Nov 23 Reuters British bank Virgin Money missed fullyear profit forecasts on Thursday, after it set aside more cash to cover loan defaults as stubborn inflation and steep borrowing costs squeeze household finances.

Lenders face a tough economic outlook due to a higher risk of unpaid loans in a costofliving crisis and margin pressure from fierce competition for savings and mortgage products.

High interest rates are building stress on borrowers, Virgin Money CEO David Duffy said, after the bank set aside 309 million pounds 385 million in fullyear results to cover potential soured loans, up from 52 million pounds the prior year.

The company39;s pretax profit slumped 42 to 345 million pounds 430 million for the 12 months to Sept. 30, compared with a 430 million pounds average of analyst estimates compiled by the company.

Analysts at JPMorgan described the results as mixed, but said higher costs would likely lead to analyst downgrades to its earnings outlook.

Shares in the lender fell 2 in early trading and were last down 0.7 at 155.85 pence at 0829 GMT.

The owner of the former Glasgowbased Clydesdale Bank also announced an additional share buyback plan of 150 million pounds.

The bank39;s increase in bad debt provisions reflected a conservative stance and loan arrears were low, Duffy said.

Virgin Money said it would also invest millions of pounds in increasing its digital services and protecting customers from emerging risks including cyberattacks using artificial…