- Accelerating Digital
- Financial Results
- Conclusion Q&A
Accelerating Digital
DAVID DUFFY
Chief Executive Officer
Strong financial performance…
Balance | • NIM of 1.56% for H1 (1.60% for Q2), improved guidance for FY21 |
sheet | • Relationship deposits +12% HoH; cost of deposits down 20 bps |
mix | • Stable lending balances reflecting careful management through Covid-19 |
• H1 21 costs of £460m; expect further progress in H2 | |
Efficiency | • Underlying cost:income ratio of 62% |
• Expect FY21 costs of <£890m; phasing impacted by ongoing restrictions | |
• Asset quality remains resilient | |
Asset | • H1 21 impairment provision charge of £38m; 11bps cost of risk |
quality | |
• Maintaining strong provision coverage; total credit provisions of £721m | |
Balance | • Capital remains robust: CET1 ratio improved to 14.4%1 |
sheet | • Significant CET1 management buffer of c.£1.3bn above regulatory minimum |
strength | |
1 IFRS 9 transitional basis; 13.9% CET1 ratio excluding the benefit from the change in treatment of software intangible assets in the period |
Underlying
ROTE
10.1%
Underlying profit
before tax
£245m
Statutory profit
before tax
£72m
Robust CET1
ratio1
14.4%
4
…supported by an improving backdrop
GDP: stronger than anticipated rebound
GDP: indexed to Q4 19
110 | |||||||||||||
100 | |||||||||||||
Gathering | 90 | ||||||||||||
pace of | |||||||||||||
recovery | 80 | ||||||||||||
70 | |||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |
19 | 20 | 20 | 20 | 20 | 21 | 21 | 21 | 21 | 22 | 22 | 22 | 22 |
Unemployment: lower than initially feared
ILO unemployment rate
7% | ||||||||||||
6% | ||||||||||||
Continued | ||||||||||||
5% | government | |||||||||||
4% | support | |||||||||||
3% | ||||||||||||
Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 |
19 | 20 | 20 | 20 | 20 | 21 | 21 | 21 | 21 | 22 | 22 | 22 | 22 |
Source: Oxford Economics Base Case, March 20211 | Source: Oxford Economics Base Case, March 20211 |
Card activity: improving consumer spending
60% | VMUK customers card spend: | ||||||||
40% | monthly, % change vs. same month a year earlier | ||||||||
Debit card spend | |||||||||
20% | Credit card spend | ||||||||
Lockdown | 0% | ||||||||
easing | (20)% | ||||||||
(40)% | |||||||||
(60)% | |||||||||
Jan 20 | Mar 20 | May 20 | Jul 20 | Sep 20 | Nov 20 | Jan 21 | Mar 21 |
1 Note: IFRS9 MES are based on January Oxford Economics scenarios
Rates: significant yield curve steepening since December
0.8% | GBP SONIA swap curve; March vs December | ||||||||||
0.6% | |||||||||||
0.4% | Improving | ||||||||||
UK rate | |||||||||||
0.2% | environment | ||||||||||
0.0% | |||||||||||
O/N | 1Y | 2Y | 3Y | 4Y | 5Y | 6Y | 7Y | 8Y | 9Y | 10Y | |
Q1 21 | Q2 21 | Source: Bloomberg | 5 | ||||||||
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Virgin Money plc published this content on 05 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 May 2021 06:10:02 UTC.