The Virgin Money UK PLC (ASX: VUK) share price could be on the rise on Thursday following the after-hours release of its interim results.
Over in London the UK-based bank's shares jumped 6% during overnight trade.
How did Virgin Money UK perform in the first half?
Much like Westpac Banking Corp (ASX: WBC) and the rest of the big four banks, times have been hard for Virgin Money UK this year.
During the six months ended March 31, the bank recorded an underlying profit before tax of £120 million. This was a 58% decline on the prior corresponding period.
Though, this was driven largely by impairment charges of £232 million. This includes COVID-19 impairment charges of £146 million. Excluding its impairments, operating profit would have been down 3% on the prior corresponding period to £352 million.
Virgin Money UK recorded loan growth of 0.3% during the half. This was driven by growth in business lending and personal loans. Things were not quite as positive for its Mortgage lending. It fell 0.9% due to its decision to be more disciplined with its margins.
No dividends.
In light of its profit decline, the bank, which was formerly owned by National Australia Bank Ltd (ASX: NAB), won't be paying investors an interim dividend. Its payouts remain on hold until the economic environment improves.
However, the bank is hoping it won't be long until it can start paying regular dividends to investors.
Management explained: "It remains the Group's ambition to return to a sustainable dividend approach in time and the Board always considers any dividend decision at the end of the financial year. However, the Board will of course give consideration to the unprecedented economic backdrop when considering any dividend decision in respect of full year 2020. "
And while the bank is confident in its medium term strategy, it has warned that the uncertain economic outlook could disrupt its progress.
It said: "In the medium term, we continue to believe our self-help strategy remains the right approach, with our focus on cost reduction, digitising the bank and driving an improved balance sheet mix. However with such an uncertain outlook and delays to the delivery of some elements of our Transformation programme, it is too early to say what, if any, impact the implications of COVID-19 will have on our 2022 financial targets."
While not the strongest result by any means, judging by its strong overnight gain, UK investors appear to have been expecting far worse from the bank.
