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Virgin Money lending and margins edge up as UK economy reopens

EconomyJul 27, 2021 07:51
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© Reuters. FILE PHOTO: A man checks his phone as he walks past a branch of Virgin Money in Manchester, Britain September 21, 2017. REUTERS/Phil Noble/File Photo

By Muvija M

(Reuters) - British bank Virgin Money (LON:VM) edged up its lending and lifted its margin forecast on Tuesday, as mortgage volumes and consumer loans grew in the third quarter after the easing of COVID-19 restrictions.

The UK's sixth largest bank said overall customer loans climbed to 72.5 billion pounds in the three months to June 30, up 0.4% on the previous year.

Mortgage loans inched up 0.7% to 58.7 billion pounds, while personal loans grew 2.5% to 5.2 billion pounds, together making up for a drop in business loans as government pandemic lending schemes wound down.

"While risks remain from the increase in COVID case numbers driven by the new variants and the impact of the removal of government support schemes later in the year, the strengthening backdrop gives scope for greater optimism about the pace of the recovery," Virgin Money said.

The company released 19 million pounds it had set aside for potential loan impairments during the health crisis, adding it might lower its remaining 678 million pounds of provisions further if the economic backdrop continued to improve.

Virgin Money, whose margins have been squeezed by record low central bank interest rates, said it now expects net interest margin for the year to be modestly above its previous guidance of 160 basis points.

The company's NIM - a key measure of a bank's profitability - improved to 168 bps in the third quarter compared to 160 bps in the second, thanks to lower cost of funds due to improvements in deposit mix and repricing.

Virgin Money's quarterly numbers come ahead of a flurry of updates from Britain's biggest banks, with Barclays (LON:BARC), Lloyds (LON:LLOY) and NatWest all due to report half-year results this week.

Virgin Money lending and margins edge up as UK economy reopens
 

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