Tuesday 2 February 2021 8:10 am

Virgin Money adds £18m fresh provisions for troubled loans

Lender Virgin Money has set aside a further £18m this quarter to protect its balance sheet from potential loan losses, as it reported a “modest” increase in the number of customers needing additional support after exiting pandemic payment holidays.

The new £18m this quarter is in addition to £726m the company is holding on its balance sheet to protect against losses.

The UK’s sixth-largest lender, set up to challenge the dominance of more conventional and bigger banks in the region, said it had granted mortgage payment holidays on £12.1bn of loans as at December 31, equivalent to around 21 per cent of balances, compared with £11.9bn at its full-year.

Virgin Money also posted a 0.3 per cent fall in the size of its loan book to £72.2bn during its first quarter, as fresh coronavirus restrictions put pressure on customer borrowing.

Virgin Money chief executive officer David Duffy 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.”

In the first quarter of its new financial year Virgin Money saw customer deposits increase by 0.9 per cent to £68.1bn.

The group’s business lending was 0.1 per cent higher at £8.9bn, and personal lending was reduced by two per cent to £5.1bn as the impact of Covid-related restrictions resulted in lower retail card spending and reduced demand for personal loans.