Virgin Money boosted by credit card sign-ups
Consumers are using credit cards more often, according to Virgin Money, which has helped fuel a sharp rise in its half-year profits.
The Glasgow-based bank which embraces the former Clydesdale and Yorkshire banks, said underlying pre-tax profit rose 58% to £388m (H1 2021: £245m) primarily reflecting stronger income.
Unsecured lending grew 7% during the period to £5.8 billion, while business lending fell 2.5% to £8.3bn.
The net interest margin expanded further to 1.83% in H1 (H1 2021: 1.56%) due to the benefit of higher rates, lower deposit costs from ongoing repricing and mix benefit, and a higher yielding lending mix, offsetting mortgage spread pressures.
An interim dividend of 2.5p per share has been declared (H1 2021:nil).
The bank released £169m previously put aside for Covid provisions, but set aside £21m in the current period.
David Duffy, chief executive, said: “We’ve made good progress against our strategy, while delivering a significant increase in profit.
“We have positive momentum in attracting new customers to Virgin Money through record credit card sales, good growth in personal current account openings and a strong uptake of our new digital fee-free business current account.
“We have upgraded our net interest margin guidance given strong growth in unsecured lending, combined with the rising interest rate environment.
“Looking ahead, while the macroeconomic outlook is uncertain and there are increased cost pressures on consumers, we remain prudently provisioned and are confident in the quality of our loan portfolio.”