Virgin Money has reported a dip in customer lending in the third quarter as demand for mortgages and personal loans fell due to the pandemic.
However, the lender said it had not yet seen a spike in credit losses linked to coronavirus.
Virgin Money reported a 2.7 per cent drop in personal lending to £5.2bn, which it attributed to lower credit card balances. However business lending grew 5.7 per cent to £8.8bn, driven by “significant demand” for the government’s coronavirus loan 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.
The essential closure of the new purchase market due to lockdown hit its mortgage portfolio by one per cent, to £58.9bn.
Why it’s interesting
Virgin Money has provided £619m in bounce back loans and £248m for the government’s CBILS scheme to the end of June.
The lender has granted around 67,000 mortgage and 53,000 payment holidays.
The group said it had not seen “any significant specific provisions or credit losses in relation to the pandemic” given the backdrop of government support and the group’s forbearance measures.
Virgin Money did say it had updated its IFRS9 impairment models to include more cautious economic scenarios given the pandemic. It said it had set aside £42m in readiness for the possibility of bad debts.
What Virgin Money said
Chief executive David Duffy said: “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.”