More “one-off” charges at Virgin Money

VIRGIN Money showed today that historical issues still haunt the bank as it moves to embrace a digital future under one brand.

The bank was bought by CYBG for £1.7 billion in 2018 – at times lately the market value of the new company has been well below that.

Today Virgin set aside another £173 million of “exceptional items” which include £49 million of merger costs and £71 million of “conduct charges” mostly relating to PPI, the scandal it seems unable to shake-off.

All banks are lately on the up as the economy improves. Virgin made a small profit of £72 million in the last six months, compared to a £7 million loss a year ago on bad loans. It took another £38 million impairment charge, down from £232 million a year ago.

Chief executive David Duffy said customers are ready to splurge. “We think there is a desire to come back and spend,” he said.

The shares, over 300p three years ago, today fell 11p to 189p.

Virgin’s net interest margin – the gap between what it pays savers and charges borrowers – is a low 1.6%. A move by the Bank of England to raise interest rates would boost those narrow margins.

Business lending, a supposed strength for the bank, fell 0.6% to £8.9 billion.

Duffy added: "We are cautiously optimistic about the improving outlook as the impact of the vaccination programme in the UK delivers positive revisions to economic expectations.”