Virgin Money pauses cost cutting due to Nationwide takeover

Challenger bank Virgin Money has put its cost saving restructuring plans on hold due to its £2.9million takeover by Nationwide Building Society.

It said that it had generated annualised cost savings of around £150million, up from £130million in November, thanks to its digitisation programme, as well as revamping its organisational structure and property.

However, the lender said that it will defer further restructuring work due to the takeover, which was announced in March, limiting the cost savings it had expected to realise in the second half. Virgin Money shareholders last month approved the Nationwide deal, which will complete later this year.

For the six months to the end of March, Virgin Money’s pre-tax profits climbed 18% to £279million thanks to higher interest rates and lower bad debt charges.

Chief executive David Duffy said that while it expects headwinds in the second half, such as increased competition and lower interest rates driving down its margins, it expects 5-10 percent growth.

He added that the was optimistic about its prospects for the business, as part of an enlarged Nationwide: “The proposed combination represents an exciting longer-term opportunity, creating the second largest mortgage and savings provider in the UK. We have an attractive business that is well positioned to continue to deliver on its growth ambitions.”

Elsewhere, fast growing financial technology group Wise said that its annual profits had rocketed 229 percent to £481million, while its revenues climbed 24 percent to £1.1billion. Chief executive and founder Kristo Kaarmann said that the cross border payments specialist is reinvesting its profits into the business and cutting its customer fees to spur further growth.