Virgin Money raises annual net interest margin forecast as profit jumps

(Reuters) -British challenger bank Virgin Money UK Plc raised its annual net interest margin forecast on Thursday, boosted by strong credit card spending by customers and rising interest rates.

The lender, born out of the merger of CYBG and Virgin Money, said it remained “prudently” provisioned due to the uncertain macroeconomic outlook and increased cost pressures on consumers.

The comments come as the company reported a 58% jump in underlying first-half pretax profit to 388 million pounds ($487.21 million).

Virgin Money’s net interest margin (NIM) – a key measure of a bank’s underlying profitability – is now expected between 180 basis points (bps) and 185 bps in the fiscal year through September 2022, it said, higher than the earlier forecasted 175 bps.

The Bank of England looks poised to raise interest rates later in the day to fight inflation after British consumer price inflation leapt to its highest level in three decades in March.

British households are facing the biggest cost-of-living squeeze since records began in the 1950s, according to the country’s budget forecasters.

“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,” Chief Executive Officer David Duffy said.

(Reporting by Shanima A in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)