Virgin Money delivers 'significant increase' in profits as customers face cost pressures

David Duffy the chief executive, said Virgin Money had made good progress against its strategy, while delivering a significant increase in profit.

He added: "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.”

Virgin Money said that its statutory profit before tax of £315m for the six months ended 31 March 2022 was "significantly higher" than the £72m recorded in the same period the year before. Underlying profit increased by 58% year on year to £388m.

The statement added: "The loan book remained broadly stable in the period, but with improved momentum in our key target segments including the strong growth in unsecured lending and the stabilisation of BAU business lending balances..which broadly offset the decline in Government scheme lending and a small reduction in mortgages where we continued to trade tactically in a competitive market.

"We continued to optimise the deposit book, which reduced 3.7% over the period but with growing relationship deposit balances, which were up 4.2%, and now represent half of all deposits."

Commenting on outlook, Virgin Money said: "Over the first half of the year, we’ve made good initial progress delivering against the accelerated digital strategy launched alongside

our FY21 results.

"We will continue to focus in H2 on growing in our target segments and delivering exciting new digital propositions for customers, while continuing to improve our efficiency and customer service.

"It’s encouraging to see our strategy, and an improving rate environment, are combining to drive stronger financial performance. . The announcement of our updated capital framework provides a clear guide for capital returns going forwards, while we maintain a robust balance sheet."

Virgin Money said the macroeconomic outlook has become more uncertain over the last six months.

The statement added: "Following a positive recovery in expectations post-COVID, recent events have seen forecasts moderate. As we enter a more uncertain environment, we are

monitoring carefully the impacts of higher inflation on the cost of living and implications for customers, as well as the second-order impacts from the conflict in Ukraine, but aren’t yet seeing signs of significant stress in the book. We enter this period with prudent coverage, robust underwriting and a defensive portfolio."