Attributed to a highly competitive mortgage market, the decline follows a change in strategy at the challenger bank last year when bosses made the decision to stop growing its share of the mortgage market after the instigation of a price war which disrupted Virgin Money’s profits.

Run by chief executive David Duffy, Virgin Money is the UK sixth-largest bank and was previously known as CYBG until the firm changed its name after a £1.7bn takeover in 2018.

New regulations in 2019 which intended to make banks safer have had significant consequences on the mortgage market, The Times reports.

The regulations have forced the UK’s largest banks to hold capital in their high-street businesses, which they have put to work in the mortgage market, which has forced rates to slump to record lows and put increased pressure on Virgin Money and other lenders.

Virgin Money has said it is now focused on maintaining, rather than expanding, its 4% mortgage market share.

The bank’s business lending increased by 2.5% to £8.1bn in the last quarter and personal lending rose by 3.7% to reach £5.2bn, however, the decline in the company’s mortgage book meant that total lending fell 0.1% to £72.9bn.

Virgin Money’s customer deposits also rose by 1.6% to reach £64.8bn.

The bank was also hit by Payment Protection Insurance mis-selling compensation costs which struck banks across the UK. Virgin Money took a £385 million provision last November to cover the costs of this, which pushed it to £232m annual pre-tax loss.

In November 2019, Virgin Money reported a post-tax loss of £194m.