Virgin Money UK PLC helped by bad debt improvement but income slides
Before impairments, operating profits dropped by 20% to £283mln as net margins fell slightly
Lower bad debt charges helped Virgin Money UK () post almost doubled underlying profits, but its shares fell as the bank revealed first-half income had dropped by 9%.
The bank also said there will not be a dividend until next year at the earliest.
A decision won’t be made the next solvency stress test in December is completed, said the statement.
The challenger bank posted a statutory profit of £72mln in the six months to March 2021, compared to a £7mln loss a year ago, but still took £173mln of one-off charges including £49mln for transformation and £59mln for PPI winding down.
Before impairments, operating profits dropped by 20% to £283mln as net margins fell slightly.
David Duffy, CEO, said it had been a strong first half with loan book quality holding steady.
“We are cautiously optimistic about the improving outlook as the impact of the vaccination programme in the UK delivers positive revisions to economic expectations,” he added.
The bank said it was keeping a tight rein on mortgage lending even though the housing market is booming at present.
Mortgage balances were steady at £58.3bn with volumes ‘carefully managed through an uncertain backdrop’, prioritising margin over volume, the bank said.
Duffy also highlighted its environmental plans: “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,” he said.
ESG targets now account for 15% of management bonuses under a new incentive scheme unveiled today.
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