Business lending grows
Deposits rise at Virgin Money as pandemic hit limited
Branch closures continue
Virgin Money has not yet seen any significant credit losses nor been required to make any significant specific provisions in relation to the pandemic impact.
Customer deposits increased by 4.8% to £67.7bn which indicates that cash held in personal current accounts and savings accounts linked to current accounts is more than £600 higher on average at the end of Q3 than pre-COVID levels. This is a result of lower spending patterns during lockdown.
The group confirmed that trading in the nine months to 30 June was in line with the board’s expectations.
Q3 Mortgage portfolio was down 1% to £58.9bn reflecting the effective closure of the new purchase market under lockdown, partially offset by improved retention rates
Business lending grew 5.7% to £8.8bn driven by significant demand for the Government backed lending schemes with £619m of BBLS and £248m of CBILS lending provided at end June
Personal lending fell 2.7% to £5.2bn primarily due to lower credit card balances.
Claims for mis-sold PPI should be complete by December. The group has 68,000 complaints left to assess and expects to complete the programme within its current provision levels.
On 1 July the company resumed its previously planned headcount reduction and branch closure programme. This will deliver cost savings in FY21, with restructuring costs of c.£60m expected in Q4. The Group continues to expect FY20 underlying operating costs of £920m.
David Duffy, chief executive, said: “Our Q3 financial results reflect lower demand from consumers due to the pandemic, but strong demand from businesses for Government-supported schemes, with the group further increasing its provisions to reflect the uncertain economic outlook while maintaining a focus on margin, cost and capital management.
“We know that things may yet get more difficult for many of our customers, but we are determined to continue to support their needs where we can and to fulfil our role in the economic recovery.”