On Wednesday, Virgin Money UK Plc announced that it anticipates lower costs in the latter half of the current financial year. This comes after the British lender reported a slight 0.7% growth in lending in the first quarter.
The bank, which is the sixth largest in the UK, stated that it had set aside an additional £66 million for the quarter ending December 31st to address potential bad loans.
There is concern among investors that a financial downturn in Britain could result in increased loan defaults and harm the finances of banks. Official budget predictions indicate that households are likely to experience a significant decrease in their standard of living over the next two years.
Despite this, lenders have also benefited from higher interest rates, which were implemented to control inflation. This allows them to profit from the difference between what they charge for lending and what they pay out for deposits.
It was predicted that the Bank of England would raise its main interest rate by a half percentage point to 4% on Thursday, marking its tenth consecutive rate increase, starting from a record low of 0.1% in December 2021.
The company, which was formed through the merger of CYBG and Virgin Money, reaffirmed its annual net interest margin outlook of 185-190 basis points.
The lender stated that the latter half of the period ending September 30th would see benefits from lower costs, such as the completion of its investment in mortgage digitization and reduced temporary expenses to support the implementation of cost-saving measures.