Virgin Money deposits top £68bn amid return to profit

Glasgow-based Virgin Money UK — owner of Clydesdale and Yorkshire banks — said on Wednesday its customer deposits rose £964 million to £68.67 billion in the six months to March 31, 2021, “driven by lower levels of spending as a result of Covid-19 related societal restrictions.”

Virgin Money UK said it returned to statutory profit, with underlying profit more than doubling to £245 million.

Statutory profit before tax was £72 million after deducting £173 million of exceptional items which the company described as: “£49m of integration & transformation costs, £47m of acquisition accounting unwind, £71m of conduct charges (£59m related to PPI, including charge taken in Q1.”

Virgin Money UK shares have risen more than 150% over the past 12 months but they fell about 5% on Wednesday after the results were announced.

Goodbody analyst John Cronin said the results were “a mixed bag” with operating costs and exceptional items “much higher than expected.”

Virgin Money UK said its loan book and mortgage balances were “stable” at £72.2 billion and £58.3 billion respectively.

Business lending declined 0.6% to £8.9 billion and personal lending declined 3.2% to £5.1 billion “due to subdued customer demand across the market.”

Virgin Money’s net interest margin (NIM) — a key measure of profitability — slipped to 1.56% from 1.62%, with the bank forecasting that its NIM would be around 1.6% for the full year.

Virgin Money UK CEO David Duffy said: “Virgin Money had a strong first half. We doubled underlying profit compared to last year and returned to statutory profit.

“The quality of our loan book remained resilient in the period, and we’ve continued to support customers and look after our colleagues and communities, while safeguarding the bank.

“We’ve made significant strategic progress to transform Virgin Money into a leading digital bank and our rebranding is largely complete.

“We’ve launched a range of innovative and compelling Virgin Money personal and business products as well as differentiated loyalty offers, which are showing early signs of success.

“Our ESG strategy continues to gain momentum across the business including developing sustainability-linked business loans and a green mortgage product as we look to further embed sustainability across everything we do.

“This lays the foundation for efficient, sustainable growth of deep, long-lasting customer relationships.

 “We are cautiously optimistic about the improving outlook as the impact of the vaccination programme in the UK delivers positive revisions to economic expectations.

“We’re continuing to manage through what is still an uncertain economic backdrop, but the bank is well placed, with a strong balance sheet, and through ongoing strategic delivery we have a clear path to long-term, improved sustainable returns.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.