Citi reiterates ‘buy’ on Virgin Money, nudges up price target

The bank noted that despite beating first-half consensus expectations and enhancing FY22 guidance, the shares traded off after the results.

"We attribute this to the communication on the conference call, which seemed to be somewhat defensive on the trajectory of net interest margins (FY22 guidance implied a decline in 2H22 versus 2Q22), on the ability to absorb cost inflation and on the timing for re-starting buybacks (despite introducing a more formal capital return policy)," it said.

"We believe the NIM guidance is overly prudent and still see a small absolute reduction in costs after this year, albeit we do expect the company to miss the 2024 cost guidance."

The bank said it sees "significant value" form here and an estimated total return of around 150%.