Virgin Money has warned of "headwinds" due to anticipated interest rate cuts and has acknowledged upcoming cost pressures as it temporarily halts some restructuring efforts ahead of its £2.9 billion acquisition by Nationwide Building Society.
The high street lender, which agreed to the takeover in March, reported an 18% rise in pre-tax profits to £279 million for the six months ending March 31. However, it expects its net interest margin—a crucial performance indicator for retail banks—to decrease in the second half of the year due to the anticipated rate cuts and ongoing sector competition
Cost pressures are also mounting for Virgin Money due to rising wage bills and broader inflation. The group has limited options to mitigate these costs because it is pausing some restructuring activities in light of the upcoming acquisition.Nationwide has committed to retaining branches as part of the merger, promising to maintain a branch in each location where the combined group operates until at least early 2028.
Virgin Money has not announced any further branch closures this year and has delayed previously planned staff reductions. The company reduced its full-time workforce by about 150 in the first quarter and had indicated in an earlier trading update that more staff cuts were expected.
Additionally, Virgin Money stated that fees related to the takeover will be "significantly" higher in the second half of the year, adding to the cost pressures.
