British lender Virgin Money has today reported a 43% increase in full-year profit, as Bank of England rate rises lifted its finances ahead of a likely prolonged economic downturn.
Virgin Money reported pre-tax profits of £595m for the year to September, up from £417m the prior year.
The bank - which resumed investor payouts over the past year - said it would pay out a final dividend of 7.5 pence per share and buy back an additional £50m worth of shares.
The country's sixth-largest lender was created through the merger of Virgin Money and rival CYBG in 2018, in a bid to challenge the market dominance of large incumbent high street banks including Lloyds and Barclays.
Investors are wary that an economic crunch in Britain could lead to higher loan defaults and dent bank finances, with official budget forecasters predicting households face a record hit to living standards over the next two years.
However, lenders have also benefitted from higher rates designed to curb rampant inflation, as they profit on the gap between what they charge on lending and pay out on deposits.
Virgin Money set aside £52m to cover potential bad loans to reflect the deteriorating outlook, but said there were limited signs of credit concerns so far.
"While we have solid credit quality across our lending, we are aware that some customers will have to make difficult decisions in this environment, and we are proactively offering them help and support," Virgin Money CEO David Duffy said.