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David Duffy, Chief Executive Officer:

“Over the first six months, we have continued to deliver on our strategic ambitions in line with expectations. While we expect there to be headwinds through the second half of the year, we remain well placed to deliver growth in our target segments.”

Summary financials

6 months to 31 Mar 2024
6 months to 31 Mar 2023
6 months to 30 Sep 2023
Net interest income (excluding notable items)
Non-interest income (OOI) (excluding notable items)
Total operating income (excluding notable items)
Notable items in income(1)
Statutory total operating income
Operating and administrative expenses (excluding notable items)
Notable items in expenses(1)
Statutory operating and administrative expenses
Statutory operating profit before impairment losses
Impairment losses on credit exposures
Statutory profit on ordinary activities before tax

Performance metrics(2)

Total customer lending
Net interest margin (NIM)
Return on tangible equity (RoTE)
Cost: income ratio
Adjusted cost: income ratio(3)
Cost of risk (CoR)
Common Equity Tier 1 (CET1) ratio (IFRS 9 transitional)

(1) Full details of notable items are included on page 88.

(2) For definitions of the performance metrics, refer to ‘Measuring the Group’s performance’ on pages 372 to 380 of the Group's 2023 Annual Report and Accounts.

(3) Adjusted to exclude all notable items and the new BoE Levy recognised in 2024 of £10m. Refer to page 89 for further details.

Delivered strong financial performance in H1 2024

  • NIM expanded further to 1.94% in H1 (Q224: 1.99%), supported by EIR adjustments in the credit card portfolio, reflecting strong customer activity and updated assumptions
  • OOI (excluding notable items) down 8% YoY, reflecting reclassification of insurance costs incurred on packaged current accounts
  • Operating expenses (excluding notable items) 5% higher YoY, driven by inflation and the new BoE Levy (£10m in Q2) partially offset by ongoing delivery of the cost savings programme; adjusted C:I ratio modestly higher YoY at 52.3%
  • Notable expenditure included £33m from restructuring activities and £15m related to new financial crime prevention programme
  • Impairment charge of £93m (CoR: 26bps), incorporating benefit from the ongoing SICR review of the Group’s credit card portfolio and a modestly improving macroeconomic outlook; credit quality remains solid; stable provision coverage of 84bps (FY23: 84bps)
  • Statutory profit before tax increased 18% YoY to £279m (9.1% statutory RoTE), primarily reflecting the lower impairment charge
  • CET1 ratio remains strong at 14.6% (FY23: 14.7%); movement includes 2p foreseeable FY 2024 dividend and c.£63m returned to shareholders as part of the £150m buyback programme announced alongside FY23, prior to the cancellation of the programme

Further growth in target lending segments and relationship deposits, in line with strategy

  • 2% growth in active relationship customer accounts during H1 to 3.8m accounts
  • Relationship deposits 2% higher in H1 at £36.3bn, remaining 53% of total deposits; total deposits increased 2% to £68.2bn
  • Continued growth in target segments; Unsecured +3%, driven by growth in cards; Business lending +7% as growth in BAU balances offset a reduction in Government scheme lending; Mortgages reduced 2% given subdued market; overall lending stable

Continued strategic execution

  • Completed purchase of abrdn’s c.50% stake in Virgin Money Investments(4) in April for £20m, following successful roll-out of new investment and pension services
  • Fully rolled-out premium broker service to 225 mortgage intermediaries, covering c.40% of VMUK applications, contributing to a stronger pipeline of recommended cases from those brokers
  • New virtual assistant Redi has now supported over 1 million conversations, attracting strong Smile scores and solving more than 50% of queries without the need for further escalation
  • Reduced office property footprint by c.35% in H1, supporting gross savings
  • Progressing second phase of Consumer Duty review ahead of July implementation

FY24 revised outlook

  • Anticipate 5-10% growth across target lending segments of business and unsecured lending in FY24, as guided at FY23
  • Continue to expect NIM to be in 190-195bps range for FY24, with NIM lower in H2 vs. H1, reflecting lower expected contribution from cards EIR adjustments, ongoing competition and lower interest rates, partially mitigated by the reinvestment rate of the structural hedge
  • In light of the proposed acquisition by Nationwide Building Society (‘Nationwide’), the Group has deferred certain restructuring activities
  • Adjusted cost: income ratio anticipated to be higher in H2 vs. H1, reflecting the latest outlook for income, inflation, ongoing investment and cost savings
  • Continue to expect CoR of 30-35bps for FY24, incorporating SICR review on card portfolio & modestly improving economic outlook
  • Given the proposed acquisition by Nationwide, the Group does not intend to announce any further share buybacks or dividends
  • As a result of these factors, statutory RoTE expected to be lower in H2 vs H1

(4) Legal entity name ‘Virgin Money Unit Trust Managers Limited’

Read the full announcement here


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