Virgin Money interim profit grows ahead of takeover by Nationwide

(Alliance News) - Virgin Money UK PLC on Thursday reported that its half-year profit climbed, ...

Alliance News 13 June, 2024 | 9:18AM
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(Alliance News) - Virgin Money UK PLC on Thursday reported that its half-year profit climbed, ahead of its takeover by Swindon, Wiltshire-based mortgage lender Nationwide Building Society.

Virgin Money UK, a Leeds-based lender, said pretax profit rose 18% to GBP279 million in the six months ended March 31 from GBP236 million a year prior.

Net interest income edged up 1.5% to GBP868 million from GBP855 million.

The company's common equity tier 1 ratio ticked down to 14.6% as at March 31 from 14.7% year-on-year. The CET1 ratio compares a bank's capital against its risk assets, with a higher ratio being more financially sound.

The net interest margin edged up 3 basis points to 1.94% from 1.91%.

Virgin Money announced a 2 pence per share interim dividend, down 39% from 3.3p a year prior.

Chief Executive Officer David Duffy said: "Over the first six months, we have continued to deliver on our strategic ambitions in line with expectations. While we expect there to be headwinds through the second half of the year, we remain well placed to deliver growth in our target segments."

Looking ahead, the company expects 5% to 10% growth across target lending segments of business and unsecured lending in financial 2024, which it had guided previously.

It continues to anticipate a net interest margin between 190 and 195 basis points for financial 2024, with the NIM set to be lower in the second half than in the first half due to lower expected contribution from cards effective interest rate adjustments, lower interest rates and ongoing competition.

Virgin Money shares edged up 0.1% to 214.20 pence per share on Thursday morning in London.

In early March, Nationwide reached a preliminary agreement with Virgin Money to acquire the company for 220 pence per share, comprising 218p and a 2p dividend, and equating to a total valuation of GBP2.9 billion. This represented a 38% premium to the Virgin Money's closing price of 159.05p the day before the offer.

In May, the requisite number of Virgin Money shareholders voted in favour of the scheme, expected to complete in the fourth quarter of 2024 following court sanctioning.

However, the UK Competition & Markets Authority on May 31 said it is considering whether the deal could result in a relevant merger situation and, if so, whether this "may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services".

The CMA has informed the two parties of the launch of its merger inquiry, and will pass a phase 1 decision within 40 days of the announcement.

The regulator has invited interest parties to comment on the planned merger, with the invitation to comment closing Friday.

By Tom Budszus, Alliance News slot editor

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Virgin Money UK PLC 215.00 GBX 0.09

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