Virgin Money profits up but still sees tough second half

(Sharecast News) - Virgin Money on Thursday posted an 18% jump in interim profit as it continued to benefit from higher interest rates and a lower bad debt charge, but reiterated it expected headwinds in the second half of the year with the Bank of England expected to cut its benchmark base rate. Pre-tax profit for the six months to March 31 came in at £279m from £236m a year earlier. Net interest income rose 2% to £868m, while net interest margin - the difference between the bank's lending and savings rates - was up three basis points to 1.94%.

Bad debt charges were down to £93m from £144m. Lending was flat at £72.6bn, of which mortgage were down 2% to £56.6m amid increased market competition.

The competition watchdog is to investigate the proposed £2.9bn acquisition of Virgin Money by Nationwide Building Society.

The unusual takeover of a listed bank by a member-owned building society, first announced in March, would create the UK's second-largest savings and mortgage provider. Virgin Money shareholders have voted in favour of the deal. Nationwide members have not been asked to vote.

Reporting by Frank Prenesti for Sharecast.com