Virgin Money’s underlying profits have more than halved after taking a £232m hit as it braces for increasing loan losses from coronavirus.
The Clydesdale and Yorkshire Bank owner - which has major offices in Newcastle, Glasgow and Leeds - posted underlying pre-tax profits of £120m for the six months to March 31, down 58% on the £286m reported a year earlier.
On a statutory basis, the group swung to a £7m interim loss from profits of £9m a year ago.
Its total charges included £164m set aside for Covid-19 related impairments amid expectations for rising bad debts as customers default on loans.
Virgin Money chief executive David Duffy said: “The COVID-19 outbreak and its impact on the nation’s businesses and consumers has markedly changed the operating environment, driving an increased impairment charge of £232m against future loan losses and a reduction in underlying profitability.
“While we delivered a resilient performance and continued to make good progress on our self-help strategy in the first half of the year, our primary objective now is safeguarding the health and well-being of our colleagues, customers and communities while also protecting the bank.
“We enter this period from a position of strength, with a defensive loan book and resilient capital position, meaning we are well-placed to help our customers and colleagues through the crisis. We have rapidly adapted our operations, products and services and I am extremely proud of how our colleagues have risen to the challenge and continued to provide the very best support and advice to our customers.
“To date we’ve directly supported over 100,000 retail customers and around 4,500 businesses. We continue to work closely with Government, regulators and the industry to ensure we maximise our support to customers and the 海角视频 economy.
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“Amid the uncertainty, it is clear that the pandemic will have long-lasting and wide-ranging effects on how companies do business and on what customers will expect from the organisations they choose to interact with.
“Although the full impacts from the COVID-19 outbreak will take time to emerge, I’m confident that our agility, digital capabilities and focus on disrupting the status quo will make us stronger and well-equipped to support changing customer needs and play our part in the 海角视频’s economic recovery.”
Mr Duffy said the bank had granted 60,000 mortgage holidays to customers, 32,000 re-payment holidays to credit card customers and around 8,000 holidays to personal loan customers.
It had also received 5,600 requests for the Bounce Back loans scheme, and had made payments of £170m to business customers so far.
Virgin Money has paused a redundancy and branch closure programme that had been announced in February, and has also put on hold the programme to re-brand its Clydesdale and Yorkshire Bank branches to the Virgin Money brand. It has not forloughed any staff during the coronavirus outbreak and has no plans to do so.
Mr Duffy said that the outbreak had accelerated the bank’s abilities to get people working from home and in the long run could offer opportunities for more flexible working for many companies which would benefit efforts to have a more diverse workforce, as well as greener ways of doing business by cutting commuting and other costs.