Virgin Money UK posts loss as credit impairment charge doubles

Wed, 25th Nov 2020

Banking group Virgin Money UK posted a full-year loss after its margins shrank and it booked a higher credit impairment charge to account for unpaid loans during the Covid-19 crisis. Pre-tax losses for the year through September amounted to £168 million, compared to losses of £265 million year-on-year. Underlying profit, which excluded transformation costs and legacy conduct charges, slumped 77% to £124 million. Underlying operating revenue fell 6% to £1.54 billion while impairment losses on credit exposures roughly doubled to £507 million, up from £252 million. Virgin Money UK's net interest margin, a key measure of profitability, contracted by 10 basis points to 1.56%. The company did not declare an interim dividend. Looking forward, it said it expected to post a broadly flat net interest margin for the full year, with non-interest income to remain subdued. 'While we are yet to see any material impacts of the pandemic on the credit quality of our loan book, our results reflect a cautious and conservative approach to the coming period as we refine our assessment of the uncertain economic outlook and the impact of the second lockdown,' chief executive David Duffy said. 'Although the vaccine news is a strong cause of hope for the future, the economic benefits are still some way off when considering the immediate reality of current restrictions and so have not yet been factored into our near-term forecasts.' Story provided by StockMarketWire.com

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