May 14 (Reuters) - British bank Virgin Money UK warned of a tepid second-half of the year on Tuesday, citing higher costs and lower profit margins due to growing investments, inflationary pressures and stiff competition for deposits.

The lender, which agreed to a 2.9 billion pound ($3.64 billion) all-cash takeover deal from 140-year-old mutually-owned building society Nationwide in March, said it expected net interest margin (NIM) - a key indicator of a bank's underlying profitability - to be lower in the second half of the year.

"Expect NIM in H2 to be impacted by lower contribution from cards effective interest rate adjustments, ongoing competition and lower interest rates," the lender said in a statement.

However, it stuck by its full-year NIM forecast to be in the range of 190-195 basis points.

Virgin Money said the first half of its financial year was "in-line with expectations", at a time when competition among banks for mortgage business and deposits has ramped up.

The company said mortgages were 2% lower at 56.6 billion pounds in the first half ended March 31, reflecting the subdued market, while overall customer deposits climbed 2% to 68.2 billion pounds. ($1 = 0.7963 pounds)

(Reporting by Eva Mathews in Bengaluru; Editing by Nivedita Bhattacharjee and Rashmi Aich)