Locked-down Virgin Money customers build up savings

Virgin Money customers have increased the amount of cash in their bank accounts by around 5% as people have been unable to spend money eating out or shopping in the usual way because of the pandemic.

The company said there is now £67.7 billion in customer accounts, mainly due to lower spending, but also businesses ensuring that they have enough cash to keep going.

It is a 4.8% rise for the third quarter, Virgin said.

The bank has seen the value of its mortgage portfolio drop by 1% to £58.9 billion.

Meanwhile, businesses borrowed a lot more – up by 5.7% to £8.8 billion – as they tapped into the Government’s support schemes.

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Virgin Money has lent £619 million in Bounce Back Loans and £248 million in Coronavirus Business Interruption Loans (CBILS).

Personal lending was down, by 2.7% to £5.2 billion as people shopped less on their credit cards.

The results are “constructive” said Jefferies analysts Joseph Dickerson and Aqil Taiyeb, as Virgin kicked off the bank reporting season.

Other banks – including NatWest, Barclays and Lloyds – are due to report later this week.

Virgin said that more than half of the 67,000 mortgage customers who had taken a payment holiday during the pandemic are now making repayments again.

Chief executive David Duffy said: “We know that things may yet get more difficult for many of our customers, but we are determined to continue to support their needs where we can and to fulfil our role in the economic recovery.”

He added: “Our third-quarter financial results reflect lower demand from consumers due to the pandemic, but strong demand from businesses for Government-supported schemes, with the group further increasing its provisions to reflect the uncertain economic outlook while maintaining a focus on margin, cost and capital management.”

Virgin has now restarted its handling of payment protection insurance claims and is building towards pre-Covid capacity levels.

It still has 68,000 complaints left to assess and expects that the process will be completed by December this year, and that the payout will be within the levels already announced.