Moody’s rates Virgin Money Baa2

Moody's Investors Service said it assigned Baa2 long-term deposits and issuer ratings, and Prime-2 short-term deposits and issuer ratings to Virgin Money plc.

The outlook is stable.

The agency also assigned a counterparty risk assessment of A3(cr)/Prime-2(cr) as well as a baa2 baseline credit assessment (BCA) and baa2 adjusted BCA.

Moody’s said the baa2 BCA reflects Virgin Money's: (a) Low asset risk, demonstrated through strong asset quality metrics; (b) Moody's view that capitalization is strong, albeit expected to decline as the bank continues to grow; and (c) high reliance on deposit funding, resulting in limited refinancing risk.

These strengths are balanced against Virgin Money's: (a) Risks related to rapid expansion and high loan growth; and (b) limited business diversification, with residential mortgages being the bank's main source of revenues and credit exposure, the agency added.

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