Good morning, everyone, and of course, good evening to those of you who are in Australia. Welcome to our half one results presentation, and thank you for taking the time to join us. Before we begin, I'd like to welcome Clifford, our new Group CFO, who joins me today to deliver his first set of Virgin Money results. Our presentation today will take approximately 30 minutes and will be followed, as usual, by a live Q&A session. Let me begin our presentation with a summary of our performance, which you can find on slide four. Our financial performance for the first half of 2021 improved across the franchise, and we delivered a statutory profit of GBP 72 million, and our underlying profit more than doubled to GBP 245 million due to lower than anticipated impairment charges, which is similar to the industry. Our NIM improved in the early part of the year from 152 basis points in Q4 to 160 basis points in the second quarter. That translates into 156 basis points for the first half. This improvement reflects our continued success in reducing the cost of term deposits and also improving our mix, and we have benefited from some improved lending spreads. I think we are pleased to announce that given this performance, we are upgrading our full year 2021 NIM guidance and now expect NIM to be around 160 basis points for the full year. Our deposits have also grown of 1.5% in the first half of the year. Particularly important, we have seen our relationship deposits rise 12% as consumers and businesses continue to maintain higher balances during the lockdown. As you also know, we have managed our loan book cautiously through the early part of the year. This has been particularly true in mortgages where we prioritize price over volume. Our business lendings remain stable. Frankly, our personal lending has performed solidly despite a reduced demand for unsecured lending. Our half one costs of GBP 460 million were down 1% year-on-year. During the lockdown, we have had to rephase some of our activity and our cost initiatives. We now expect to deliver slightly below GBP 890 million for the full year. We will deliver these rephased cost reductions in the first half of 2022 as well as other opportunities that have arisen as a result of the pandemic. I will come back to those shortly. Our asset quality has remained very resilient across the book, and we have not incurred any material specific provisions or experienced a deterioration of asset quality across any of our portfolios to date. Our H1 charge for the cost of risk was therefore 11 basis points, and we expect that the cost of risk will remain subdued for the rest of this year. It is likely to trend higher next year for obvious reasons. Although we have refreshed our economic scenarios to reflect this more positive economic outlook, we have not yet actually experienced the pandemic without government support. We have decided to maintain our prudent provision levels of GBP 721 million, with coverage remaining broadly stable at 100 basis points. Finally, CET1 strengthened in the first half to 14.4%, which is 13.9% if you exclude the software adjustment, and this leaves us with a management buffer of circa GBP 1.3 billion above our minimum regulatory requirements. Let's turn to the future. I set out here the latest economic outlook from Oxford Economics. You will see that the economic backdrop has improved markedly from the time we announced our full year results, and that's been driven by quite a few factors. The biggest driver of all is that the vaccination program rollout has exceeded expectations. Also the government has continued to extend support well beyond the original plans, which has had a big impact. Finally, we are seeing material injections of stimulus in the major economies of the world. The Oxford Economics outlook for GDP has therefore improved, and their base case now suggests that the economy will recover back to pre-pandemic levels within 12 months. We also see that consumer spending levels are recovering, and it is likely that spending will continue to increase as the restrictions are eased further. In April, credit card spending started to exceed the same period last year, rising to finish nearly 90% higher in recent weeks. Equally, it's very important to understand the expectation for peak unemployment levels, and these have reduced in the latest forecasts. We believe that there will still be an economic impact from the forecast unemployment levels when government support ends. Another key indicator to watch closely will be how consumer behaviors will evolve around spending the large pools of savings that have been built up during the lockdown. Whilst this improving backdrop does provide some scope for greater optimism, the recovery is still in its initial stages, and we think it's right to remain cautious until the full effect of the removal of government support is understood. We're also a little bit conscious that we will be living with variants of the current pandemic for a period of time. Whilst we hope that the vaccination will prevent further lockdowns, I don't think at this stage that that can be guaranteed. However, given this more optimistic economic backdrop and the strength of our capital, our funding, and our provision profile, our top priorities going forward will be to reduce the operating cost of the business, to accelerate our digital transformation, and finally, to build our customer franchise and experience. Let me now turn to the implications of COVID on the operating costs of our business. As you will recall at Capital Markets Day in June 2019, we outlined our intent to become a purpose-led digital bank. The lessons we have learned during COVID have led us to conclude that we need to accelerate our ambitions around digital. In addition to improving digital service delivery, we see an opportunity to further reduce our costs using cloud-based technologies and faster and more