The UK's sixth-largest lender reported an underlying pretax profit of 124 million pounds for the 12 months ended Sept. 30, compared to a profit of 539 million pounds a year earlier.

The company, which had previously announced loss provisions of 232 million pounds, said it now had a total of 735 million pounds in provisions on its balance sheet.

"While we are yet to see any material impacts of the pandemic on the credit quality of our loan book, our results reflect a cautious and conservative approach," Chief Executive Officer David Duffy said in the results statement.

"Although the (COVID-19) vaccine news is a strong cause of hope for the future, the economic benefits are still some way off."

Banks globally are preparing for a surge in bad loans at a time when low interest rates aimed at rekindling economic growth have squeezed net interest margins (NIM), a traditional source of profit.

Virgin Money said its NIM stood at 1.56% for the full year and had inched up to 1.52% in the fourth quarter from 1.47% in the previous three months.

(Reporting by Muvija M and Patrick Graham in Bengaluru; Editing by Vinay Dwivedi)