Virgin Money reported a strong rise in full-year profits driven by higher interest rates.
The bank on Monday said pre-tax profit surged 43% to £595m. It also posted impairment losses of £52m, compared with a £131m credit a year ago.
Net interest margin, the difference between loan and savings rates, increased to 1.85% from 1.65% as the Bank of England increased its base rates to combat spiralling inflation, currently at 11%.
Virgin said it expected NIM to be 1.85-1.90% in the current fiscal year.
“While not directly exposed to Ukraine, we have seen second-order impacts on the broader UK economy from higher costs, higher interest rates and potential pressure on our customers and asset quality,” the bank said.
“At present, credit quality indicators remain benign but we remain cautious on the outlook, and stand ready to support customers further if needed. Against this backdrop, impairment charges were muted as provisions taken for Covid-19 impacts were unwound.”
“Despite a modest reduction, we have retained above pre-Covid levels of coverage with a potentially challenging economic outlook in mind, and to reflect worsening macroeconomic forecasts.”
Reporting by Frank Prenesti for Sharecast.com
