David Duffy

In the three months to the end of 2020, the bank’s customer deposits rose slightly by almost 1% to £68.1 billion as customers spent less and businesses maintained healthy balance sheets to get through the coronavirus pandemic.

Mortgages dropped 0.2% to £58.2bn and personal lending fell 25 to £5.1bn.

The latest results showed that business lending rose slightly by 0.1% of 38.9bn, although the UK government-backed lending schemes remained popular as new lockdowns and restrictions saw firms take on more debt to see through the winter.

Bounceback loans increased by 14% and larger Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption loan scheme facilities rose 19%.

The bank’s Net Interest Margin (NIM) was stable in the first quarter at 152bps, as expected, with higher liquidity and lower hedge contributions offset by an improving mix and cost of deposits, and supportive mortgage spreads.

However, Virgin Money also announced it had added a further charge of £49m to the cost of compensation over the PPI scandal following a higher level of internal reviews into complaints leading to payouts.

The group said it had finished the final processing of all complaints by January 25, with a total of 740,000 received and a processing cost of £3.1bn.

David Duffy, chief executive officer, said: “Virgin Money had a profitable and positive first quarter and continued to prioritise our customers and colleagues through this uncertain external environment, including through payment holidays and Government lending schemes.

“We have made a good start to the year with the launch of new customer propositions, further roll-out of our rebrand programme and a return to statutory profit, while maintaining a disciplined approach. The Group remains strongly capitalised and we have good momentum as we look out into the remainder of the year.”

He added: “Given the current UK-wide restrictions and ongoing uncertainty, we maintain the cautious economic outlook we outlined in November and our full year guidance remains broadly unchanged.

“Looking ahead, the vaccine roll-out and EU trade deal are encouraging for the UK’s economic recovery and we remain focused on disrupting the market through a variety of innovative new products and propositions with a customer and brand experience that is the best in the market.”

Share in Virgin Money closed up last night at nearly 8% after the results were announced.