24th Nov 2021 10:17
(Alliance News) - Virgin Money UK PLC on Wednesday confirmed a swing to an annual profit and reinstated its shareholder payout.
In the year to September 30, the midcap lender swung to a pretax profit of GBP417 million, compared to a GBP168 million loss the year before.
Virgin Money recorded a GBP131 million benefit for credit exposures, after booking a GBP507 million provision the year before.
Net interest income increased to GBP1.36 billion from GBP1.28 billion, with total operating income growing to GBP1.49 billion from GBP1.44 billion.
Virgin Money's loan book ended the period at GBP72.00 billion, down slightly from GBP72.46 billion at the same point the year before, due a 5.3% drop in Business lending.
The lender's net interest margin improved to 1.62% from 1.56%. Looking ahead, Virgin Money expects continued margin growth, with its NIM rising to 1.70% in financial 2022.
Its fully-loaded CET1 ratio rose to 14.4% from 12.2%.
Operating & administrative expenses rose to GBP1.20 billion from GBP1.10 billion. The bank's underlying cost-to-income ratio improved to 57% from 59%.
Chief Financial Officer Clifford Abrahams said: "I'm pleased to report a significant strengthening in the operating performance of the business with a return to statutory profit in financial 2021 and good financial momentum as we accelerate delivery of our Digital First strategy."
At the beginning of November, in its full-year trading update, Chief Executive David Duffy said: "We performed very strongly in financial 2021, with an expected return to statutory profit before tax underpinned by significant underlying profit growth. We increased our net interest margin, reduced costs, improved impairments and delivered a strong capital progression which enabled the proposed reinstatement of a dividend."
On Wednesday, Virgin Money declared a 1 pence final dividend.
Looking ahead, the bank is targeting above market lending growth across Business and Unsecured lending, whilst maintaining Mortgage market share. It is also looking for "modest mix-driven" net interest margin growth but expects its non-interest income to rise as a proportion of total income.
Virgin Money shares were 3.4% lower at 175.15p each in London on Wednesday morning.
By Paul McGowan; [email protected]
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