VIRGIN Money plunged to a £141 million loss for the year, warning that the economic pain from the pandemic will be severe and that optimism over vaccines may be misplaced.
The lender took a credit impairment charge of £501 million, a “cautious” estimate of what it could lose on bad debts. Virgin Money shares fell 9p to 137p on the figures.
It also noted that it has built up a capital buffer of £1 billion to protect itself and customers from economic pain next year that it plainly expects to be brutal.
Chief executive David Duffy told the Standard: “There is a lot of optimism out there due to the vaccine news. But it is unclear when the benefits of the vaccines will come.”
As he called on Chancellor Rishi Sunak to ensure there is government support for the economy, Duffy warned that a slump could be around the corner as furlough schemes end. “The reality of the consequences of the lockdown have not yet hit,” he said.
Duffy is working to turn Virgin Money, which he merged with CYBG, into a nimble, digital player with high tech branches.
As such, more takeover deals are not likely. “That is not where my head is at,” he said. “I would like us to come out of Covid with people thinking of us as the most agile and innovative bank.”
He thinks the big banks, and his own, adapted quickly and well to the crisis as it emerged.
“There was a little stutter at the beginning. But I think banking as an industry has reacted better than in previous crises.”
Virgin Money won’t pay a dividend this year due to tight rules from regulators. But it seems it would not have paid one had they been allowed.
Duffy wants to get through next year in tact before shareholders should expect payments to resume. “It has been an extraordinary year of disruption for all of us,” he added.