LONDON (ShareCast) - (Sharecast News) - Virgin Money UK reported a 58% surge in underlying profit before tax in its interim numbers on Thursday to £388m, as its margin on lending expanded, although it noted an uncertain macroeconomic outlook.
The FTSE 250 retail bank said its net interest margin expanded 27 basis points year-on-year for the six months ended 31 March to 1.83%.

It put that down to higher rates, lower deposit costs from ongoing repricing and a mix benefit, and a higher yielding lending mix offsetting mortgage spread pressures.

Underlying non-interest income totalled £83m, which was up 26% year-on-year as a result of higher card spending and business activity levels.

Virgin Money said its underlying costs of £456m were 1% lower than the same period last year, as expected cost savings from its ongoing digital transformation and restructuring were offset by inflation, including agreed pay rises, along with targeted growth and planned higher digital development costs.

The bank said an impairment charge of £21m reflected updated macroeconomics and judgements.

It reported limited specific provisions and changes in asset quality metrics in the period, with a "defensively positioned" portfolio as the outlook became more uncertain.

Looking ahead, Virgin Money upgraded its net interest margin expectations for the full year to between 180 and 185 basis points, based on current rate expectations, while its costs were set to remain "broadly stable" compared to the 2021 financial year.

"We've made good progress against our strategy, while delivering a significant increase in profit," said chief executive officer David Duffy.

"We have positive momentum in attracting new customers to Virgin Money through record credit card sales, good growth in personal current account openings and a strong uptake of our new digital fee-free business current account."

Duffy said the bank had upgraded its net interest margin guidance given strong growth in unsecured lending, combined with a rising interest rate environment.

"Looking ahead, while the macroeconomic outlook is uncertain and there are increased cost pressures on consumers, we remain prudently provisioned and are confident in the quality of our loan portfolio."

At 0902 BST, shares in Virgin Money UK were down 5.66% at 167.45p.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE