Virgin Money hurt by bad debt charge

VIRGIN Money shares were hit by heavy selling today after the challenger bank revealed a bigger-than-expected provision to cover potential bad debts.

The impairment charge of £144 million, which compared with £21 million a year earlier, contributed to the FTSE 250-listed lender’s half-year profits falling 16% to £312 million.

The caution has been driven by the economic outlook, with credit quality stable bar a modest rise in card arrears from abnormally low pandemic levels.

Virgin Money shares fell 11% before improving to stand 6% or 9.15p lower at 144p at the end of a largely uneventful results season for UK lenders.

Shares in Lloyds and NatWest were today broadly unmoved at 46.1p and 255.9p respectively as Virgin Money’s results also highlighted a better-than-expected revenues performance and a strong capital position.

The FTSE 100 index fell 0.4% or 32.35 points to 7756.02, reflecting the weaker outlook for the global economy as US interest rates look set to stay higher longer after the Federal Reserve dashed Wall Street hopes for a cut later this year.

This fuelled safe haven demand for gold, with the yellow metal near $2030 an ounce to help Endeavour Mining shares up by 44p to 2126p on the day of its trading update.

The biggest FTSE 100 rise came from investment platform Hargreaves Lansdown, with its shares up 4% or 32.6p to 824.4p after reporting a 14% increase in net new business to £1.6 billion for the third quarter.

On the fallers board, BAE Systems shares fell back from recent record levels despite its AGM trading update restating 2023 guidance. The stock fell 11.5p to 1008p.

Vodafone also dipped 0.6p to 95.6p as the Financial Times reported that the mobile phone giant is close to a deal with Three owner CK Hutchison to merge their UK operations.

The FTSE 250 index lost 81.13 points to 19,284.47, with retailers Asos and

Currys among those priced more than 2% lower.