Virgin Money first-half profit jumps as customer spending recovers

British challenger bank Virgin Money, which is led by Irishman David Duffy, raised its annual net interest margin forecast on Thursday, boosted by strong credit card spending by customers and rising interest rates.

The lender, born out of the merger of CYBG and Virgin Money, said it remained “prudently” provisioned due to the uncertain macroeconomic outlook and increased cost pressures on consumers.

The comments come as the company reported a 58 per cent jump in underlying first-half pretax profit to £388 million (€459 million).

Interest margin

Virgin Money’s net interest margin (NIM) - a key measure of a bank’s underlying profitability - is now expected between 180 basis points (bps) and 185 bps in the fiscal year through September 2022, it said, higher than the earlier forecasted 175 bps.

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The Bank of England raised interest rates to their highest since 2009 at 1 per cent on Thursday to counter inflation now heading above 10 per cent, even as it sent a warning that Britain risks falling into recession.

British households are facing the biggest cost-of-living squeeze since records began in the 1950s, according to the country’s budget forecasters.

“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,” Mr Duffy said. - Reuters