(Reuters) -Virgin Money UK on Thursday warned of a higher cost-to-income ratio in the second half of the year, as the British lender delayed certain restructuring plans due to an all-cash takeover proposal from building society Nationwide.
The cost-to-income ratio is a key measure of efficiency where lower is better.
The impact of inflation and investments will only be partially offset by the company’s cost-savings programme, as some restructuring has been deferred due to the proposed acquisition by Nationwide, representing further headwinds relative to the first half, CEO David Duffy said.
The lender, which earlier this year agreed to a 2.9-billion-pound ($3.71 billion) all-cash takeover by Nationwide, reported an 18% rise in statutory pre-tax profit on ordinary activities to 279 million pounds for the six months ended March 31.
Last month, London-listed Virgin Money warned of a lower net interest margin (NIM) – a key indicator of a bank’s underlying profitability – in the second half of the year.
The company, however, retained its full-year NIM forecast to be in the range of 190 to 195 basis points.
“While we expect there to be headwinds through the second half of the year, we remain well-placed to deliver growth in our target segments,” Duffy said.
($1 = 0.7826 pounds)
(Reporting by Echha Jain in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)
