Virgin Money shares drop as profits miss forecasts

Virgin Money shares (LSE: VMUK) dropped 2.4% on Thursday morning after the lender blamed margin pressures and rising impairments for a 24% plunge in full-year profits.

The FTSE 250 bank reported underlying pre-tax profits of £593 million for the past year – below analysts’ forecasts of £625 million.

Chief executive David Duffy struck an upbeat tone, touting “good progress executing our strategy” in 2023 to attract more customers and grow target lending.

But Virgin’s net interest margin remains under pressure, rising slightly to 1.91%, while impairment charges surged six-fold to £ 309 million amid a deteriorating economic outlook.

Underlying expenses also rose 6% to £ 971 million as Virgin ploughed money into fixing service issues and tech investments under its digital transformation push.

However, the bank’s lending book proved more resilient than expected, dipping just 1% to £72.8 billion over the year.

Read More News:
Intertek shares upbeat as revenue rises

And deposits increased by 2% to £66.6billion as savers continued to flock to Virgin.

Looking ahead, Mr Duffy predicted around £800 million in payouts for Virgin Money investors through to the end of 2024.

But the underwhelming annual figures still weighed on VMUK shares on Thursday morning.

The stock has now shed 18% over the course of the past year as the bank battles an inflationary environment.