VMUK FY22 Financial Results

	2022 £m	2021 £m	Change
Underlying net interest income	1,592	1,412	13%
Underlying non-interest income	163	160	2%
Total underlying operating income	1,755	1,572	12%
NIM	1.85%	1.62%	23bps
Average interest-earning assets	86,275	86,947	(1)%

Average balance sheet	2022	2021
Interest earning assets
Mortgages	57,996	1,272	2.19	58,426	1,332	2.28
Unsecured lending	6,100	407	6.67	5,407	383	7.09
Business lending⁽¹⁾	8,263	331	4.00	8,801	298	3.38
Liquid assets	13,059	117	0.90	12,827	26	0.20
Due from other banks	853	2	0.22	1,482	-	(0.02)
Swap income/other	-	104	n/a	-	(87)	n/a
Other interest earning assets	4	-	n/a	4	-	n/a
Total average interest earning assets	86,275	2,233	2.59	86,947	1,952	2.25
Total average non-interest earning assets	3,229			3,590
Total average assets	89,504			90,537

Interest bearing liabilities
Current accounts	15,829	(46)	(0.29)	14,516	(14)	(0.09)
Savings accounts	30,895	(147)	(0.48)	30,242	(123)	(0.41)
Term deposits	12,894	(149)	(1.16)	18,259	(223)	(1.22)
Wholesale funding	16,169	(296)	(1.83)	13,591	(176)	(1.30)
Other interest bearing liabilities	145	(3)	n/a	164	(4)	n/a
Total average interest bearing liabilities	75,932	(641)	(0.84)	76,772	(540)	(0.70)
Total average non-interest bearing liabilities	7,903			8,414
Total average liabilities	83,835			85,186
Total average equity	5,669			5,351
Total average liabilities and average equity	89,504			90,537
Net interest income		1,592	1.85		1,412	1.62

For the year ended 30 September	2022 £m	2021 £m	Change
Staff costs	375	348	8%
Property and infrastructure	42	43	(2)%
Technology and communications	116	113	3%
Corporate and professional services	114	101	13%
Depreciation, amortisation and impairment	116	155	(25)%
Other expenses	151	142	6%
Total underlying operating and administrative expenses	914	902	1%
Underlying CIR	52%	57%	(5)%pts

As at 30 September 2022	Credit provisions £m	Gross lending £bn	Coverage ratio bps	Net cost of risk bps	% of loans in Stage 2	% of loans in Stage 3
Mortgages	56	58.5	9	(5)	5.3	1.0
Unsecured:	284	6.5	466	322	17.3	1.2
of which credit cards	246	5.5	481	347	13.9	1.3
of which personal loans and overdrafts	38	1.0	388	161	34.9	0.9
Business	117	8.1	159⁽¹⁾	(112)	18.7	4.6
Total	457	73.1	62	7	7.8	1.4
of which stage 2	268	5.7	472
of which stage 3	104	1.0	1,124

As at 30 September 2021	Credit provisions £m	Gross lending £bn	Coverage ratio bps	Net cost of risk bps	% of loans in Stage 2	% of loans in Stage 3
Mortgages	87	58.5	15	(7)	12.3%	1.1%
Unsecured:	194	5.8	380	(64)	9.7%	1.2%
of which credit cards	160	4.7	379	5	10.7%	1.3%
of which personal loans and overdrafts	34	1.1	386	(386)	5.0%	1.1%
Business	223	8.3	306⁽¹⁾	(62)	29.2%	2.8%
Total	504	72.6	70	(18)	14.1%	1.3%
of which stage 2	302	10.2	302
of which stage 3	91	1.0	959

	2022 £m	2021 £m
Underlying profit on ordinary activities before tax	789	801
Adjusting items
- Restructuring charges	(82)	(146)
- Acquisition accounting unwinds	(35)	(88)
- Legacy conduct costs	(8)	(76)
- Other items	(69)	(74)
Statutory profit on ordinary activities before tax	595	417
Tax (expense)/credit	(58)	57
Statutory profit for the year	537	474
Underlying RoTE	13.5%	17.8%
Statutory RoTE	10.3%	10.2%
TNAV per share	383.0p	289.8p

As at 30 September	2022	2021	Change
Mortgages	58,155	58,104	0.1%
Unsecured	6,163	5,415	13.8%
Business⁽¹⁾	8,247	8,477	(2.7)%
Total customer lending	72,565	71,996	0.8%

Relationship deposits⁽²⁾	34,649	30,596	13.2%
Non-linked savings	17,048	21,285	(19.9)%
Term deposits	13,663	14,989	(8.8)%
Total customer deposits	65,360	66,870	(2.3)%

Wholesale funding	17,012	13,596	25.1%
of which TFS	-	1,244	(100)%
of which TFSME	7,200	4,650	54.8%
Loan to deposit ratio (LDR)	111%	108%	3%pts
Liquidity coverage ratio (LCR)	138%	151%	(13)%pts

	2022	2021	Change
CET1 ratio (IFRS 9 transitional)	15.0%	14.9%	0.1%pts
CET1 ratio (IFRS 9 fully loaded)	14.6%	14.4%	0.2%pts
Total capital ratio	22.0%	22.0%	-%pts
MREL ratio	32.1%	31.9%	0.2%pts
UK leverage ratio	5.1%	5.2%	(0.1)%pts
RWAs (£m)	24,148	24,232	(0.3)%
of which Mortgages (£m)	9,155	10,010	(8.5)%
of which Unsecured (£m)	4,817	4,311	11.7%
of which Business (£m)	6,196	6,040	2.6%

CET1 capital movements⁽¹⁾	2022
Opening CET1 ratio	14.9%
Capital generated (bps)	226
RWA growth (bps)	(4)
AT1 distributions (bps)	(27)
Underlying capital generated (bps)	195
Restructuring charges (bps)	(25)
Acquisition accounting unwind (bps)	(10)
Conduct (bps)	(3)
Foreseeable ordinary dividends (bps)	(58)
Share buyback (bps)	(31)
Other (bps)	(3)
Reversal of intangible asset relief (bps)	(53)
Net capital generated (bps)	12
Closing CET1 ratio	15.0%

2022 income statement	Statutory results £m	Restructuring charges £m	Acquisition accounting unwinds £m	Legacy conduct £m	Other £m	Underlying basis £m
Net interest income	1,576	-	16	-	-	1,592
Non-interest income	140	-	16	-	7	163
Total operating income	1,716	-	32	-	7	1,755
Total operating and administrative expenses before impairment losses	(1,069)	82	3	8	62	(914)
Operating profit before impairment losses	647	82	35	8	69	841
Impairment losses on credit exposures	(52)	-	-	-	-	(52)
Profit on ordinary activities before tax	595	82	35	8	69	789
Financial performance measures
RoTE	10.3%	1.4%	0.6%	0.1%	1.1%	13.5%
CIR	62.3%	(4.4)%	(1.8)%	(0.4)%	(3.6)%	52.1%
Basic EPS	32.4p	4.2p	1.8p	0.4p	3.6p	42.4p

2021 income statement	Statutory results £m	Restructuring charges £m	Acquisition accounting unwinds £m	Legacy conduct £m	Other £m	Underlying basis £m
Net interest income	1,357	-	55	-	-	1,412
Non-interest income	132	-	23	-	5	160
Total operating income	1,489	-	78	-	5	1,572
Total operating and administrative expenses before impairment losses	(1,203)	146	10	76	69	(902)
Operating profit before impairment losses	286	146	88	76	74	670
Impairment credit on credit exposures	131	-	-	-	-	131
Profit on ordinary activities before tax	417	146	88	76	74	801
Financial performance measures
RoTE	10.2%	2.9%	1.7%	1.5%	1.5%	17.8%
CIR	80.8%	(8.9)%	(5.4)%	(4.6)%	(4.5)%	57.4%
Basic EPS	27.3p	7.8p	4.7p	4.1p	4.0p	47.9p

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Investors and Analysts
Richard Smith Head of Investor Relations	+44 7483 399 303 richard.smith@virginmoneyukplc.com

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Martin Pollard Senior Manager, Investor Relations	+44 7894 814 195 martin.pollard@virginmoneyukplc.com

Media (UK)
Matt Magee	+44 7411 299477
Head of Media Relations	matthew.magee@virginmoneyukplc.com

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Financial highlights
Statutory profit before tax	Underlying profit before tax	Statutory RoTE
£595m	£789m	10.3%
2021: £417m	2021: £801m	2021: 10.2%
NIM	Underlying CIR	Cost of risk
1.85%	52%	7bps
2021: 1.62%	2021: 57%	2021: (18)bps
CET1 ratio	Loan growth	Relationship deposit growth
15.0%	0.8%	+13.2%
2021: 14.9%	2021: (0.6)%	2021: +19.2%

Guidance
	FY23 outlook	Medium-term outlook
	NIM	Statutory RoTE
	185-190bps	c.11% in FY24, consistent with target of >10%
	Underlying costs	Growth
	c.50% CIR	Targeting growth in Unsecured and Business (non-government), maintaining Mortgage market share
	Cost of risk	Income
	Normalise around the through-the-cycle level of c.30-35bps	Mix-driven NIM expansion
	Restructuring costs	Gross savings
	c.£275m across FY22-FY24, with the majority in FY23	Gross cost savings of c.£175m by FY24 generate headroom to absorb inflation and re-investment
	Dividend	Underlying costs
	30% dividend payout supplemented with buybacks	Underlying CIR to be <50%

Classification	ECL calculation period	Description
Stage 1	12 months	An exposure that is not credit-impaired on initial recognition and has not experienced a SICR since initial recognition.
Stage 2	Lifetime	An exposure that has experienced a SICR since initial recognition, but is not yet deemed to be credit impaired.
Stage 3	Lifetime	An exposure that is credit-impaired.

	2022			2021
	Gross loans and advances to customers £m	Credit-related commitments £m	Total £m	Gross loans and advances to customers £m	Credit-related commitments £m	Total £m
Mortgages	58,464	4,200	62,664	58,441	2,845	61,286
Unsecured	6,513	11,057	17,570	5,770	10,507	16,277
Business	8,169	4,102	12,271	8,340	3,769	12,109
Total	73,146	19,359	92,505	72,551	17,121	89,672
Impairment provisions on credit exposures⁽¹⁾	(454)	(3)	(457)	(496)	(8)	(504)
Fair value hedge adjustment	(941)	-	(941)	(179)	-	(179)
Maximum credit risk exposure on lending assets	71,751	19,356	91,107	71,876	17,113	88,989
Cash and balances with central banks			12,221			9,711
Financial instruments at FVOCI			5,064			4,352
Due from other banks			656			800
Other financial assets at fair value			78			153
Derivative financial assets			342			140
Maximum credit risk exposure on all financial assets⁽²⁾			109,468			104,145

VMUK FY22 Financial Results

Virgin Money UK PLC Full Year Results 2022

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	12 months to	12 months to
	30 Sep 2022	30 Sep 2021			Change
	£m		£m		%


Underlying net interest income (NII)	1,592	1,412		13
Underlying non-interest income	163	160		2
Total underlying operating income	1,755	1,572		12
Underlying operating and administrative expenses	(914)	(902)		1
Impairment (losses)/credit on credit exposures	(52)	131		n.m.
Underlying profit on ordinary activities before tax	789	801		(1)
Adjusting items	(194)	(384)		(49)
Statutory profit on ordinary activities before tax	595	417		43

Performance measures⁽¹⁾
Total customer lending (£m)	72,565	71,996		0.8%
Net interest margin (NIM)	1.85%	1.62%		0.23%pts
Underlying cost: income ratio (CIR)	52%	57%		(5)%pts
Statutory return on tangible equity (RoTE)	10.3%	10.2%		0.1%pts
Dividends and share buybacks announced (£m)	267	14		n.m.
Common equity tier 1 (CET1) ratio (IFRS 9 transitional)	15.0%	14.9%		0.1%pts
(1) Refer to pages 124 to 133 for a range of metrics that are used to measure and track the Group's performance.

Group credit highlights	2022 £m	2021 £m
Impairment charge/(credit) on credit exposures
Mortgage lending	(30)	(44)
Unsecured lending	178	(32)
Business lending	(96)	(55)
Total Group impairment (credit)/charge	52	(131)
Underlying impairment (credit)/charge⁽¹⁾ to average customer loans (cost of risk)	0.07%	(0.18%)

Key asset quality ratios
% Loans in Stage 2	7.76%	14.09%
Loans in Stage 3	1.41%	1.32%
Total book coverage⁽²⁾	0.62%	0.70%
Stage 2 coverage⁽²⁾	4.72%	3.02%
Stage 3 coverage⁽²⁾	11.24%	9.59%

2022	Mortgages		Personal						Business		Total ⁽³⁾
	Mortgages		Cards		Loans and Overdrafts		Combined		Business		Total ⁽³⁾
	£m	%	£m	%	£m	%	£m	%	£m	%	£m	%
PD deterioration	2,084	69%	401	52%	329	99%	730	66%	826	55%	3,640	64%
Forbearance	106	3%	9	1%	1	0%	10	1%	235	15%	351	6%
AFD or Watch List⁽¹⁾	6	0%	-	0%	-	0%	-	0%	447	29%	453	8%
> 30 DPD	169	5%	24	3%	5	1%	29	3%	18	1%	216	4%
Other⁽²⁾	725	23%	340	44%	-	0%	340	30%	-	0%	1,065	18%
	3,090	100%	774	100%	335	100%	1,109	100%	1,526	100%	5,725	100%
ECLs
PD deterioration	18	55%	73	47%	23	92%	96	53%	26	47%	140	53%
Forbearance	5	16%	3	2%	-	0%	3	2%	12	22%	20	7%
AFD or Watch List⁽¹⁾	-	0%	-	0%	-	0%	-	0%	17	31%	17	6%
> 30 DPD	2	6%	13	8%	2	8%	15	8%	-	0%	17	6%
Other⁽²⁾	7	23%	67	43%	-	0%	67	37%	-	0%	74	28%
	32	100%	156	100%	25	100%	181	100%	55	100%	268	100%

2022	Gross lending £m	Modelled & IA ECL £m	PMA £m	Total ECL £m	Net lending £m	Coverage %	Average LTV %
Residential - capital repayment	36,417	13	5	18	36,399	0.05%	54.2%
Residential - interest only	7,041	3	1	4	7,037	0.05%	45.4%
BTL	15,006	6	28	34	14,972	0.22%	52.4%
Total Mortgage portfolio	58,464	22	34	56	58,408	0.09%	52.7%
2021
Residential - capital repayment	35,192	19	21	40	35,152	0.10%	57.2%
Residential - interest only	8,341	6	2	8	8,333	0.10%	47.2%
BTL	14,908	8	31	39	14,869	0.24%	54.8%
Total Mortgage portfolio	58,441	33	54	87	58,354	0.15%	55.3%

2022 LTV⁽¹⁾	Stage 1			Stage 2			Stage 3⁽²⁾			Total⁽³⁾
2022 LTV⁽¹⁾	Loans £m	%	ECL £m	Loans m	%	ECL m	Loans m	%	ECL m	Loans m	%	ECL £m
Less than 50%	23,069	43%	2	1,659	54%	3	288	49%	2	25,016	43%	7
50% to 75%	27,452	50%	5	1,270	41%	19	242	42%	2	28,964	50%	26
76% to 80%	2,412	4%	1	103	3%	3	17	3%	1	2,532	4%	5
81% to 85%	1,108	2%	1	26	1%	1	11	2%	1	1,145	2%	3
86% to 90%	547	1%	1	25	1%	1	6	1%	-	578	1%	2
91% to 95%	154	-	-	4	-	1	8	1%	1	166	-	2
96% to 100%	16	-	-	-	-	-	3	1%	-	19	-	-
Greater than 100%	33	-	-	3	-	4	8	1%	7	44	-	11
	54,791	100%	10	3,090	100%	32	583	100%	14	58,464	100%	56

2021 LTV⁽¹⁾	Stage 1			Stage 2			Stage 3⁽²⁾			Total⁽³⁾
2021 LTV⁽¹⁾	Loans £m	%	ECL £m	Loans m	%	ECL m	Loans m	%	ECL m	Loans m	%	ECL £m
Less than 50%	19,907	39%	1	2,268	32%	6	274	41%	2	22,449	38%	9
50% to 75%	24,383	49%	1	3,648	51%	37	256	39%	3	28,287	49%	41
76% to 80%	3,123	6%	1	729	10%	9	49	8%	1	3,901	7%	11
81% to 85%	2,346	5%	1	426	6%	6	30	5%	1	2,802	5%	8
86% to 90%	715	1%	-	102	1%	3	17	3%	1	834	1%	4
91% to 95%	79	-	-	7	-	-	8	1%	1	94	-	1
96% to 100%	8	-	-	2	-	-	5	1%	-	15	-	-
Greater than 100%	35	-	-	10	-	3	14	2%	10	59	-	13
	50,596	100%	4	7,192	100%	64	653	100%	19	58,441	100%	87

2022	Total loans and advances subject to forbearance measures			Impairment allowance on loans and advances subject to forbearance measures
2022	Number of loans	Gross carrying amount m	% of total portfolio	Impairment allowance m	Coverage %
Formal arrangements	1,145	137	0.23%	8.6	6.23%
Temporary arrangements	518	82	0.14%	4.4	5.38%
Payment arrangement	1,211	133	0.23%	0.6	0.49%
Payment holiday	381	47	0.08%	0.1	0.27%
Interest only conversion	1,193	225	0.39%	0.8	0.35%
Term extension	66	5	0.01%	-	0.45%
Other	14	1	-	-	0.92%
Legal	108	10	0.02%	0.3	2.42%
Total mortgage forbearance	4,636	640	1.10%	14.8	2.31%
2021
Formal arrangements	1,115	133	0.23	4.9	3.66
Temporary arrangements	675	100	0.17	6.8	6.81
Payment arrangement	1,865	176	0.30	2.3	1.30
Payment holiday	1,436	123	0.21	0.5	0.41
Interest only conversion	1,390	273	0.47	1.3	0.47
Term extension	127	12	0.02	0.1	0.57
Other	19	2	0.01	-	0.68
Legal	116	11	0.02	0.3	3.09
Total mortgage forbearance	6,743	830	1.43	16.2	1.95

2022	Gross lending £m	Modelled ECL £m	PMA £m	Total ECL £m	Net lending £m	Coverage %
Credit cards	5,558	216	30	246	5,312	4.81%
Personal loans	925	32	2	34	891	3.57%
Overdrafts	30	4	-	4	26	12.57%
Total Unsecured lending portfolio	6,513	252	32	284	6,229	4.66%
2021
Credit cards	4,655	142	18	160	4,495	3.79%
Personal loans	1,082	14	17	31	1,051	3.57%
Overdrafts	33	3	-	3	30	11.14%
Total Unsecured lending portfolio	5,770	159	35	194	5,576	3.80%

2022	Gross lending £m	Government⁽¹⁾ £m	Total gross £m	Modelled & IA ECL £m	PMA £m	Total ECL £m	Net lending £m	Coverage⁽²⁾ %
Agriculture	1,392	66	1,458	5	1	6	1,452	0.45%
Business services	980	286	1,266	22	4	26	1,240	2.53%
Commercial Real Estate	597	10	607	3	-	3	604	0.54%
Government, health and education	1,008	54	1,062	8	2	10	1,052	0.95%
Hospitality	652	78	730	4	1	5	725	0.80%
Manufacturing	640	109	749	23	3	26	723	3.96%
Resources	133	8	141	3	1	4	137	2.37%
Retail and wholesale trade	330	128	458	7	1	8	450	2.51%
Transport and storage	291	56	347	4	1	5	342	1.44%
Other	1,089	262	1,351	20	4	24	1,327	2.11%
Total Business portfolio	7,112	1,057	8,169	99	18	117	8,052	1.59%
2021
Agriculture	1,361	80	1,441	7	5	12	1,429	0.89%
Business services	943	337	1,280	21	27	48	1,232	4.82%
Commercial Real Estate	667	13	680	4	3	7	673	1.00%
Government, health and education	1,031	73	1,104	7	10	17	1,087	1.62%
Hospitality	563	105	668	6	7	13	655	2.29%
Manufacturing	556	144	700	22	21	43	657	6.93%
Resources	95	8	103	3	4	7	96	6.85%
Retail and wholesale trade	623	248	871	14	14	28	843	4.13%
Transport and storage	300	80	380	4	4	8	372	2.50%
Other	883	230	1,113	17	23	40	1,073	4.42%
Total Business portfolio	7,022	1,318	8,340	105	118	223	8,117	3.06%

2022	Cash £m	Guarantee m	Netting £m	Debt securities £m	Other physical collateral £m	Receivables £m	Total £m	Exposure £m
Financial assets at amortised cost
Loans and advances to customers
Business	7	970	237	-	464	501	2,179	2,397
Cash and balances with central banks	-	-	-	-	-	-	-	-
Due from other banks	-	-	-	-	-	-	-	-
Total	7	970	237	-	464	501	2,179	2,397
Of which: Stage 3
Loans and advances to customers
Business	-	127	-	-	1	11	139	140

2022	Mortgages		Unsecured						Business⁽²⁾		Total⁽⁴⁾
	Mortgages		Cards		Loans and Overdrafts		Combined		Business⁽²⁾		Total⁽⁴⁾
	£m	%	£m	%	£m	%	£m	%	£m	%	£m	%
Stage 1	54,791	93.7%	4,712	84.8%	612	64.1%	5,324	81.8%	6,270	76.7%	66,385	90.8%
Stage 2 - total	3,090	5.3%	774	13.9%	335	35.1%	1,109	17.0%	1,526	18.7%	5,725	7.8%
Stage 2: 0 DPD	2,763	4.7%	723	13.0%	327	34.3%	1,050	16.1%	1,499	18.4%	5,312	7.2%
Stage 2: < 30 DPD	158	0.3%	27	0.5%	3	0.3%	30	0.5%	9	0.1%	197	0.3%
Stage 2: > 30 DPD	169	0.3%	24	0.4%	5	0.5%	29	0.4%	18	0.2%	216	0.3%
Stage 3⁽³⁾	583	1.0%	72	1.3%	8	0.8%	80	1.2%	373	4.6%	1,036	1.4%
	58,464	100.0%	5,558	100.0%	955	100.0%	6,513	100.0%	8,169	100.0%	73,146	100.0%
ECLs
Stage 1	10	17.9%	57	23.2%	6	15.8%	63	22.2%	12	10.3%	85	18.6%
Stage 2 - total	32	57.1%	156	63.4%	25	65.8%	181	63.7%	55	47.0%	268	58.6%
Stage 2: 0 DPD	28	49.9%	129	52.4%	22	57.9%	151	53.1%	55	47.0%	234	51.2%
Stage 2: < 30 DPD	2	3.6%	14	5.7%	1	2.6%	15	5.3%	-	0.0%	17	3.7%
Stage 2: > 30 DPD	2	3.6%	13	5.3%	2	5.3%	15	5.3%	-	0.0%	17	3.7%
Stage 3⁽³⁾	14	25.0%	33	13.4%	7	18.4%	40	14.1%	50	42.7%	104	22.8%
	56	100.0%	246	100.0%	38	100.0%	284	100.0%	117	100.0%	457	100.0%
Coverage
Stage 1		0.02%		1.29%		1.06%		1.26%		0.22%		0.13%
Stage 2 - total		1.02%		21.94%		7.29%		17.22%		3.75%		4.72%
Stage 2: 0 DPD		1.02%		19.41%		6.41%		15.09%		3.76%		4.43%
Stage 2: < 30 DPD		0.81%		57.37%		33.67%		54.48%		3.57%		8.53%
Stage 2: > 30 DPD		1.25%		59.03%		52.92%		58.01%		1.47%		8.57%
Stage 3⁽³⁾		2.28%		50.96%		73.14%		53.51%		19.96%		11.24%
		0.09%		4.81%		3.88%		4.66%		1.59%		0.62%

2021	Mortgages		Unsecured						Business⁽²⁾		Total⁽⁴⁾
	Mortgages		Cards		Loans and Overdrafts		Combined		Business⁽²⁾		Total⁽⁴⁾
	£m	%	£m	%	£m	%	£m	%	£m	%	£m	%
Stage 1	50,596	86.6%	4,100	88.1%	1,048	94.0%	5,148	89.2%	5,672	68.0%	61,416	84.7%
Stage 2 - total	7,192	12.3%	497	10.7%	56	5.0%	553	9.6%	2,433	29.2%	10,178	14.0%
Stage 2: 0 DPD	6,918	11.9%	466	10.1%	46	4.2%	512	8.9%	2,390	28.7%	9,820	13.5%
Stage 2: < 30 DPD	128	0.2%	16	0.3%	5	0.4%	21	0.4%	25	0.3%	174	0.2%
Stage 2: > 30 DPD	146	0.2%	15	0.3%	5	0.4%	20	0.3%	18	0.2%	184	0.3%
Stage 3⁽³⁾	653	1.1%	58	1.2%	11	1.0%	69	1.2%	235	2.8%	957	1.3%
	58,441	100.0%	4,655	100.0%	1,115	100.0%	5,770	100.0%	8,340	100.0%	72,551	100.0%
ECLs
Stage 1	4	4.6%	32	20.0%	9	26.5%	41	21.1%	66	29.6%	111	22.0%
Stage 2 - total	64	73.6%	99	61.9%	19	55.9%	118	60.9%	120	53.8%	302	59.9%
Stage 2: 0 DPD	61	70.2%	82	51.3%	13	38.2%	95	49.0%	120	53.8%	276	54.8%
Stage 2: < 30 DPD	1	1.1%	8	5.0%	2	5.9%	10	5.2%	-	-	11	2.1%
Stage 2: > 30 DPD	2	2.3%	9	5.6%	4	11.8%	13	6.7%	-	-	15	3.0%
Stage 3⁽³⁾	19	21.8%	29	18.1%	6	17.6%	35	18.0%	37	16.6%	91	18.1%
	87	100.0%	160	100.0%	34	100.0%	194	100.0%	223	100.0%	504	100.0%
Coverage
Stage 1		0.01%		0.85%		1.13%		0.91%		1.35%		0.18%
Stage 2 - total		0.88%		22.12%		42.01%		23.92%		5.43%		3.02%
Stage 2: 0 DPD		0.87%		19.51%		33.66%		20.64%		5.48%		2.84%
Stage 2: < 30 DPD		0.85%		58.36%		52.88%		57.27%		1.51%		6.90%
Stage 2: > 30 DPD		1.36%		64.46%		99.65%		73.48%		2.85%		8.99%
Stage 3⁽³⁾		2.81%		54.13%		64.02%		55.65%		17.31%		9.59%
		0.15%		3.79%		3.86%		3.80%		3.06%		0.70%

2022		Stage 1		Stage 2		Stage 3⁽¹⁾		Total⁽²⁾
2022		Lending £m	ECL £m	Lending £m	ECL £m	Lending £m	ECL £m	Lending £m	ECL £m
Mortgages	PD range
Strong	0 - 0.74	52,184	6	1,864	10	-	-	54,048	16
Good	0.75 - 2.49	2,302	2	641	5	-	-	2,943	7
Satisfactory	2.50 - 99.99	305	2	585	17	-	-	890	19
Default	100	-	-	-	-	583	14	583	14
Total		54,791	10	3,090	32	583	14	58,464	56
Unsecured
Strong	0 - 2.49	4,795	42	413	26	-	-	5,208	68
Good	2.50 - 9.99	524	20	459	72	-	-	983	92
Satisfactory	10.00 - 99.99	5	1	237	83	-	-	242	84
Default	100	-	-	-	-	80	40	80	40
Total		5,324	63	1,109	181	80	40	6,513	284
Business
Strong	0 - 0.74	4,808	5	719	17	-	-	5,527	22
Good	0.75 - 9.99	1,455	7	751	31	-	-	2,206	38
Satisfactory	10.00 - 99.99	7	-	56	7	-	-	63	7
Default	100	-	-	-	-	373	50	373	50
Total		6,270	12	1,526	55	373	50	8,169	117

2021		Stage 1		Stage 2		Stage 3⁽¹⁾		Total⁽²⁾
2021		Lending £m	ECL £m	Lending £m	ECL £m	Lending £m	ECL £m	Lending £m	ECL £m
Mortgages	PD range
Strong	0 - 0.74	46,984	3	4,555	19	-	-	51,539	22
Good	0.75 - 2.49	3,313	1	1,888	21	-	-	5,201	22
Satisfactory	2.50 - 99.99	299	-	749	24	-	-	1,048	24
Default	100	-	-	-	-	653	19	653	19
Total		50,596	4	7,192	64	653	19	58,441	87
Unsecured
Strong	0 - 2.49	4,730	28	85	9	-	-	4,815	37
Good	2.50 - 9.99	411	12	325	54	-	-	736	66
Satisfactory	10.00 - 99.99	7	1	143	55	-	-	150	56
Default	100	-	-	-	-	69	35	69	35
Total		5,148	41	553	118	69	35	5,770	194
Business
Strong	0 - 0.74	3,298	13	505	53	-	-	3,803	66
Good	0.75 - 9.99	2,374	53	1,823	40	-	-	4,197	93
Satisfactory	10.00 - 99.99	-	-	105	27	-	-	105	27
Default	100	-	-	-	-	235	37	235	37
Total		5,672	66	2,433	120	235	37	8,340	223

2022	Gross amounts £m	Gross amounts offset on balance sheet⁽¹⁾ m	Net amounts presented on balance sheet m	Net amounts not offset on balance sheet		Net amount ⁽³⁾ £m
2022	Gross amounts £m	Gross amounts offset on balance sheet⁽¹⁾ m	Net amounts presented on balance sheet m	Subject to master netting agreements m	Cash collateral pledged/received⁽²⁾ £m	Net amount ⁽³⁾ £m
Assets
Derivative financial instruments⁽⁴⁾	3,340	(2,998)	342	(46)	(182)	114
Liabilities
Derivative financial instruments⁽⁴⁾	1,797	(1,469)	328	(46)	(32)	250
Securities sold under repurchase agreement	703	-	703	(703)	-	-
2021
Assets
Derivative financial instruments⁽⁴⁾	413	(273)	140	(76)	(1)	63
Liabilities
Derivative financial instruments⁽⁴⁾	678	(469)	209	(76)	(50)	83

Scenario	30 Sept 2022 (%)	30 Sept 2021 (%)
Upside	10	15
Base	55	50
Downside	35	35

Year	Assumption	2021 %	2022 %	2023 %	2024 %	2025 %	2026 %
30 September 2022	Base rate		1.4	2.2	1.8	1.8	1.7
	Unemployment		3.9	4.6	4.4	3.8	3.8
	GDP		3.6	0.3	2.1	2.7	2.1
	Inflation		9.4	7.5	0.6	0.7	1.5
	HPI		6.8	(4.6)	(3.0)	4.4	6.7
30 September 2021	Base rate	0.1	0.1	0.1	0.3	0.5
	Unemployment	4.8	4.6	4.3	4.0	3.9
	GDP	7.3	6.7	2.1	1.5	1.5
	Inflation	2.1	2.7	1.9	1.8	1.8
	HPI	5.0	(1.6)	0.6	2.7	3.9

2022	Unemployment %	GDP %	HPI %
Upside	3.9	3.1	3.3
Base	4.1	2.1	2.0
Downside	6.3	0.4	(3.4)

2021
Upside	3.9	4.6	4.6
Base	4.3	3.8	2.1
Downside	6.5	2.1	(5.8)

Unemployment - simple average		HPI - year-on-year movement


GDP - year-on-year movement		While there are inflationary pressures at present that are impacting the Group's ECL calculations, the following graph demonstrates the expected relatively short-term nature of these over the forecast period (year-on-year movement):

2022	Probability Weighted⁽¹⁾ £m	Upside £m	Base £m	Downside £m
Mortgages	15	12	13	23
Unsecured of which:	251	236	237	279
Cards	216	209⁽⁴⁾	208	233
Personal loans and overdrafts ⁽³⁾	35	27	29	46
Business ⁽²⁾	53	39	43	97
Total	319	287	293	399

2021	Probability Weighted £m	Upside £m	Base £m	Downside £m
Mortgages	24	16	19	37
Unsecured of which:	159	155	155	167
Cards	142	139	139	147
Personal loans and overdrafts	17	16	16	20
Business	83	47	61	127
Total	266	218	235	331

	2022 £m	2021 £m
Mortgages +10%	(1)	(2)
Business +10%	(1)	(2)
Mortgages -10%	2	3
Business -10%	2	3

	2022 £m	2021 m
Mortgages +1%	1	1
Unsecured +1%	15	4
Business +1%	4	6
Mortgages -1%	(1)	(1)
Unsecured -1%	(15)	(4)
Business -1%	(3)	(4)

		Origination PD	SICR Trigger
Mortgages	Low origination lifetime PD	2.00%	5.69%
	High origination lifetime PD	10.00%	17.69%
Unsecured (credit cards)	Low origination lifetime PD	2.00%	22.34%
	High origination lifetime PD	10.00%	25.52%
Business	Low origination lifetime PD	2.00%	6.03%
	High origination lifetime PD	10.00%	16.70%

	2022 £m	2021 m
A 10% movement in the mortgage portfolio from Stage 1 to Stage 2⁽¹⁾	+9	+6
A 10% movement in the credit card portfolio from Stage 1 to Stage 2⁽¹⁾	+87	+69
A 10% movement in the business portfolio from Stage 1 to Stage 2⁽¹⁾	+18	+13
A PD stress which increases PDs upwards by 20% for all portfolios	+106	+94

Scenario	VMUK weighting	Economic measure⁽²⁾	2022 %	2023 %	2024 %	2025 %	2026 %
Upside	10%	Base rate	1.4	3.0	2.5	2.3	2.3
		Unemployment	3.8	4.2	4.0	3.7	3.6
		GDP	3.9	2.8	3.2	3.4	2.1
		Inflation	9.5	8.5	1.8	0.7	1.3
		HPI	8.3	(2.3)	(1.8)	5.7	6.5
Base	55%	Base rate	1.4	2.2	1.8	1.8	1.7
		Unemployment	3.9	4.6	4.4	3.8	3.8
		GDP	3.6	0.3	2.1	2.7	2.1
		Inflation	9.4	7.5	0.6	0.7	1.5
		HPI	6.8	(4.6)	(3.0)	4.4	6.7
Downside	35%	Base rate	1.3	1.7	0.6	0.5	0.5
		Unemployment	4.0	6.0	7.1	7.3	7.1
		GDP	2.6	(5.6)	0.8	2.1	2.1
		Inflation	9.3	5.0	(1.0)	0.7	1.5
		HPI	3.5	(13.3)	(11.6)	(2.7)	7.4
Weighted average		Base rate	1.4	2.1	1.4	1.4	1.4
		Unemployment	3.9	5.0	5.3	5.0	4.9
		GDP	3.3	(1.5)	1.7	2.5	2.1
		Inflation	9.4	6.7	0.2	0.7	1.5
		HPI	5.8	(7.4)	(5.9)	2.0	6.9

Regulatory capital ⁽¹⁾	30 Sept 2022 £m	30 Sept 2021 £m
Statutory total equity	6,340	5,473

CET1 capital: regulatory adjustments ⁽²⁾
Other equity instruments	(666)	(915)
Defined benefit pension fund assets	(650)	(551)
Prudent valuation adjustment	(5)	(5)
Intangible assets	(256)	(208)
Goodwill	(11)	(11)
Deferred tax asset relying on future profitability	(302)	(258)
Cash flow hedge reserve	(699)	(10)
AT1 coupon accrual	(13)	(19)
Foreseeable dividend on ordinary shares	(106)	(14)
Excess expected loss	(100)	-
Share buyback	(13)	-
IFRS 9 transitional adjustments	114	134
Total regulatory adjustments to CET1	(2,707)	(1,857)
Total CET1 capital	3,633	3,616

