Virgin Money has revealed a 10% pay rise for the majority of its 7,500 staff, as it reported a 43% hike in annual profits, thanks in part to surging UK interest rates.
The bank stated that it is giving most workers a rise of around 10% on average to help them cope with soaring inflation, which comes on top of a £1,000 cost-of-living payment in August.
The pay hike, which was announced internally earlier this month, will be made in two instalments - the first in January and the second in July - with staff being paid between 9% and 11% extra.
The lender has also launched a cost-of-living hub to help offer support to customers in financial distress, but said it has not yet seen signs of an increase in borrowers falling behind with their repayments.
However, it is “carefully monitoring” the customer base and set aside £52m to cover borrower defaults, as the UK faces a prolonged recession due to the cost-of-living crisis.
This compares with a £131m release the previous year of loan loss impairments built up during the pandemic.
Virgin Money’s annual results showed statutory pre-tax profits jumped to £595m for the year to 30 September, from £417m the previous year.
On an underlying basis and stripping out costs such as restructuring charges, annual profits fell 1% to £789m.
Chief executive David Duffy said: “The macroeconomic outlook has become more uncertain over the course of the year.
“Following a positive recovery in expectations post-Covid, recent events have seen forecasts deteriorate.
“As we enter a more volatile environment, with higher inflation and rates, we are carefully monitoring for any impacts.”
He added: “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.”
The bank stated it has been seeing the impact of rising inflation on banking customers, with its data showing spending has soared by 16% on groceries and 57% on energy bills.
It reported overall lending growth of 0.8% over the year to £72.6bn, while it upgraded its net interest margin outlook for the year ahead, due to sharply rising interest rates in the UK.
Mortgage lending remained stable at £58.2bn, having returned to growth in the second half of the financial year.
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