Virgin Money posted an 18% rise in profit before tax to £279m for H1, but said the latter half of the year could bring “headwinds”.
Virgin Money said this would be due to cost challenges and pressure on its net interest margins (NIMs) caused by competition and lower rates.
Its NIM sat at 1.94% in H1, compared to 1.91% last year.
David Duffy, CEO, added: “Over the first six months, we have continued to deliver on our strategic ambitions in line with expectations. While we expect there to be headwinds through the second half of the year, we remain well-placed to deliver growth in our target segments.”
He said Virgin Money would focus on the Nationwide takeover during the second half of the year, which was successfully voted for by shareholders in May.
It said the transaction, which is still subject to approval, was expected to complete in Q4 this year.
Duffy also said “certain restructuring activities” had been deferred in light of the acquisition, which was also contributing to further headwinds in the future.
“We have an attractive business that is well-positioned to continue to deliver on its growth ambitions. Over the remainder of the year, we’ll continue to invest in improving the customer experience and launching innovative and rewarding products, whilst maintaining a resilient balance sheet and investing further in our capabilities,” Duffy added.
Steady mortgage activity
Earlier, Virgin Money reported that a subdued market saw its mortgage balances contract by 2% to £56.6bn.
Its mortgage yields rose by 83 basis points due to the higher-interest-rate environment, and its mortgage interest income increased 31% year-on-year.
Some 86% of Virgin Money’s mortgage portfolio had a loan to value (LTV) of 75% or less, compared to 91% as of 30 September 2023. The average LTV was stable at 53.6%, compared to 52.9% previously.
Virgin Money and Nationwide announced a £2.9bn merger earlier this year, which would make it the second-largest provider of savings and mortgages if approved. The Competition and Markets Authority (CMA) has since opened an investigation into the merger to assess its potential impact on consumer choice.
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
