Shares in Virgin Money (VMUK), previously known as CYBG, surged 21% to a three-month high of 172p, topping the list of FTSE 350 risers, despite reporting losses for the full year to 30 September and suspending its dividend.

The Clydesdale and Yorkshire Bank owner said underlying profit for the full year was down 7% to £539m, but reported losses after tax were £194m after ‘legacy conduct costs, restructuring and acquisition costs’ and a £385m provision for PPI mis-selling.

Chief executive David Duffy described the bank’s underlying performance as ‘resilient in a challenging environment’ with the net interest margin (the gap between what the interest rate it pays on deposits and the rate it makes on lending) of 1.66% in line with previous guidance.

He also pointed to an improvement in cost control, with the full year’s run rate of £53m in cost savings putting the bank on track for its 2022 target of £200m in savings.

The decision to suspend the dividend for the 2019 financial year was taken in light of the size of PPI provisions, but the board hasn’t ruled out the possibility of paying a dividend for the current financial year.

Virgin Money’s targets for the current year in terms of net interest margin, costs and capital ratios are in line with consensus forecasts according to analysts at investment bank Jefferies.

The analysts also point out that the bank’s full-year core equity tier one (CET1) capital ratio – a key measure of financial stability set by the regulator – was actually ahead of market forecasts at 13.3% against a consensus of 13%.


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Issue Date: 28 Nov 2019