As profits fall...
Virgin Money braced for surge in bad loans
The bank has suspended the closure of branches (pic: Terry Murden)
Virgin Money has seen first half underlying profit fall 58% to £120m (2019: £286m) as it prepared for a surge of bad loans triggered by the coronavirus pandemic.
It is taking an impairment charge of £232m against future loan losses.
The Glasgow-based owner of the Clydesdale bank network said about 12,000 (1.2%) of its credit card customers, were already seriously in arrears by three months or more before the pandemic.
It said it had given payment holidays to around 60,000 mortgage borrowers, 32,000 credit card customers and 8,000 personal loan customers.
Profit after tax slumped 40.5% from £37m in the six months to March 2019 to just £22m in the six months to March 2020.
On a statutory basis, the group slipped to a £7m loss from profits of £42m a year ago.
Revenue slipped 3% year on year to £817m as the bank’s net interest margin narrowed from 1.71% last year to 1.62%.
Importantly, no further PPI or other conduct provisions were required in the period.
David Duffy, chief executive, said: “The COVID-19 outbreak and its impact on the nation’s businesses and consumers has markedly changed the operating environment.
“We enter this period from a position of strength, with a defensive loan book and resilient capital position, meaning we are well-placed to help our customers and colleagues through the crisis.”