.

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  • RATINGS AND PRICE CORRECT AT TIME OF ISSUE


  • Virgin Money Holdings

    Closing Price: 307p

  • RATING 20/10/16

  • PREVIOUS RATING N/A

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