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(Alliance News) - Virgin Money UK PLC on Tuesday said it has delivered continued business momentum with trading in the first half broadly as anticipated.
The Leeds-based lender, which has agreed to be taken over by Nationwide Building Society, said customer loans were stable in the six months ending March at GBP72.7 billion as growth across business and unsecured lending was offset by lower mortgages balances.
Mortgages fell 2% in the period to GBP56.6 billion from a year prior, reflecting a subdued market, although application volumes improved in the second quarter from the first quarter.
However, business lending was 7% higher at GBP9.3 billion, driven by strong demand in sector specialisms, Virgin Money said.
Unsecured lending increased 3% in to GBP6.7 billion, driven by 5% growth in credit card lending, while customer deposits were 2% higher at GBP68.2 billion.
Virgin Money said net interest margin performed in-line with expectations, ticking up in the second quarter from the first.
Virgin Money expects first half NIM to be at the upper end of the financial 2024 range of 190 to 195 basis points.
The group said it continues to execute its cost saving programme, partly offsetting headwinds from inflation, and expects the adjusted cost to income ratio to remain broadly stable in the first half. In financial 2023, the cost to income ratio was 52%.
Credit quality remains solid and arrears trends are broadly consistent with those set out in the first quarter, Virgin Money said.
The CET1 ratio improved further in the second quarter and is expected to be more than 14.5% at the end of the first half.
Looking ahead, Virgin Money said it expects downward pressure on NIM in the second half of the financial year, primarily reflecting a lower expected contribution from cards and ongoing competition.
It also anticipates cost pressures from inflation and investment, which will only be partially mitigated by the ongoing cost savings programme.
Virgin Money reiterated its backing for the offer from Nationwide.
"The group believes the acquisition of Virgin Money by Nationwide presents an exciting opportunity to build on our significant strategic progress by combining two complementary businesses that together can offer more great products and services to a larger customer base, while delivering value for our shareholders," it commented.
In March, the Leeds-based lender accepted a takeover approach from Nationwide Building Society, a deal which will create "the second largest provider of mortgages and savings in the UK".
Interim results are expected to be released on June 13.
A court meeting, and general meeting, of shareholders will be held next Wednesday 22 to approve the scheme of arrangement by which takeover by Nationwide will be facilitated, Virgin Money previously stated.
Shares in Virgin Money fell 0.2% to 214.60 pence in London on Tuesday.
By Jeremy Cutler, Alliance News reporter
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