Business
Virgin Money makes $993 million credit provisions, turns profit in first-quarter
Published by linker 5
Posted on February 2, 2021
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by linker 5
Posted on February 2, 2021
2 min readLast updated: January 21, 2026
(Reuters) – Virgin Money has set aside 726 million pounds ($992.6 million) to cover potential loan losses during the COVID-19 economic downturn and gave a cautious outlook on Tuesday despite a rebound into statutory profit in its first quarter.
Shares in the UK’s sixth-largest lender jumped 6.4% to 141 pence by 0950 GMT, topping gainers on the UK mid-cap index despite flagging a “modest” increase in customers needing additional support after exiting pandemic payment holidays.
While Virgin Money turned an underlying pretax profit in its last full financial year, which ended in September, statutory earnings – which include one-off items – were in the red due to acquisition-related costs, among others.
The company reported a 141 million pound loss in its last fiscal year but did not disclose the size of the statutory profit it turned in the three months to Dec. 31 – its financial first quarter – on Tuesday.
Virgin Money, set up to challenge the dominance of bigger UK banks, said it had granted mortgage payment holidays on 12.1 billion pounds of loans as of Dec. 31, equivalent to around 21% of balances, compared with 11.9 billion pounds at end September.
The bank also reported negative exceptional items totalling 101 million pounds in the quarter, higher than some analysts had expected.
But this sum was offset by a lower-than-expected first-quarter impairment charge of 18 million pounds, which Investec analyst Ian Gordon said was “entirely responsible for VMUK’s return to profit.”
The company said recent fresh restrictions across Britain in a response to record COVID-19 infection levels were likely to delay a return to normality in its business.
“As a consequence, VMUK continues to adopt a cautious view on economic assumptions and this is reflected in coverage levels, underwriting standards and liquidity levels,” it said.
Business lending was 0.1% higher over the period, with government-backed lending via the Bounce Back Loan scheme up 14% to 923 million pounds and lending via the larger Coronavirus Business Interruption Scheme up 19% to 422 million pounds.
However, the size of Virgin Money’s total loan book fell 0.3% to 72.2 billion pounds as fresh curbs to contain the pandemic put pressure on household borrowing.
($1 = 0.7314 pounds)
(Reporting by Muvija M in Bengaluru; Editing by Sinead Cruise and Jan Harvey)
Explore more articles in the Business category
