Its net interest margin (NIM) – a key measure of profitability – dipped to 1.56% from 1.62%, as record low interest rates set by the Bank of England hurt challenger banks, who rely on margin on lending the most. Virgin Money said the vast majority of its customers who were on payment holidays have resumed payments. Larger lenders offer other financial services, such as wealth management or investment banking, which have cushioned the hit to margins from low interest rates.
While big banks including Lloyds (LLOY.L) and HSBC (HSBA.L) have released provisions due to the better-than-feared economic outlook, smaller lenders are yet to follow suit. Virgin Money took an impairment charge of 38 million pounds in the half-year period, much lower than the 232 million pounds booked a year earlier.
Virgin Money’s rival Metro Bank (MTRO.L) last week said it was starting to see improvement across its loan book as restrictions eased, but gave no update on provisions. read more The bank, formed from the merger of Virgin Money and CYBG, reported pre-tax profit of 72 million pounds ($100.12 million) for the six months ended March 31, compared to a 7 million pound loss a year earlier when it made hefty provisions for potential soured loans.
Source www.reuters.com Our Standards: The Thomson Reuters Trust Principles.
($1 = 0.7192 pounds) Still, Virgin Money guided NIM would be around 1.60% for the full year, while forecasting costs of less than 890 million.
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