Virgin Money revives dividend, targets cost savings

Underlying profit set to surge as it shakes off pandemic effect

Virgin Money UK, which is led by Irishman and former AIB chief executive, David Duffy, reinstated its dividend on Thursday as earnings recovered from the Covid-19 pandemic, with the bank setting new medium-term growth targets for margins and cost savings.

“We performed very strongly in FY21, with an expected return to statutory profit before tax underpinned by significant underlying profit growth,” Mr Duffy said in a statement.

Britain’s challenger banks, a relatively new breed of lenders that regulators hope will challenge the dominance of century-old mainstream banks, are rebounding from the health crisis.

Virgin Money UK said its underlying profit for the fiscal year to September was expected to surge to £801 million from the £124 million it reported in the pandemic hit 2020.

The lender, born out of the merger of CYBG and Virgin Money, set a gross cost savings target of 175 million pounds over the next three years to fiscal year 2024, adding it plans to reinvest half of that in the business.

The company, which in September outlined a new digital growth strategy, set a dividend of 1 pence a share for the year.

Virgin Money UK’s net interest margin - a key measure of a bank’s profitability - improved 6 basis points to 162 for fiscal 2021, prompting it to guide to an NIM of 170 basis points in the current year.– Reuters