Virgin Money reveals 10% pay rise for staff as profits rise

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Lender Virgin Money has revealed a 10% pay rise for the majority of its 7,500 staff as it saw a 43% rise in annual profits thanks to soaring UK interest rates.

The group said it was giving most workers a raise of around 10% on average to help them cope with soaring inflation, on top of a £1 cost-of-living payment. £000 in August.

The pay rise, which was announced internally earlier this month, will be in two installments, the first in January and the second in July, with staff being paid between 9% and 11% extra.

The company has also launched a cost of living hub to help offer support to customers in financial difficulty, but said it has yet to see signs of an increase in the number of overdue borrowers in their reimbursements.

But the lender stressed it was “watching its customer base carefully” and had earmarked £52m to cover borrower defaults as the UK faces a prolonged recession due to the cost of living crisis .

That compares with a release of £131m the previous year from loan loss write-downs built up during the pandemic.

Virgin Money’s annual results showed statutory profit before tax jumped to £595m for the year to September 30, from £417m the year before, partly thanks to higher interest rates. interest that boosted profit margins.

On an underlying basis and excluding costs such as restructuring charges, full-year profits fell 1% to £789m.

David Duffy, chief executive of Virgin Money, said: “The macroeconomic outlook has become more uncertain over the year.

“Following a positive recovery in post-Covid expectations, recent events have seen forecasts deteriorate.

“As we enter a more volatile environment, with higher inflation and rates, we are carefully monitoring any impact.”

He added: “While we have strong credit quality across all of our loans, we are aware that some customers will have to make difficult decisions in this environment and we are proactively offering them help and support. .”

The group said it saw the impact of soaring inflation on bank customers, with its data showing spending soared 16% on groceries and 57% on energy bills.

It reported overall loan growth of 0.8% for the year to £72.6bn, while improving its net interest margin outlook – a key measure of retail banking performance – for the coming year due to the sharp rise in UK interest rates.

The group said mortgages were flat at £58.2bn, having returned to growth in the second half of the financial year.

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