High street lender Virgin Money has returned to profit in the first half of the year but said it remains cautious on how the economy will fare when furlough and other Government support schemes are withdrawn.
The group - which has bases in Newcastle, Leeds and Glasgow - reported pre-tax profits of 拢72m for the six months to March 31 against losses of 拢7m a year earlier.
On an underlying basis, interim pre-tax profits more than doubled to 拢245m from 拢120m a year ago.
Profits were boosted as impairments for bad debts fell 84% to 拢38m compared with a year earlier, offsetting lower retail banking income due to rock-bottom interest rates.
The bank also reported a further 拢59m hit from the payment protection insurance (PPI) scandal after a higher level of internal reviews into complaints led to payouts.
The group missed out on the mortgage boom that boosted many of its rivals in the first quarter amid the stamp duty holiday, with its mortgage balance remaining flat at 拢58.3bn.
It said it chose to focus on profit margins rather than chasing higher mortgage sales, but has started to see lending pick up, with lending surging 50% between February and March.
Personal loans dropped 3.2% to 拢5.1bn in its first half as households reined in spending and saved instead, with business lending also down 0.6% at 拢8.9bn.
The group saw its net interest margin 鈥 a key performance measure for retail banks 鈥 fall due to record low interest rates.
But it hiked its margin outlook for the full year due to an improving picture as the economy is set to bounce back strongly from the latest lockdown.
Chief executive David Duffy said: 鈥淰irgin Money had a strong first half. We doubled underlying profit compared to last year and returned to statutory profit.
"The quality of our loan book remained resilient in the period, and we鈥檝e continued to support customers and look after our colleagues and communities, while safeguarding the bank.
We鈥檝e made significant strategic progress to transform Virgin Money into a leading digital bank and our rebranding is largely complete. We鈥檝e launched a range of innovative and compelling Virgin Money personal and business products as well as differentiated loyalty offers, which are showing early signs of success.
鈥淥ur 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. This lays the foundation for efficient, sustainable growth of deep, long-lasting customer relationships.
鈥淲e are cautiously optimistic about the improving outlook as the impact of the vaccination programme in the 海角视频 delivers positive revisions to economic expectations.
"We鈥檙e continuing to manage through what is still an uncertain economic backdrop, but the bank is well placed, with a strong balance sheet, and through ongoing strategic delivery we have a clear path to long-term, improved sustainable returns.鈥
Virgin Money was formed from the 2018 merger of CYBG, the owner of the Clydesdale and Yorkshire banks, with Newcastle鈥檚 Virgin Money, which itself had taken over most of the assets of the former Northern Rock bank. It is now the country鈥檚 sixth largest bank.
Despite increasing confidence on the 海角视频鈥檚 economic outlook, the bank said that it recognised 鈥渢he need for additional customer support as furlough ceases, Government-backed loan schemes are phased out, repayments commence and the economy normalises.鈥
