Glasgow-based Virgin Money UK plc said on Tuesday that its customers’ deposits increased 4.8% to £67.7 billion in its third quarter “primarily due to lower personal customer spending during lockdown and business customers maintaining higher levels of liquidity.”
In a third-quarter trading update, Virgin Money UK said its Q3 business lending grew 5.7% to £8.8 billion “driven by significant demand for the Government backed lending schemes with £619m of BBLS and £248m of CBILS lending provided at end June.”
The bank said its Q3 personal lending fell 2.7% to £5.2 billion “primarily due to lower credit card balances.”
Virgin Money UK said it has not yet seen significant specific provisions or credit losses in relation to the coronavirus pandemic, but cautioned: “The group has updated its IFRS9 impairment models incorporating more cautious economic scenarios … and refined its overlays to reflect payment holiday assumptions, resulting in a prudent net increase in its provisions of £42m primarily in mortgages and personal …”
The bank has granted about 67,000 mortgage holidays and 53,000 “personal payment” holidays.
The bank’s NIM (net interest margin) declined to 157bps (9 months annualised) with a Q3 NIM of 147bps “due to the immediate asset repricing following the base rate reduction and cost of holding excess customer deposits …”
Virgin Money UK shares have recovered from a low of around 54p in March to around 98p on Tuesday — but are still about 50% down over the past 12 months.
Virgin Money UK CEO David Duffy said: “I am pleased with the way the group has performed during the pandemic.
“In a severely disrupted environment we are delivering on what we set out in May; to safeguard the health and wellbeing of our colleagues, customers and communities while protecting the bank.
“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.
“Our priority remains on offering the right support for our customers in need.
“We have now granted c.67k mortgage and c.53k personal payment holidays, and we’ve supported c.25k business customers with lending arrangements.
“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.
“I’m proud of the way our colleagues have responded to the significant challenges of recent months, and encouraged by the agility with which we have adapted our operations.
“We have now recommenced our transformation and rebrand activity, taking what we have learned through the pandemic to deliver on our mission to disrupt the status quo as a full-service digital bank.”