Virgin Money's share price jumps sharply as group's losses widen and bank axes dividend plan


Virgin Money’s share price jumps despite dropping plans to start dishing up dividends to investors and losses caused by bumper PPI payouts

  • Share price increased over 22% today after group posted higher losses
  • In the year to 30 September, pre-tax loss rose to £232million  

Shares in Virgin Money have jumped over 22 per cent after the group posted better than expected figures and showed shoots of growth.

The shares have jumped even though the group, previously known as CYBG, unveiled a statutory pre-tax loss of £232million for the year to 30 September, up from £164million a year ago.

The group has scrapped its plans to introduce a dividend for investors this year and taken a £385million hit from payment protection insurance payouts.

On the up: Shares in Virgin Money have jumped over 22 per cent today

On the up: Shares in Virgin Money have jumped over 22 per cent today

On the dividend front, Virgin Money said its ‘progressive and sustainable dividend ambition remains and the Board will reconsider dividends for FY20 in line with normal practice.’

The company’s underlying profit fell by 7 per cent to £539million, while revenues slipped by 3 per cent to £1.6billion.    

The Clydesdale and Yorkshire Bank owner, which changed its name from CYBG in October following last year’s £1.7billion takeover of Virgin Money, said its bottom line was also hit by restructuring costs after the deal. 

The group’s net interest margin, which is the difference between what it pays for funds and earns from lending, fell to 1.66 per cent over the period, down from 1.78 per cent. 

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Virgin Money grew mortgage lending by 1.7 per cent to £60.1billion, while customer deposits rose by 4.6 per cent to £63.8billion. 

The group is now focusing away from mortgages towards higher growth areas, such as business and personal lending – which rose 16.1 per cent and 4.5 per cent respectively in 2018-19. 

David Duffy, Virgin Money’s chief executive, said: ‘We have delivered a good operating performance and made great progress on the Virgin Money integration and re-brand.

No dividend: Virgin Money has scrapped plans to introduce a dividend for this year

No dividend: Virgin Money has scrapped plans to introduce a dividend for this year 

‘We’re ready to deliver our strategy to disrupt the status quo with brilliant customer service and unique Virgin Money products.’  

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.’

However, he pointed out that the loss before tax was better than expected.

Mr Ronald added: ‘The decline in Virgin Money’s net interest margin is disappointing, but not surprising against previous guidance.

‘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.’

Russ Mould, investment director at AJ Bell, said: ‘Expectations were pitched fairly low heading into today’s announcement so the company’s solid if unspectacular performance across several metrics has been treated with a sigh of relief.

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‘While the lack of a dividend is disappointing, given that many people invest in banks purely for income, it may also be prudent given that Virgin Money faced a big last-minute surge in PPI claims and it also incurred larger-than-expected restructuring costs during the period.’



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