Virgin Money shares surge on profit rise, share buyback extension
By Frank Prenesti
Date: Monday 21 Nov 2022
(Sharecast News) - Virgin Money shares surged on Monday as the bank reported a 43% rise in full-year profits driven by higher interest rates and said it would extend its share buyback by £50m.
The bank said pre-tax profit surged 43% to £595m, beating analysts forecasts of £578m. It also posted impairment losses of £52m, compared with a £131m credit a year ago.
Shareholders were rewarded with a 7.5p-a-share dividend and an additional stock buyback on top of £75mn announced in June.
Net interest margin, the difference between loan and savings rates, increased to 1.85% from 1.65% as the Bank of England increased its base rates to combat spiralling inflation, currently at 11%. Virgin said it expected NIM to be 1.85-1.90% in the current fiscal year.
"While not directly exposed to Ukraine, we have seen second-order impacts on the broader UK economy from higher costs, higher interest rates and potential pressure on our customers and asset quality," the bank said.
"At present, credit quality indicators remain benign but we remain cautious on the outlook, and stand ready to support customers further if needed. Against this backdrop, impairment charges were muted as provisions taken for Covid-19 impacts were unwound."
"Despite a modest reduction, we have retained above pre-Covid levels of coverage with a potentially challenging economic outlook in mind, and to reflect worsening macroeconomic forecasts."
Credit card lending was up 13.8% year-on-year to £6.2bn while mortgage lending returned to growth in the second half, despite the mini-budget turmoil when the bank temporarily pulled its entire mortgage product range after rates soared in the wake of sacked finance minister Kwasi Kwarteng's mini-budget fiasco in September.
Reporting by Frank Prenesti for Sharecast.com
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN