According to its interim financial results, this was due to continuing to “prioritise margin in an increasingly competitive environment”.
The results also include Clydesdale Bank.
The majority of this came from residential capital repayment loans at around £36bn, followed by buy-to-let at around £15bn and residential interest-only at approximately £7.3bn.
The bank said that market activity levels were lower compared to last year with higher rates and inflation dampening activity, especially in the house purchase segment, with balances falling by 0.8 per cent in the first half of the financial year.
“Completions spreads remained below back book levels throughout the period, while front book application spreads remained competitive,” it noted.
The lender said that its statutory profit was £236m, which compares to £315m in the same period last year due to a high impairment charge.
Virgin Money said that the volume and value of loans in forbearance had fallen to 4,032 loans worth £531m, compared to 4,636 at £640m.
The firm said that the impairment charge for the period was £144m, up from £21m in H1 2022.
This was driven by “updated economic assumptions as underlying credit quality generally remained stable, albeit with some signs of a modest increase in arrears in cards, from abnormally low pandemic levels”.
The lender said that this was primarily due to customers successfully completing the forbearance reporting probation period and “returning to fully performing status”.
It added that there were 30 repossessions in the six-month period to the end of March, which is up from 73 in the 12 months to 30 September.
Virgin Money added that it had “continued to make progress” on developing its digital mortgage platform and expected this to be delivered in 2024 as it extended the test and developing phase.
David Duffy (pictured), chief executive of Virgin Money, said: “Currently the mortgage market backdrop remains subdued with new application spreads remaining lower than the backbook given elevated swap rates and continued competition in the market.
“We have continued to trade nimbly, focusing on margin and credit quality against this subdued backdrop, leading to a 0.8 per cent reduction in balances over the half.”
He continued: “While the market is likely to remain subdued in the near term, we’ve continued to invest in the development of our new digital mortgage platform which will support greater market access and our trading capability in the medium term.
“We now expect this to be delivered in 2024, as we have taken a pragmatic decision to extend the testing and development phase to ensure a better product for customers and brokers on launch; this won’t impact our trading capability through the remainder of FY23.”
