Virgin Money beats profit forecasts ahead of CYBG merger

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Virgin Money beats profit forecasts ahead of CYBG merger

The figures come ahead of a proposed merger with the owner of the Clydesdale Bank, Yorkshire Bank and B brands.


Virgin Money is merging with CYBG (PA)
Virgin Money is merging with CYBG (PA)

Virgin Money has reported a better-than expected rise in profits ahead of its merger with CYBG.

For the six months ended June 30, underlying pre-tax profit rose 10% to £141.6 million, up from £128.6 million.

Net interest income was up 5.1% to £303.1 million as compared to £288.5 million in the same six months in 2017.

The figures come ahead of a proposed merger with the owner of the Clydesdale Bank, Yorkshire Bank and B brands.

The takeover values the bank, which is backed by Richard Branson, at £1.7 billion, but the deal is likely to lead to more than 1,500 job losses.

The recommended offer made by CYBG for Virgin Money in June reflects confidence in our strategy
Virgin Money boss Jayne-Anne Gadhia

CYBG’s David Duffy will stay on as chief executive, leaving Virgin Money boss Jayne-Anne Gadhia to serve in a consultancy role as his senior adviser.

Ms Gadhia said: “The recommended offer made by CYBG for Virgin Money in June reflects confidence in our strategy, our track record of delivery and the complementary models of the two businesses, and will accelerate the delivery of our strategic objectives.”

However, Gary Greenwood, research analyst at Shore Capital, said it was significant that Virgin Money had downgraded its forecast for its net interest margin, a measure of how successful a bank is at investing.

“Had it not been for the fact that Virgin Money is currently in the process of being acquired by CYBG, then we would have expected this update to have catalysed a negative share price reaction,” he said.

“However, with the shares currently trading around 5% below the implied CYBG offer valuation of 407p, we believe there is a degree of support to the stock.”

Press Association

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