Virgin Money UK’s share price tanks despite a return to profit


first_imgSimply click below to discover how you can take advantage of this. Royston Wild | Wednesday, 5th May, 2021 | More on: VMUK Enter Your Email Address See all posts by Royston Wild Wednesday’s proving to a bright day on UK share markets as investors buy back in following yesterday’s heavy falls. Both the FTSE 100 and FTSE 250 have punched handsome gains, the latter moving back towards April’s record highs. However, the same sense of cheer hasn’t spread to the Virgin Money UK (LSE: VMUK) share price.This UK banking share sank to two-week lows around 183p per share earlier in midweek trading. It’s recovered some ground to 189p, as I write, but remains 5% lower from Tuesday’s close.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Back in profitVirgin Money’s share price has fallen following the release of half-year trading numbers. But don’t think this reflects some chilly news coming out of the FTSE 250 share. Instead, the company advised of a sharp improvement in trading conditions and painted a cautiously positive picture looking ahead.Virgin Money’s share price fall represents nothing more than healthy profit taking following strong recent gains. The bank had risen around 50% in value in 2021 prior to today’s release and by 169% over the previous 12 months.Virgin Money said today it bounced back to pre-tax profit on a statutory basis. This is thanks to a sharp drop in impairment charges, it said. Profit clocked in at £72m for the six months to March, improving from the £7m loss recorded a year earlier.On an underlying basis, meanwhile, Virgin Money’s pre-tax profit more than doubled year-on-year to £245m.Impairment charges crumbleIncome at Virgin Money fell 9% between October and March, to £743m, caused by the introduction of additional Covid-19 lockdowns. But impairment charges collapsed from the same period a year earlier, coming in much lower than expected too. At £38m, this was much better than charges of £232m the bank had booked previously.In other news, Virgin Money’s net interest margin slipped to 1.56% in the six months to March. This was slightly worse than the 1.62% the firm punched out in the same 2019/2020 period.Virgin Money looks ahead with confidenceChief executive David Duffy was positive-if-careful when commenting about Virgin Money’s prospects. “We are cautiously optimistic about the improving outlook as the impact of the vaccination programme in the UK delivers positive revisions to economic expectations,” he said.“We’re continuing to manage through what is still an uncertain economic backdrop, but the bank is well placed, with a strong balance sheet, and through ongoing strategic delivery we have a clear path to long-term, improved sustainable return,” Duffy added. He also praised the “significant strategic progress” Virgin Money has made to transform itself “into a leading digital bank.”City analysts think Virgin Money will record earnings of 14.9p per share in the fiscal year to September. This compares to losses of 15.3p recorded in the previous financial period and leaves the bank trading on a forward price-to-earnings (P/E) ratio of 13 times. Our 6 ‘Best Buys Now’ Shares I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. 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