LONDON (ShareCast) - (Sharecast News) - UK lender Virgin Money swung to a first-half loss as it made a ?232m bad loans provision due to the coronavirus crisis.
UK lender Virgin Money swung to a first-half loss as it made a ?232m bad loans provision due to the coronavirus crisis.

The bank, formed after a merger with CYBG, reported a statutory pre-tax loss of ?7m in the six months to March, compared with a profit of ?42m. The figure included a ?33m loss from Virgin Money before the deal with Clydesdale Bank.

Underlying profit slumped 58% to ?120m mainly due to the Covid-19 impairment charge. Income fell 3% year on year to ?817m, with net interest income the key driver, down 4% to ?702m.

Net interest margin, the difference between the rate on savings and loans, was 9 basis points lower year on year 1.62%.

The bank said it had given 40,000 loan repayment holidays and 60,000 mortgage deferrals, and added that it had also granted support to 4,500 business customers, including extending coronavirus business interruption loans worth ?135m.

"The Covid-19 outbreak and its impact on the nation's businesses and consumers has markedly changed the operating environment, driving an increased impairment charge of ?232m against future loan losses and a reduction in underlying profitability," said chief executive David Duffy.

Total charges included an extra ?164m for Covid-19 related impairments as the bank braced itself for higher bad debts as customers default on loans.

Its total charges included an extra ?164 million set aside for Covid-19 related impairments amid expectations for rising bad debts as customers default on loans.

The group revealed it already has around 1.2% of it credit card customers, some 12,000, are seriously in arrears, by three months or more.

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