Virgin Money reports 26 per cent rise in first-half profit

British bank flags weaker UK housing market and increased pressure on margins

Underlying pretax profit at Virgin Money Holdings rose 26 per cent rise  to £128.6 million in the first half of the year. Photograph: Rui Vieira/PA Wire

Underlying pretax profit at Virgin Money Holdings rose 26 per cent rise to £128.6 million in the first half of the year. Photograph: Rui Vieira/PA Wire

 

British bank Virgin Money Holdings flagged a weaker housing market and pressure on margins on Tuesday, hitting its shares and adding to signs of tougher trading for UK lenders.

Virgin Money is the first British bank to report mid-year results.

The company’s cautious guidance overshadowed a 26 per cent rise in first-half underlying pretax profit to £128.6 million (€143.9 million), helped by growth in its core mortgages, savings and credit card businesses.

Analysts are concerned slowing economic growth, a faltering housing market, high levels of consumer debt and rising inflation could start to make life harder for UK banks.

Virgin’s net interest margin, a measurement of lending profitability, was 1.59 per cent in the first half, down one basis point from the end of 2016. For 2017 as a whole, it forecast a margin towards the bottom of its 1.57-1.60 per cent guidance.

The bank’s core capital ratio was 13.8 per cent, 140 basis points below end-2016 levels.

Virgin said balances at its credit card business, which contributed 27.9 per cent of total first-half income, rose to £2.8 billion and were on track to hit £3 billion by the end of 2017. – (Reuters)