Proactive Investors - Virgin Money UK PLC (LON:VMUK) and other UK banks are "trading at a material discount to the sector", analysts at UBS noted ahead of first-half numbers from the challenger bank this Thursday.
VMUK's shares have been the worst performing of the UK-focused FTSE 350 banks in the year to date, down 17%.
Yet the first-quarter trading statement in February showed "solid trends", said the UBS analysts, with loans up 0.7% on the prior quarter, deposits up 1.2%, CET-1 capital levels up 10 basis points to 14.7% and net interest margin improving to 1.89%.
Headline full-year guidance was retained in all areas: for NIM 185-190bps, loan losses around 30-35bps, cost/income around 50%.
For the half-year results, the market expects underlying profit before tax of £314mln, down 15% on the year earlier.
"We expect the focus of the market to be on deposit volumes, liquidity metrics, net interest income/NIM trajectory (the impact of mortgage spreads below back book levels vs tailwinds from higher rates and reinvestment of the hedge positions), cost trends and areas of credit risk," said UBS.
In April, Virgin teamed up with Abrdn (LON:ABDN) to launch a new digital retail investment solution, run by a joint venture between the two companies, offering ISAs or general investment accounts direct to consumers via an app, and with plans to add a pension product before long.