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Virgin Money profits edge up ahead of Nationwide deal

Nationwide Building Society is planning to take over smaller rival Virgin Money (Mike Egerton/PA) (PA Wire)
Nationwide Building Society is planning to take over smaller rival Virgin Money (Mike Egerton/PA) (PA Wire)

Virgin Money, poised to sell itself to Nationwide Building Society in a controversial £2.9 billion deal, says interest rates remain volatile and economic growth low.

It made profits for the half-year of £372 million before losses on bad debts of £93 million.

In future those loses will become an issue for Nationwide Building Society and its 16 million members, who have been denied a vote on the deal.

In the six moths to March, VM’s profit margin is up a bit to 1.94%.

Shareholders including Richard Branson’s Virgin Group have already backed the takeover deal at 220p a share for a bank that comprises parts of the old Northern Rock, Yorkshire Bank and Clydesdale Bank.

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Mortgage loans in the six months fell 2% to £56.6 billion.

CEO David Duffy, who has been paid around £30 million over six years at the bank, said in a statement: “So far this financial year, the macroeconomic backdrop has modestly improved, with inflation continuing to fall, though remaining above the Bank of England's target range. As a result, market interest rate expectations have been volatile through the period, but with continued low unemployment and wage inflation supporting customer affordability.”

Virgin Money did not speak to the media today, as is normal on results days.

Some members have been arguing fiercely against the deal. They say it risks the future security of Nationwide, one of the safest lenders in the UK,

Nationwide Building Society chief executive Debbie Crosbie sold £150,000 worth of shares in Virgin Money before she launched a £2.9 billion takeover bid for the business.

She did so well before the bid in March, selling 90,000 shares in two tranches in July 2023 and November 2023.

Virgin Money’s bid is priced at 220p a share. Crosbie sold at 170p. Today the stock opened at 214p, still below the value of the deal.

Today, the campaign to “GIve Nationwide Members a Say” on the deal wrote to the Competition and Markets Authority to “formally express our concerns”.

It believes the takeover will lead to less choice and higher prices.

Its complaint adds: “Additionally, the merger could result in a reduction in customer service quality. Currently, Nationwide holds a market leadership position based on independent surveys of customer satisfaction levels. However, large-scale mergers often lead to operational challenges and cost-cutting measures, which could degrade the overall customer experience. This deterioration would be particularly concerning for customers who rely on personal banking services.”