Analysis: Virgin Money UK posts loan loss of £74m

The results show Virgin Money saw a net increase in credit provisions of £42m, after write-offs of £32m, bringing its total balance sheet credit provisions to £584m.

The bank called this “prudent” as it has not seen any significant credit losses in relation to the pandemic impact, given a backdrop of government support.

The bank has also seen lending volumes fall, posting a Q3 mortgage portfolio reduction of one percent to £58.9bn. Virgin Money said this reflected the effective closure of the new purchase market under lockdown, though the fall was partially offset by improved retention rates

The lender also reported that personal lending volumes in the three months to the end of June dropped 2.7% to £5.2bn, which it attributed primarily to lower credit card balances.

Payment holidays

The report showed that the level of new payment holiday requests had reduced significantly since its peak in April.

Virgin Money reported that the initial cohort of payment holidays expiring suggests at this stage only a small proportion of customers require an extension.

The lender has granted 67,000 mortgage payment holidays to date at July 17. This equates to around 20% of balances and is an 11% increase on April’s figure of 60,000. Some 70% of customers have matured from their first payment holiday, with around 31,000 mortgage payment deferrals still in force at July 17.

Some 42,000 credit card payment deferrals have been granted to date at July 17 which is around five percent of total credit card accounts. This is a 30% increase on April, where 32,000 deferrals had been granted. Some 32,000 credit card payment holidays are still in force.

Virgin has also granted 11,000 personal loans payment deferrals as of July 17 which is about nine percent of balances. This figure has risen since April where 8,000 customers had been granted a personal loan payment deferral. Some 75% of customers have matured from their first payment holiday.