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By Muvija M
July 27 (Reuters) - British bank Virgin Money
raised its margin forecast on Tuesday after reporting an
increase in home and consumer lending in the third quarter as
COVID-19 restrictions eased.
The company also released 19 million pounds it had set aside
for potential loan impairments during the health crisis, and
said it might lower its remaining 678 million pounds ($934.83
million) of provisions further if the economic backdrop
continued to improve.
"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 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 were up 0.7% to 58.7 billion pounds, while
personal loans, including credit cards, rose 2.5% to 5.2 billion
pounds, together making up for a drop in business loans as
government pandemic lending schemes wound down.
"A strong update across all areas," banking analysts at Citi
said in a note. "The provision reversals, better NIM (net
interest margin) outlook and stronger cards growth also bode
well for the large-cap domestic peers too."
Virgin Money shares were down 0.3% at 0745 GMT - compared
with a 1.2% drop in the wider FTSE 350 index - after
they had gained around 2% in early trading.
The company, 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.
Virgin Money'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,
Lloyds and NatWest all due to report half-year
results this week.
($1 = 0.7253 pounds)
(Reporting by Muvija M in Bengaluru, Editing by Iain Withers
and Jane Merriman)
