After announcing a rise in residential and commercial lending in the third quarter as COVID-19 limitations loosened, British bank Virgin Money upped its profitability projection on July 27, 2021.
The business also waived 19 million pounds allotted for probable credit deficiencies during the pandemic and said it might reduce the outstanding 678 million pounds or $934.83 million of measures even further if the economy improved.
“While concerns exist from an uptick in COVID case numbers due to new variations and the impact of the government’s withdrawal of assistance programs later this year,” Virgin Money stated, “the improving background offers space for more confidence about the speed of restoration.”
Overall client loans increased by 0.4 percent to 72.5 billion pounds in the three months to June 30, according to the UK’s sixth-largest bank.
Mortgage loans increased by 0.7 percent to 58.7 billion pounds, while private loans, comprising credit cards, increased by 2.5 percent to 5.2 billion pounds, offsetting a decline in corporate bonds as state pandemic lending programs came to an end.
In a note, Citi banking experts wrote, “A good update across all categories.” “The provision setbacks, improved NIM or net interest margin forecast, and higher card development bode favorably for large-cap domestic peers as well.”
At 0745 GMT, Virgin Money shares dropped 0.3 percent, comparable to a 1.2 percent loss in the broader FTSE 350 index, after having risen almost 2% in early trade.
The business said it now anticipates its net interest margin for the year to be somewhat higher than its earlier forecast of 160 basis points, despite record low central bank profitability squeezing profits.
Virgin Money’s net interest margin (NIM), a crucial indicator of capital adequacy, increased to 168 basis points in the third quarter from 160 basis points in the second, mainly to reduced cost of funds from improved deposit mix and price changes.
Virgin Money’s quarterly results reap the benefit of a rush of announcements from Britain’s largest banks, with half-year results from Barclays, Lloyds, and NatWest all expected this week.