Virgin Money Provides $ 993 Million for Distressed Loans

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February 2 (Reuters)Virgin money lender VMUK.L set aside 726 million pounds ($ 992.59 million) to protect its balance sheet against possible loan losses, after a “modest” increase in the number of customers requiring additional assistance after the end of pandemic payment holidays.

The UK’s sixth-largest lender, set up to challenge the dominance of the biggest British banks, announced Tuesday that they had granted mortgage payment holidays on 12.1 billion pounds of loans as of December 31, or about 21% of balances, against 11.9 billion pounds in a full year.

IHe had said he would set aside £ 735million last year.

“Recent additional restrictions across the UK due to record infection levels are likely to delay the pace of normalized economic and transactional activity,” the company said.

“As a result, VMUK continues to take a cautious view of economic assumptions and this is reflected in coverage levels, underwriting standards and liquidity levels.”

The shares were trading up 2.6% at 135.4 pence at 08:23 GMT.

Virgin Money also saw a 0.3% drop in the size of its loan portfolio to £ 72.2 billion in its first quarter, as new coronavirus restrictions put pressure on hhousework borrowing.

However, business loans rose 0.1% in the three months to Dec.31, with government-backed loans through the Bounce Back loan program up 14% to £ 923million and loans through coronavirus business disruption program up 19% to 422 million pounds. .

In addition to subdued retail lending activity, the bank has also been hit by near-zero interest rates set by the central bank last year to revive an economy hit by the coronavirus. The net interest margin (NIM) stagnated at 1.52% during the three-month period.

Virgin Money, which serves 6.4 million customers across the UK, said NIM in the current year would be broadly stable. It said it made a statutory profit in the first quarter after losing £ 141million in its most recent fiscal year.

($ 1 = 0.7314 pounds)

(Report by Muvija M in Bengaluru, edited by Sinead Cruise)

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