Banks

Virgin Money UK overlooked as bank posts strong results

Fri 06 May 22, 1:54pm (AEST)
A shopfront displaying Virgin Money UK iconography
Source: A shopfront displaying Virgin Money UK iconography

Stocks in article

vuk
MktCap:
-

Share article

Key Points

  • Virgin Money UK posts underlying pre-tax profits of $674.5m (£388m) for six months ended 31 March 2022
  • Massive sell-offs likely exacerbated by panic in market driven by US Fed, Bank of England rate hike
  • Macquarie forecasts a full year FY22 dividend of 11.06c as bank posts record quarter for new credit card accounts

Virgin Money UK (ASX:VUK) has posted its interim financial results for the six month period ended 31 March 2022, posting underlying pre-tax profit of $674.5m and a net interest margin of 1.83%.

Despite the strong result during a turbulent period, the charts for VUK may reflect, at first glance, a different story—the stock has been hit with a massive sell-off in the last week, seeing it down 8% heading towards mid-afternoon trade on Friday. 

(Source: Virgin Money UK) The bank's predictions for inflation; GDP growth
(Source: Virgin Money UK) The bank's predictions for inflation; GDP growth

Uncertainty at the fore as US Fed, BoE raise interest rates 

A combination of factors are currently driving uncertainty in world markets—most notably Russia’s ongoing invasion of Ukraine—but this week the US Fed raised interest rates, aggressively, by 0.5%.

And, overnight, the Bank of England has raised interest rates by 0.25% to 1%. 

Virgin Money UK’s internal modelling, based on the Oxford Economics Base Case, predicts inflation in 2022 at 6.2% will subdue by 4% into 2023 and then recede to 1.1% in 2024—however, the bank expects inflation to rise to 2% again by 2026. 

Record uptake in credit card accounts 

Included in Virgin Money UK’s interim financial report is its record quarter performance for new credit card accounts with 175,000 products purchased in the three months ending 31 March 2022. 

The company claims it now has an 8% share of credit cards in the market. 

At the same time, Virgin Money UK has boosted performance on a number of efficiency initiatives in-house, and has also seen an uptick in users of its digital fee-free banking service applications. 

The bank is paying an interim dividend of 2.5 pence per share (4.3c Australian). 

Virgin Money UK's charts show the battering the company is taking, despite strong results
Virgin Money UK's charts show the battering the company is taking, despite strong results

 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

Get the latest news and media direct to your inbox

Sign up FREE