Virgin Money flags tepid second-half on higher costs, margin hit (updated)

Virgin Money UK

14/05/2024 07:58

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       May 14 (Reuters) - British bank Virgin Money UK  VMUK.L 
warned of a tepid second-half of the year on Tuesday, citing
higher costs and lower profit margins due to growing
investments, inflationary pressures and stiff competition for
deposits. 
    The lender, which agreed to a 2.9 billion pound ($3.64
billion) all-cash takeover deal from 140-year-old mutually-owned
building society Nationwide in March, said it expected net
interest margin (NIM) - a key indicator of a bank's underlying
profitability - to be lower in the second half of the year.
    "Expect NIM in H2 to be impacted by lower contribution from
cards effective interest rate adjustments, ongoing competition
and lower interest rates," the lender said in a statement. 
    However, it stuck by its full-year NIM forecast to be in the
range of 190-195 basis points. 
    Virgin Money said the first half of its financial year was
"in-line with expectations", at a time when competition among
banks for mortgage business and deposits has ramped up. 
    The company said mortgages were 2% lower at 56.6 billion
pounds in the first half ended March 31, reflecting the subdued
market, while overall customer deposits climbed 2% to 68.2
billion pounds.

($1 = 0.7963 pounds)
    

 (Reporting by Eva Mathews in Bengaluru; Editing by Nivedita
Bhattacharjee and Rashmi Aich)
 ((Eva.Mathews@thomsonreuters.com;))