Clydesdale Bank owner Virgin Money's losses widen after PPI surge

The Clydesdale Bank owner was pushed deeper into the red by PPI charges. Picture: John Devlin
The Clydesdale Bank owner was pushed deeper into the red by PPI charges. Picture: John Devlin
Share this article
Have your say

Clydesdale Bank owner Virgin Money has seen full-year losses widen due to integration costs and an extra £385 million hit from payment protection insurance (PPI) claims.

The group, which has rebranded from CYBG since buying Virgin Money in a £1.7 billion deal last year, posted statutory pre-tax losses of £232m for the year to 30 September, against £164m in the previous year.

Its maiden results as a combined company show the bank was pushed deeper into the red by fourth-quarter PPI charges following a surge in last-minute claims ahead of the 31 August submission deadline.

The group's PPI bill increased to £415m over the year, with total provisions to date standing at £3.01bn.

On an underlying basis and with the PPI bill stripped out, pre-tax profits fell 7 per cent year-on-year to £539m.

Virgin Money halted the final shareholder dividend payment in light of the claims hit.

Chief executive David Duffy said: “Our statutory result was significantly affected by additional PPI provisions, driven by the unprecedented surge in PPI information requests in August, along with anticipated Virgin Money acquisition-related costs.

"Our customer divisions have performed well – we have delivered a further c.£2bn in net lending to support UK SMEs and consumers, attracted c.£3bn in customer deposits, and made marked improvements to our customer experience."

He added that the group "achieved all the required approvals in 2019 to enable us to operate as one bank, with one brand”.

READ MORE: Virgin Money kicks off re-brand to phase out Clydesdale Bank

Alasdair Ronald of Brewin Dolphin said: “Virgin Money would have hoped for better news on its maiden results as one company. The bank has taken a significant hit from additional PPI provisions and the cost of the merger, while pressure on UK domestic earners continues to take its toll.

"The suspension of the dividend and lack of clarity over 2020 will likely not be well received; although, the statutory loss is lower than some had feared.

"There are undoubtedly further challenges ahead, with increasing competition from other challenger banks potentially eroding new business margins. However, the integration appears to be on track and significant costs savings should be achieved.”

READ MORE: Scotland's top three tech start-ups revealed