Clydesdale Bank owner Virgin Money braced for thousands defaulting on loans amid pandemic
Clydesdale Bank owner Virgin Money has suffered a plunge in profits after booking a £501 million hit as it braces for economic fallout from fresh coronavirus restrictions.
The Glasgow-head quartered group, which also owns the Yorkshire Bank, reported underlying full-year, pre -tax profits of £124m for the year to September 30, down 77 per cent from the £539m posted the previous year.
The group – formerly known as CYBG – said its “substantial” charge for loan losses comes as it prepares for a surge of borrowers falling behind with repayments due to the coronavirus crisis.
It said it has not yet seen significant arrears, but took the charge to reflect the“highlyun certain” economic outlook and the fact restrictions are set to remain in place for some time.
On a statutory basis, the group saw pre-tax losses narrow to £168m, from a deficit of £265m the previous year.
Chief executive David Duffy said: “While we are yet to see any material impacts of the
pandemic on the credit quality of our loan book, our results reflect a cautious and conservative approach to the coming period as we refine our assessment of the un cert ai ne conomic outlook and the impact of the second lockdown.
“Although the vaccine news is a strong cause of hope for the future, the economic benefits are still some way off when considering the immediate reality of current restrictions and so have not yet been factored into our near-term forecasts.”
He added :“Looking into 2021, we are well under way in rolling out our full suite of Virgin Money products and services across personal and business, underpinned by our unique brand proposition and leading digital capabilities.
“This progress, as well as the steps we have already taken to transform and simplify our business, mean we are well positioned to emerge from the pandemic as an agile, innovative and disruptive force in UK banking.”
The group is working through a previously announced restructuring which involves the closure of some branches and the merging of others, as well as rebranding all Clydesdale and Yorkshire branches under the Virgin Money banner, by the end of 2021.