LONDON, Nov 21 (Reuters) – Shares in British lender Virgin Cash (VMUK.L) leapt 16% on Monday after it reported a leap in full-year revenue and investor payouts, as Financial institution of England price rises lifted its funds regardless of a looming financial downturn.
Virgin Cash reported pre-tax revenue of 595 million kilos ($703 million) for the 12 months to September, up 43% from 417 million the prior 12 months.
The financial institution – which resumed investor payouts over the previous 12 months – stated it will pay out a last dividend of seven.5 pence per share and purchase again an extra 50 million kilos value of shares.
Financial institution analysts at JPMorgan stated the lender’s outcomes had been robust, including shareholder returns had been extra beneficiant than anticipated.
Virgin Cash shares had been final up 15% at 0827 GMT.
The nation’s sixth-largest lender was created by the merger of Virgin Cash and rival CYBG in 2018, in a bid to problem the market dominance of banks together with Lloyds and Barclays.
Traders are cautious that an financial crunch in Britain might result in greater mortgage defaults and dent financial institution funds, with official funds forecasters predicting households face a report hit to residing requirements over the subsequent two years.
Nonetheless, lenders have additionally benefitted from greater charges designed to curb rampant inflation, as they revenue on the hole between what they cost on lending and pay out on deposits.
Virgin Cash stated it anticipated its web curiosity margin – a key measure of profitability – would improve from 185 foundation factors to between 185-190 foundation factors subsequent 12 months.
The financial institution put aside 52 million kilos to cowl potential dangerous loans to mirror the deteriorating financial outlook, however stated there have been restricted indicators of credit score considerations up to now.
CEO David Duffy advised reporters there have been, nonetheless, indicators prospects had been coming underneath pressure.
Buyer spending on power payments was up 57% and outlay on groceries elevated 16%, Duffy stated, whereas the lender had seen a small improve in bank card spending on necessities.
“We’re conscious that some prospects should make troublesome choices on this surroundings, and we’re proactively providing them assist and assist,” Duffy stated.
Virgin Cash had raised employees pay to assist them address value of residing pressures, Duffy stated.
The financial institution has agreed a wage improve of Sep 11% for its employees, break up throughout will increase in January and July, a financial institution spokesperson stated.
($1 = 0.8467 kilos)
Reporting by Iain Withers; enhancing by Emma-Victoria Farr and Jason Neely
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