Virgin Money profits and capital changes since Nationwide acquisition

It was reported in the Mail on Sunday yesterday that Virgin Money’s profitability has again fallen, with profits after tax of £113 million for the year ending 31 March 2026.

This will be the last year of accounts that substantially report on the performance of the business acquired by Nationwide, following the Part VII legal transfer affected on 2nd April 2026 which moved the vast majority of Clydesdale Bank PLC (a wholly owned subsidiary of Virgin Money UK PLC) customers, assets and liabilities into the building society core.

Investment in Clydesdale Bank PLC

Following the transfer of substantially all of Clydesdale Bank PLC’s assets and liabilities to Nationwide on 2 April 2026, the remaining business activities within Clydesdale Bank PLC relate solely to Scottish banknote issuance. The retail and commercial business banking activities now sit directly within Nationwide. As a result, the Company has reassessed the carrying value of its investment in Clydesdale Bank PLC based on the future cash flows expected from the remaining banknote business. This assessment resulted in a reduction to the carrying value, with £4.3bn being recognised in reserves in April 2026.

Note 16 of the Virgin Money UK PLC annual accounts

So what do the results show?

Profits

Profitability reported by Virgin Money UK PLC continues to fall for the third period in a row.

Return on Equity has also fallen.

Account date	Accounting period length (months)	Profit After Tax (£m)	PAT (£m, annual)	Equity (£m)	Return on Equity (%)
30/Sep/2022	12	537	537	6,340	8.5%
30/Sep/2023	12	235	235	5,255	4.5%
31/Mar/2025	18	230	153	4,849	3.2%
31/Mar/2026	12	113	113	5,127	2.2%

Recall the statements made by Nationwide to concerned members seeking a member vote on the then proposed acquisition:

The capital that Nationwide is using to purchase Virgin Money is currently earning just over 5% in interest [risk free] from the Bank of England. Using Virgin Money’s pre-tax profits for the last financial year as an example, Nationwide would achieve a 12% return on the one-off purchase price – more than double the current return. 

Nationwide statement made to members seeking a vote on the then proposed acquisition of Virgin Money

The annual reports show that the post tax return falls substantially short of acquisition expectations. The full opportunity cost of pursuing the acquisition rather than investing member equity in other ways may never be known, especially as transparency into Virgin Money performance is now lost going forward.

Capital

The accounts showed that Nationwide made further capital injections into Clydesdale Bank PLC. These have also been reported previously in the Mail on Sunday, following earlier Companies House submissions.

Date	Capital injection (£m)
01 Oct 2024	650
27 Mar 2025	150
25 Jun 2025	85
21 Aug 2025	200
Total	1,085

After the account year end of 31 March 2026, the Part VII legal transfer was affected. This has a post balance sheet effect changing the company’s capital position.

Post balance sheet effect	£bn
Impairment of investment in Clydesdale Bank PLC	(4.280)
Release of merger reserve	+2.128
Net reduction in retained earnings	(2.123)
Planned capital reduction	tbc

After the Part VII transfer:

• the investment in Clydesdale Bank PLC falls by £4.28bn;
• the £2.128bn merger reserve is released against that impairment;
• retained earnings move from +£1.055bn to -£1.07bn;
• total equity remains positive because there is still £1.226bn of share capital and share premium plus £698m of AT1 capital. The company therefore remains solvent but with negative retained earnings, and a capital reduction exercise expected to follow.