The Virgin Money share price surged by nearly 15% today on the back of optimism of a coronavirus vaccine and general outlook of the economy.
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The Virgin Money UK (ASX: VUK) share price was one the highest movers on the ASX today, rising by almost 15% to $2.40. Meanwhile the ASX has also gained across most sectors, still fuelled by the news that a vaccine for COVID-19 is imminent. The Virgin Money share price was the highest gainer of all the mid cap stocks today, with all major bank shares also moving in the same direction.
Why did Virgin Money UK rise today?
As mentioned, the big jump in the Virgin Money share price today was mainly driven by optimism around the availability of a vaccine. The share price was also buoyed by the news that consumer confidence in Australia is at a seven-year high. Meanwhile in London, where Virgin Money operates, the FTSE 100 Index (FTSE: UKX) has risen for two consecutive days, with a total gain of 6.46%. Yesterday’s FTSE closing level is the highest since 23 June. The market euphoria is continuing despite the United Kingdom showing a jump in its unemployment level from 4.5% to 4.8% in the September quarter, according to official data released yesterday.
Why is the UK economy important for Virgin Money?
Virgin Money derives all of its income from the UK. The history of Virgin Money dates back to 2016, when National Australia Bank Ltd. (ASX: NAB) demerged its UK operations in Clydesdale Bank and Yorkshire Bank (known collectively as CYBG). The combined entity of CYBG and Virgin Money was renamed Virgin Money UK PLC in 2019.
Virgin Money is a mid-sized bank, and its market share is dwarfed by the UK’s big five banking entities. Around 80% of Virgin Money’s loan book is in mortgages, with 30% of this concentrated in London’s property market alone. Virgin Money UK will be renamed to Virgin Money in 2021.
How has the Virgin Money share price performed in 2020?
In its quarterly trading update to 30 June 2020, Virgin Money announced that it had not seen any significant provisions or credit losses due to the COVID-19 pandemic, mainly due to government support. The Virgin Money share price had lost around 40% on a year-to-date basis before today’s 15% jump. With today’s gains, the Virgin Money share price is now 32% lower year to date and has a market capitalisation of $2 billion.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.