Virgin Money ramps up cost cutting as it unveils £130m plan to fight cyber crime

Virgin Money said it would need to cut costs by £200m a year, up from £175m previously, to pay for the plans through “further strategic rationalisation of our real estate portfolio, outsourcing and systems simplification”.

It added the plans would put back goals to deliver “double-digit statutory returns”.

Details of the investment came as the group reported full-year statutory pre-tax profits tumbling 42 per cent to £345m as it set aside £309m for loans expected to turn sour, up from £52m the previous year.

David Duffy, chief executive of Virgin Money, said: “We are stepping up investment in our technological capability to future proof our business and protect our customers from the growing risk of fraud strategies driven by advances in AI.”

He added: “This is the right thing to do for customers and the bank in the long term, safeguarding and protecting both as the environment evolves, and will support sustainable shareholder returns over time.

“While the investment will impact on returns in the short term, we believe it mitigates against the risk of greater impact on the bank and our customers in the future.”

The group said its plans to invest in fraud and cyber crime prevention come as the threat has risen significantly recently.

It said: “The rapidly increasing prevalence of online channels and social media are driving higher instances of fraud and financial crime in the UK.

“Increasingly, this will become an area where banks bear the full extent of fraud losses and associated penalties.

“Cyber crime represents another area of significant development, with new technologies including AI increasing the sophistication and risk of attacks.”

The group’s cost cutting has already seen it shut swathes of its branches, with the group announcing in July that it would shut almost a third of its bank branches due to the shift towards online banking.

It said it was axing another 39 branches, which will leave it with 91 across the UK, in a move that is putting 255 jobs at risk.

In a statement to accompany the results, Virgin Money said: “2023 has been another year of significant change in the operating environment.

"The combination of the higher rate environment and our strategy is increasingly translating into growth in relationship customer accounts and income. We’ve made good progress on our journey to digitise the bank.. There remains more to do as we enter the final year of our current three-year plan, but we have good momentum across key areas of the business, a robust balance sheet, and a continued focus on ensuring we support and reward our customers’ ongoing loyalty.”