Virgin Money UK PLC sees strong full-year performance as it

Virgin Money UK PLC (LSE:VMUK) announced that it will reinstate its dividend after it predicted strong growth in profits in its fiscal year to September 2021.

The bank also revealed new cost saving targets for the medium term and said the outlook for the current year is “solid”.

“We performed very strongly in FY21, with an expected return to statutory profit before tax underpinned by significant underlying profit growth,” said chief executive David Duffy.

The company expects full-year underlying pre-tax profits for FY21 of £801mln, a rise of 546% on the previous year, boosted by strong financial momentum and improved macro outlook.

Income grew 2% to £1.57bn after a 5% increase in net interest income more than offset a 16% fall in other income, Virgin Money UK said in a statement.

Net interest margin (NIM) rose 6 basis points to 162. The bank is forecasting a rise in NIM to 170 basis points in FY22.

The bank said its robust asset quality and an improving outlook allowed to release expected credit losses (ECL) of £131mln, compared with a charge of £501mln in the previous year.

Mortgages were stable year-on-year at £58.1bn. Personal lending grew 4% to £5.4bn with strong performance from the cards book as lockdown restrictions were eased, while business lending was 5% lower at £8.5bn as normal business activity was subdued and government-backed loans began to amortise.

The dividend is being reinstated with a full-year payout of 1 pence per share.

Virgin Money said it is targeting cost savings of around £175mln over the next 3 years to FY24, where more than 50% will be reinvested in the business.

Shares fell 4.19% to 187.50p.