Virgin Money UK reports profit boost thanks to rising interest rates and unsecured lending
Virgin Money UK posted a boom compared to 2021 figures, with underlying profit increasing 58 per cent to £388m, reflecting stronger income.
The amount of money the bank was earning in interest on loans compared to the amount it is paying in interest on deposits, or NIM, expanded 1.83 per cent in the first half of the year, compared to 1.56 per cent in 2021.
This was due to the benefit of higher rates, lower deposit costs from ongoing repricing and mix benefit, and a higher yielding lending mix, offsetting mortgage spread pressures.
Underlying costs of £456m were one per cent lower, as expected cost savings from ongoing digital transformation and restructuring were offset by inflation, including agreed pay rises, along with targeted growth and planned higher digital development costs.
The company, which also operates under the Clydesdale Bank, Yorkshire Bank and Virgin Money brands stated that volume growth saw a stable loan book at £71.9bn, with unsecured lending up seven per cent to £5.8bn driven by strong cards growth, whilst business lending declined 2.5 per cent to £8.3bn.
Discussing the results, David Duffy, Chief Executive Officer said: “We’ve made good progress against our strategy, while delivering a significant increase in profit. 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.
“We have upgraded our net interest margin guidance given strong growth in unsecured lending, combined with the 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.”