1st Feb 2023 09:09
(Alliance News) - Virgin Money UK PLC on Wednesday said it has benefitted from higher interest rates and noted it is "prudently provisioned" for economic uncertainty.
The lender said it enjoyed a "positive" start to its financial year despite an "uncertain economic backdrop".
Virgin Money said customer lending in the three months to December 31 grew 0.7% quarter-on-quarter to GBP73.07 billion from GBP72.57 billion. On an annual basis, customer lending was 2.8% higher.
Mortgage lending alone was 0.4% higher quarter-on-quarter and up 1.7% annually. Business lending picked up 2.4% quarterly and 9.7% yearly.
Virgin Money said its net interest margin improved to 189 basis points in the first quarter, from 186 in the second. The company said it was boosted by "higher rates, structural hedge contributions and deposit margins".
For the year, it expects a net interest margin the range of 1.85% to 1.90%. For financial 2022, it reported a NIM of 1.85%.
"We've had a positive first quarter, with continued good progress on digitisation and growth in lending across the business as more customers choose Virgin Money. Arrears remain broadly stable, but we've increased the support available to those who need it and remain prudently provisioned for an uncertain economic outlook. Looking ahead, we have good financial momentum and a number of exciting digital product launches to come which will support our continued growth
Virgin Money said it booked a GBP66 million impairment charge during the first quarter.
Looking ahead to the second half of its financial year, it predicts it will benefit from "lower costs" stemming from investment in mortgage digitisation plans.
Virgin Money added that it paused restructuring activity in the first-half, but does expect to book the majority of a remaining GBP190 million restructuring charge in the current financial year.
Virgin Money added that 63% of a GBP50 million buyback extension was completed in first-quarter. The extension followed the completion of its maiden GBP75 million share repurchase programme.
"The group currently expects any further buybacks to take place after the results of the [Bank of England's] 2022 annual cyclical scenario stress test are published in the summer, subject to regulatory approval," the company added.
Shares in the company were 0.2% higher at 193.25 pence each in London on Wednesday morning.
By Eric Cunha, Alliance News news editor
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