Shares in the UK's sixth largest lender jumped 7% to 141 pence by 1337 GMT, amongst the best performers in the UK mid-cap index.

"The great majority of people - whether it was credit cards or personal loans - who are on payment holidays have resumed payment. And in the business book we've not seen any material losses or impairments," Chief Executive David Duffy told Reuters.

"But we still remain cautious because we haven't seen the consequences of the pandemic yet, and that will be more visible later on."

Duffy said he expected the true impact of the pandemic on customer finances to become clearer in the second half of this year and the first half of 2022, if government pandemic support schemes are wound down.

On Tuesday, VMUK's results showed it has set aside a total of 726 million pounds ($992.6 million) to cover potential loan losses and flagged a "modest" increase in customers needing additional support after exiting pandemic payment holidays.

However analysts said the loan loss provision of 18 million pounds for the quarter was lower than expected.

The lender, set up to challenge the dominance of bigger UK banks, said it had granted mortgage payment holidays on 12.1 billion pounds of loans as of Dec. 31, equivalent to around 21% of balances, compared with 11.9 billion pounds at end September.

Business lending overall was broadly flat over the quarter, with government-backed lending via the Bounce Back Loan scheme up 14% to 923 million pounds and lending via the larger Coronavirus Business Interruption Scheme up 19% to 422 million pounds.

The company, which reported a 141 million pound loss in its last fiscal year, did not disclose the size of the statutory profit - which includes one-off items - it turned in the three months to Dec. 31.

($1 = 0.7314 pounds)

(Reporting by Muvija M in Bengaluru; Editing by Sinead Cruise, Iain Withers and Jan Harvey)

By Muvija M