Virgin Money reports lower demand from consumers due to the pandemic

Virgin Money UK PLC said its trading in the nine months to June 30 2020 was in line with the board’s expectations.

In Yorkshire and the Humber the bank has lent almost £207m through the CBILS and BBLS to more than 5,500 SMEs, which is around a quarter of its lending in the Government guaranteed lending schemes.

Customer deposits increased in the third quarter by 4.8 per cent to £67.7bn primarily due to lower personal customer spending during lockdown and business customers maintaining higher levels of liquidity.

A spokesman said that personal relationship balances -cash held in personal current accounts and savings accounts linked to current accounts - were more than £600 higher on average at the end of Q3 than pre-COVID levels, as a result of lower spending patterns during lockdown.

Personal lending reduced by 2.7 per cent to £5.2bn primarily due to lower credit card balances.

The group said it has not yet seen any significant specific provisions or credit losses in relation to the pandemic, given the backdrop of Government support.

In a statement, Virgin Money said: "While the group remains committed to our integration and transformation programmes a majority of these activities remained on hold during Q3 as we prioritised support for customers and colleagues during the pandemic.

"As a result, exceptional items in Q3 totalled £51m including lower restructuring and integration costs of £19m, acquisition accounting charges of £28m and other items of £4m.

"On 1st July VMUK announced the recommencement of its previously planned headcount reduction and branch closure programme. This will deliver cost synergies in FY21, with restructuring costs of c.£60m expected in Q4. The group continues to expect FY20 underlying operating costs of <£920m."

David Duffy, the chief executive officer,said: “I am pleased with the way the group has performed during the pandemic. In a severely disrupted environment we are delivering on what we set out in May; to safeguard the health and wellbeing of our colleagues, customers and communities while protecting the bank.

"Our Q3 financial results reflect lower demand from consumers due to the pandemic, but strong demand from businesses for Government-supported schemes, with the group further increasing its provisions to reflect the uncertain economic outlook while maintaining a focus on margin, cost and capital management.

“Our priority remains on offering the right support for our customers in need. We have now granted c.67k mortgage and c.53k personal payment holidays, and we’ve supported c.25k business customers with lending arrangements.

"We know that things may yet get more difficult for many of our customers, but we are determined to continue to support their needs where we can and to fulfil our role in the economic recovery. I’m proud of the way our colleagues have responded to the significant challenges of recent months, and encouraged by the agility with which we have adapted our operations.

“We have now recommenced our transformation and rebrand activity, taking what we have learned through the pandemic to deliver on our mission to disrupt the status quo as a full-service digital bank."

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