Despite posting a pre-tax loss of £232 million, Virgin Money’s share price has jumped 22 per cent. The banking group blamed PPI pay-outs and the costs associated with its merger with Clydesdale and Yorkshire Bank group for the loss, and its share price hasn’t suffered now standing at 176.3p at the time of writing. Virgin Money has been forced to cancel its investor dividend plans for 2019 although it says its “progressive and sustainable dividend ambition remains, and the Board will reconsider dividends for FY20 in line with normal practice.’

The pre-tax loss is better than expectations, which explains the share price jump and the banking group has shown some promising signs of growth in areas. The improvement on net-interest-margin – the difference between what it pays for funds and earns from lending – seems to have been sufficient to reassure investors and analysts that the bank is heading in the right direction. It fell to 1.66 per cent over the period, down from 1.78 per cent, and mortgage lending grew by 1.7 per cent to £60.1 billion. Analysts remain reasonably optimistic on this one – many have pointed out that expectations were low and it’s a relief that Virgin Money has surpassed them. The majority think that the results show good momentum, and now that PPI claims and restructuring costs are paid, the bank should be able to move forward which would be good news for investors.

In the sub-prime finance sector, Amigo Loans also saw its share price shoot up 16 per cent despite posting a fall in pre-tax profit to £42.4m. Like Virgin Money, while Amigo’s numbers weren’t great, they were better than expected with no change to full year guidance which is probably a pleasant surprise for investors. The firm, which offers guarantor loans to those with poor credit ratings, had enjoyed fast growth in the past couple of years but has recently come under scrutiny from the Financial Conduct Authority. The regulator had said in March that it was concerned about the number of guarantors who had had to step in and repay loans, and Amigo responded saying it has launched a review about how it communicates with guarantors. So, is the lender’s stock likely to stay in the black following these results? Analysts seem cautiously optimistic, saying the shares seem cheap based on current metrics. Most are encouraged by the response to the FCA’s concerns and see it as a good sign that the regulator is not specifically criticising the lender’s product or operating model. Overall, Amigo’s customer numbers were up 18 per cent and based on its current share price of 65.00p, it has a prospective price to earnings ratio of just 4.1. Stock is down 75 per cent overall since the company’s flotation in June 2018, but these figures look solid if not particularly spectacular. If Amigo can respond adequately to regulatory pressure, an area that has been the death knell for some other sub-prime lenders, could it be a good buy for investors looking for a low entry point?