VUK out overnight, this is the Virgin Money UK business (and old Clydesdale bank).

The bank is well capitalised, buybacks are on the table, and arrears are low. Equally, NIM pressures abound in the sector and the provisioning is kicking up in line with a weaker UK economy. It is visually quite striking in the below graph.

It is not especially new, either, arrears have been climbing for some time.

NIM’s specifically for VUK don’t appear to too bad, perhaps even better than here in Aus. But the number that is going to matter is the net of loan losses, and, we think, there’s good reason to be nervous there.

Are you fairly compensated for all that given the stock trades on a PE of 4x. A PB of 1/3rd. Well, I can certainly understand why you would make that trade.

But then, we’ve already got ~15% of the fund in ANZ and WBC, and would prefer to be underweight the banks.

If things don’t go awry, in the UK, then VUK will probably make shareholders lots of money.

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