Bank profits hit in ‘extraordinary year of disruption’
Underlying pre-tax profits at Virgin Money UK have dropped 77% to £124m from £539m in 2019, in the bank’s final results issued today.
After exceptional costs of £292m, including £139m of integration and transformation costs and £113m of acquisition accounting unwind, the Group recorded a statutory loss after tax of £141m.
Income was 6% lower than FY19 at £1.5bn, which Virgin Money UK says primarily reflects the impact of the pandemic in the second half of the year and rate changes.
The bank also recorded a lending contraction of 0.7% to £72.5bn and deposit growth of 5.8% to £67.5bn.
The period saw business lending growth of 13.6% to £8.9bn, due to £1.2bn of Government-backed lending (BBLS/CBILS/CLBILS) in response to the virus, while mortgage lending declined 3% to £58.3bn.
Virgin Money UK’s outlook summary states: “Given the unprecedented nature of COVID-19, the exact economic outlook for the UK is clearly evolving and remains hard to predict with any high degree of certainty at present.
“It is therefore not appropriate at this stage to give firm medium-term guidance and so the Group’s previous FY22 targets are withdrawn pending more certainty in the economic environment.”
David Duffy, chief executive officer, said: “It has been an extraordinary year of disruption for all of us.
“Our priority has been to support our customers and colleagues through this period, and we will continue to do so during the challenging economic environment ahead.
“I’m proud of the way we’ve adapted how we work this year to continue serving our customers, while looking after our colleagues and protecting the bank for the future.
“While we are yet to see any material impacts of the pandemic on the credit quality of our loan book, our results reflect a cautious and conservative approach to the coming period as we refine our assessment of the uncertain economic outlook and the impact of the second lockdown.
“Although the vaccine news is a strong cause of hope for the future, the economic benefits are still some way off when considering the immediate reality of current restrictions and so have not yet been factored into our near-term forecasts.”
