Virgin Money UK PLC said Wednesday that it returned to a pretax profit for the first half of fiscal 2021 on the back of significantly lower impairment charges, and that it is cautiously optimistic about its improving outlook.
Pretax profit on ordinary activities for the six months to March 31 was 72 million pounds ($100 million) compared with a loss of GBP7 million for the same period last year, the U.K. bank said. Impairment losses on credit exposures for the period were GBP38 million compared with GBP232 million a year before.
Underlying profit for the first half more than doubled to GBP245 million.
Total operating income fell to GBP695 million from GBP767 million, with net interest income down 3.7% at GBP646 million. The net interest margin declined by 6 basis points to 1.56% in the first half, but improved to 1.60% in the second quarter.
Virgin Money UK's common equity tier 1 ratio--a key measure of balance-sheet strength--stood at 14.4% at the end of the period, up from 13.4% at Sept. 30.
The lender said that net interest margin is expected to be around 1.60% for fiscal 2021 and that it sees a clear path to delivering double-digit statutory returns on tangible equity in the medium term.