Glasgow-based Virgin Money UK, owner of Clydesdale and Yorkshire banks, said on Wednesday its first-half underlying profit fell 58% amid an impairment charge of £232 million against future loan losses as a result of the coronavirus crisis.
It said underlying profit for the six months ended March 31 fell 58% to £120 million “primarily due to the Covid-19 impairment charge.”
Virgin Money reported first-half loan growth of 0.3% to £73.2 billion and deposit growth of 1.4% to £64.7 billion.
The group reported a common equity tier one ratio of 13% — higher than analyst forecasts — and its stock rose about 5%.
Virgin Money UK CEO David Duffy said: “The Covid-19 outbreak and its impact on the nation’s businesses and consumers has markedly changed the operating environment, driving an increased impairment charge of £232m against future loan losses and a reduction in underlying profitability.
“While we delivered a resilient performance and continued to make good progress on our self-help strategy in the first half of the year, our primary objective now is safeguarding the health and well-being of our colleagues, customers and communities while also protecting the bank.
“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.
“We have rapidly adapted our operations, products and services and I am extremely proud of how our colleagues have risen to the challenge and continued to provide the very best support and advice to our customers.
“To date we’ve directly supported over 100,000 retail customers and around 4,500 businesses.
“We continue to work closely with Government, regulators and the industry to ensure we maximise our support to customers and the UK economy.
“Amid the uncertainty, it is clear that the pandemic will have long-lasting and wide-ranging effects on how companies do business and on what customers will expect from the organisations they choose to interact with.
“Although the full impacts from the COVID-19 outbreak will take time to emerge, I’m confident that our agility, digital capabilities and focus on disrupting the status quo will make us stronger and well-equipped to support changing customer needs and play our part in the UK’s economic recovery.”