AT1 capital
AT1 capital instruments	666	697
Total AT1 capital	666	697

Total Tier 1 capital	4,299	4,313

Tier 2 capital
Subordinated debt	1,020	1,019
Total Tier 2 capital	1,020	1,019

Total regulatory capital	5,319	5,332

Regulatory capital flow of funds ⁽¹⁾	2022 £m	2021 £m
CET1 capital ⁽²⁾
CET1 capital at 1 October	3,616	3,271
Share capital and share premium	(1)	2
Retained earnings and other reserves (including special purpose entities)	428	449
Prudent valuation adjustment	-	1
Amendment to software asset deduction rules⁽³⁾	(151)	151
Intangible assets	103	118
Deferred tax asset relying on future profitability	(44)	(107)
Defined benefit pension fund assets	(99)	(81)
AT1 distribution paid already deducted from CET1	19	21
Dividend paid already deducted from CET1	14	-
Foreseeable distributions	(119)	(33)
Share buyback	(13)	-
Excess expected losses	(100)	-
IFRS 9 transitional relief	(20)	(176)
Total CET1 capital at 30 September	3,633	3,616

AT1 capital
AT1 capital at 1 October	697	915
AT1 instrument issued net of costs	346	-
AT1 instrument repurchased	(377)	-
Less other equity instruments not qualifying as AT1	-	(218)
Total AT1 capital at 30 September	666	697
Total Tier 1 capital at 30 September	4,299	4,313

Tier 2 capital
Tier 2 capital at 1 October	1,019	749
Capital instruments issued: subordinated debt	-	298
Capital instruments purchased: subordinated debt	-	(30)
Amortisation of issue costs	1	2
Tier 2 capital at 30 September	1,020	1,019
Total capital	5,319	5,332

Minimum capital requirements	2022			2021
Minimum capital requirements	Exposure £m	RWA £m	Minimum capital requirements m	Exposure £m	RWA £m	Minimum capital requirements m
Retail mortgages	62,545	9,155	732	61,146	10,010	801
Business lending	11,959	6,196	497	11,670	6,040	483
Other retail lending	17,408	4,817	385	16,201	4,311	345
Other lending	18,165	277	22	15,467	326	26
Other⁽¹⁾	584	637	51	765	856	69
Total credit risk	110,661	21,082	1,687	105,249	21,543	1,724
Credit valuation adjustment		258	21		103	8
Operational risk		2,623	210		2,481	198
Counterparty credit risk		185	15		105	8
Total	110,661	24,148	1,933	105,249	24,232	1,938

RWA movements	12 months to 30 September 2022					12 months to 30 September 2021
RWA movements	IRB RWA £m	STD RWA £m	Non-credit risk RWA⁽²⁾ £m	Total £m	Minimum capital requirements £m	IRB RWA £m	STD RWA £m	Non-credit risk RWA⁽²⁾ £m	Total £m	Minimum capital requirements £m
Opening RWA	15,699	5,844	2,689	24,232	1,938	15,846	5,642	2,911	24,399	1,953
Asset size	267	575	-	842	68	(553)	152	-	(401)	(32)
Asset quality	(959)	4	-	(955)	(75)	(644)	16	-	(628)	(50)
Model updates⁽¹⁾	(64)	-	-	(64)	(5)	1,086	-	-	1,086	87
Methodology and policy	-	(160)	-	(160)	(13)	(36)	151	-	115	9
Other	-	(124)	377	253	20	-	(117)	(222)	(339)	(29)
Closing RWA	14,943	6,139	3,066	24,148	1,933	15,699	5,844	2,689	24,232	1,938

Available capital (amounts)	30 September 2022
Available capital (amounts)	IFRS 9 Transitional basis m	IFRS 9 Fully loaded basis m
CET1 capital	3,633	3,519
Tier 1 capital	4,299	4,185
Total capital	5,319	5,205
RWA (amounts)
Total RWA	24,148	24,056
Capital ratios
CET1 (as a percentage of RWA)	15.0%	14.6%
Tier 1 (as a percentage of RWA)	17.8%	17.4%
Total capital (as a percentage of RWA)	22.0%	21.6%
Leverage ratio
Leverage ratio total exposure measure	83,771	83,657
UK leverage ratio	5.1%	5.0%

Minimum requirements	30 September 2022
Minimum requirements	CET1	Total capital
Pillar 1⁽¹⁾	4.5%	8.0%
Pillar 2A	1.7%	3.1%
Total capital requirement	6.2%	11.1%

Capital conservation buffer	2.5%	2.5%
UK countercyclical capital buffer	0.0%	0.0%
Total (excluding PRA buffer) ⁽²⁾	8.7%	13.6%

MREL position	2022 £m	2021 £m
Total capital resources⁽¹⁾⁽²⁾	5,319	5,332
Eligible senior unsecured securities issued by Virgin Money UK PLC⁽²⁾	2,423	2,408
Total MREL resources	7,742	7,740
Risk-weighted assets	24,148	24,232
Total MREL resources available as a percentage of risk-weighted assets	32.1%	31.9%
UK leverage exposure measure	83,771	83,415
Total MREL resources available as a percentage of UK leverage exposure measure	9.2%	9.3%

	2022 £m	2021 m
Total assets	91,907	89,100
Less: other liabilities⁽¹⁾	(3,122)	(3,060)
Funding requirement	88,785	86,040
Funded by:
Customer deposits	65,434	66,971
Debt securities in issue	8,509	7,678
Due to other banks	8,502	5,918
of which:
Secured loans	7,230	5,896
Securities sold under agreements to repurchase	1,205	-
Transaction balances with other banks	17	-
Deposits with other banks	50	22
Equity	6,340	5,473
Total funding	88,785	86,040