Virgin Money sees losses widen after PPI claims surge
Virgin Money – formerly known as CYBG – has revealed widened full-year losses after booking an extra £385 million charge for payment protection insurance (PPI) claims.
The Clydesdale and Yorkshire Bank owner, which rebranded after buying Virgin Money in October last year, posted statutory pre-tax losses of £232 million for the year to September 30 against £164 million the previous year.
It was pushed deeper into the red by the fourth-quarter PPI charge following a surge in last-minute claims ahead of the August 31 deadline.
On an underlying basis and with the PPI bill stripped out, pre-tax profits fell 7% to £539 million from £581 million the previous year.
The group’s PPI bill increased to £415 million over the year after the final-quarter claims rush, with total provisions to date £3.01 billion.
It halted the final shareholder dividend payment in light of the PPI hit.
But Virgin Money UK chief executive David Duffy insisted the group has a “clear path” to return to statutory profit in 2019-20, with the PPI charges behind it and despite tough retail banking conditions.
Virgin Money grew mortgage lending by 1.7% to £60.1 billion, though its net interest margin – a key measure for retail lenders – fell over the year amid intense competition on mortgage market rates.
Customer deposits rose by 4.6% to £63.8 billion.
The group is now focusing away from mortgages towards higher growth areas over the year ahead, such as business and personal lending – which rose 16.1% and 4.5% respectively in 2018-19.
It is also launching a raft of initiatives as it rolls out the Virgin Money rebrand across its Clydesdale and Yorkshire Bank brands, including a digital current account next month, three new concept stores and a loyalty programme offering incentives across the wider Virgin Group.
Mr Duffy said: “In 2019 we refreshed our strategy, launched our three new divisions and delivered significant integration milestones.
“We are now one bank with the culture and capabilities to deliver on our strategy of disrupting the status quo.”
But its overhaul is also seeing it close sites as part of merger cost savings following the £1.7 billion takeover of Virgin Money.
Around 1,500 job losses were announced after the Virgin Money deal, when it warned that around 16% of the combined workforce will go.