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The Bank of England in December became the first major central bank to increase interest rates since the coronavirus pandemic began, and the market expects more hikes this year as inflation rises.
“Overall, despite the uncertainty posed by new variants and concerns over inflation, the strengthening backdrop and easing of government restrictions give some scope for greater optimism about the pace of the recovery,” Virgin Money said in a statement.
The London-listed firm forecast its net interest margin (NIM) – a key measure of a bank’s underlying profitability – will be about 175 basis points in the year to September 2022.
Its NIM improved to 177 basis points in the first quarter on lower cost funds, higher hedge contributions and higher yielding lending mix.
The lender, which in November said it was looking to digitalise its services at a faster pace, saw an increase in total credit card spending as new accounts opened exceeded 132,000 in the quarter – the highest since the start of the pandemic.
Virgin Money, formerly known as CYBG, however saw a decline in mortgages lending and business lending owing to a fall in government-backed lending in the sector and weaker market demand.
