(Alliance News) - Virgin Money UK PLC on Thursday lifted net interest margin guidance, but reported a fall in first-half profit as impairment losses picked up.

Shares in the company fell 5.9% to 144.15 pence, the worst FTSE 250 performer.

The lender said total operating income in the six months to March 31 rose 8.3% year-on-year to GBP914 million from GBP844 million. Pretax profit, however, fell 25% to GBP236 million from GBP315 million.

Impairment losses totalled GBP144 million, accelerating from GBP21 million a year earlier and hurting Virgin Money's bottom-line.

Operating profit before impairment losses was 13% higher at GBP380 million from GBP336 million.

"More people are choosing to bank with Virgin Money. While the past six months have seen turbulence in the economy and in the financial system, we have continued to focus on our target areas, growing customer numbers and deposits thanks to our new and existing digital products. Further customer-centric product launches are coming in the second half of the year," Chief Executive Officer David Duffy said.

Virgin Money's net interest margin rose to 1.91% in the first-half, from 1.83% a year earlier. Its common equity tier 1 ratio was unchanged at 14.7% year-on-year, but down slightly from 15.0% at year end.

Virgin Money lifted its interim dividend by 32% to 3.3 pence per share, from 2.5p. Its interim dividend is typically worth a third of the prior year's total payout. Its dividend for financial 2022 totalled 10p per share.

Looking ahead, it slightly lifted its net interest margin guidance. It now expects a net interest margin of 1.90% for the full-year. It had previously guided for an outcome in the range of 1.85% to 1.90%. It would represent an improvement from 1.85% in financial 2022.

Virgin Money, which recently completed an inaugural GBP75 million share buyback and began an extra GBP50 million repurchase programme in November, said it expects "further buybacks", depending on the outcome of the Bank of England's annual cyclical scenario stress test.

"In the medium term, the group will continue to target diversification on both sides of the balance sheet, delivering growth in unsecured and business lending, while maintaining our mortgage market share," Virgin Money added.

Also on Thursday, Virgin Money said Non-Executive Director Darren Pope will remain with the firm.

Pope had planned to step down on May 16 to "explore another non-executive director role which would have caused a conflict with Virgin Money".

"Darren has updated the board that he will no longer be progressing this external opportunity and it has therefore been agreed that Darren will remain on the Virgin Money board," the company added.

By Eric Cunha, Alliance News news editor

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