Challenger bank Virgin Money has announced a move into the small business banking market, as it looks to step up competition with the UK’s biggest lenders.
The company said it would launch an SME savings account in January 2018 as a first step towards offering more products to business customers.
The FTSE 250 firm has set its sights on securing £5bn of SME deposits within five years in a bid to capitalise on what it describes as an “attractive, but poorly served market”.
However, shares fell more than 4% in morning trading after the company warned that its annual share of gross lending would be at the lower end of its 3% to 3.5% forecast.
The bank said the change was driven by a need to manage margin amid pressures in the mortgage market.
On track for full-year targets
Virgin Money also pencilled in banking net interest margin to drop from 170 basis points to 165 basis points in 2018, but said it was still on track to meet its full-year financial targets.
Chief executive Jayne-Anne Gadhia said: “We are also delighted to announce the start of our journey into SME banking and we will be launching a new SME savings account in January 2018.