Bosses of Virgin Money have described a positive first half of the year but warned of pressures in the coming months amid the ongoing takeover move by Nationwide Building Society.
Unaudited results published to the London Stock Exchange show the challenger bank generated net interest income of £2.3bn in the six months to the end of March, up from £1.7bn in the same period last year. Operating profits fell from £380m to £372m as statutory pre-tax profits increased from £236m to £279m.
At the same time, the bank saw a gradual increase in credit card arrears with forbearance - payment postponements offered to help card holders - at £112m across more than 27,000 accounts, an increase from the end of September when the figure was £90m across 22,206 accounts. Virgin said the trend was reflective of the current environment.
Read more: Newcastle firm LightOx gets £1.5m investment to develop cancer treatment
Read more: Greggs to create up to 600 new jobs with food production site in Derby
The bank's boss, David Duffy, said that since January there had been signs of improvement in the mortgage market despite a 1.5% fall in mortgage balances during the period to £56.6bn, and cost of living pressures continuing.
Meanwhile, in light of the proposed takeover Virgin said it had deferred some restructuring activity as part of a £275m turnaround plan first introduced in 2021. Operating and administrative costs in the period were 3% higher at £551m as any savings from restructuring that remained were wiped out by higher inflation including wage growth and a £10m impact from the new Bank of England Levy.
There was also launch of a new financial crime prevention programme to tackle rising levels of increasingly sophisticated fraud across the sector. Around £15m of costs so far have been booked against the move, which included beefing up cyber defences, and providing customers with more protections against criminals.
Most Read
Chief executive Mr Duffy said: "Overall the business has had a positive first half of the year with good delivery across key areas. As we look out in to the second half, the group does expect downward pressure on net interest margin relative to H1. We also anticipate cost pressures from inflation and investment in H2, which will only be partially mitigated by the ongoing cost savings programme, where certain restructuring activities have now been deferred in light of the proposed acquisition by Nationwide."
The proposed £2.9bn takeover of Virgin Money by Nationwide Building Society has attracted the attention of the Competition and Markets Authority, which last month said it had launched an investigation into the move with a decision on whether a fuller probe is necessary to come by the end of July.
At the end of July, Virgin will pay a financial year 2024 dividend of 2p per share, which was announced alongside the interim results.