effective tools. We see the opportunity arising in a number of ways. Firstly, our customers have changed their behaviors materially. They have learned how to be more productive using obviously new technologies and to optimize their time using video techniques. This is especially true for small business owners who are often time poor. COVID has provided these customers with a significant opportunity to become more efficient and better connected. As a result of that trend, we are expanding our fintech ecosystems and adding a wide range of services and in-app products to support those customers. Secondly, following employee feedback, we will implement a predominantly remote working model. This Life More Virgin model, as we call it, will offer our employees substantial flexibility and an ability to live their best lives both at work and at home. This approach will impact on the use of our head offices and our branch network, and we expect that will naturally lead to a reduction in the operating costs of the bank. Thirdly, the delivery of technology solutions has been transformed by the pandemic, as you know. Like many others, we've been able to deliver solutions in days and weeks rather than months and years. Based on what we have learned, there's a real opportunity to go further and faster, and the key areas of focus will be the digitization of our customer journeys and the automation of key internal processes. I believe that if you look at the combination of customers migrating to digital, the emergence of a more efficient bank operating model, and the availability of these technologies and new ways of working, this will allow us to deliver a far more efficient cost outcome over the medium term. What does it all mean? As a result of COVID, we have had to rephase some of our delivery of costs this year. We will deliver this saving again in the first half of 2022. Equally, we have identified the potential for additional cost savings in excess of our guidance, and we are confident that we'll be able to deliver these savings in 2022 and beyond. We have some work to do, and we will complete that analysis of those costs in the coming months, and we'll provide more detail on the impact of our cost guidance at the year end. Let me now turn to progress in the different areas of our business. As we focus on growth, it has been helpful that many large-scale projects like rebranding and integration of PPI are nearing completion, and that allows us to focus management resources towards the growth agenda. As we return to this growth model, digital sales capabilities will be critical to our success, and I'm pleased to say that we're making good progress in this area and the vast majority of our sales are now digital. We are well on the way to achieving our ambition, which is to be at close to 100% digital sales in all products over time. In addition, most of these sales are now Virgin branded and incorporate Virgin lifestyle propositions. We first launched our Brighter Money Bundles to retail customers, and we have seen a 19% increase in like-for-like growth in current accounts. This is a very encouraging sign of what the product and brand combination can achieve, and we will be developing similar propositions across our entire product suite during this year. Partnerships are also a key driver of our growth momentum, and we're making good progress in developing our technology partner ecosystem. We already work with a number of fintechs, as you know, in the retail area. In our business bank, we've now signed up seven fintechs and have a target of building up to 20 partners by the full year 2022. Lastly, we have launched our Home Buying Coach fintech app with 22,000 downloads to date. Early signs indicate that there's quite a lot of potential to generate significant additional lending via this tool. As we emerge from this phase of the pandemic, I'm confident that the combination of our technology, brand, and unique propositions will allow us to build real growth momentum as we come out of the pandemic. That being said, we will be prudent in our origination in the short term until we understand how the pandemic will play out without government support, but we are optimistic about growing the balance sheet in the medium term. Our loyalty and rewards program is key to this growth strategy, and we are working closely with Virgin Red and the Virgin Group loyalty program has now been launched and is expanding quickly. Customers who sign up now have the ability to earn and spend points across an ever-increasing range of companies and services. Encouragingly, more than 100,000 customers have signed up within the first two months, with plans by Virgin Red to grow to over 1 million customers within a year of launching on this program. At the same time, we are working on our Virgin Wines and Charity bundles, and I have already mentioned that these propositions have delivered impressive growth in our current accounts. Virgin Red is also offering point incentives to the Virgin Group customer base to open a Virgin Money current account, and the early signs have been very positive. We'll continue to explore that type of cross-selling opportunity with others and target the 17 million Virgin customer relationships who have a strong affinity for the brand. In addition to these bundles, we are also constantly adding new functionality to our product, and our recent credit card cashback launch has seen more than 100,000 customers register already. The credit card has averaged a 10% cashback on purchases over the past few months, and that's industry-leading, and we're now expanding cashback to our personal and business debit cards later in the year. We believe that the combination of the Virgin Red loyalty program and our loyalty strategies will provide very strong support for our growth ambitions. Following the launch of our refreshed ESG strategy in November, the board and I remain firmly focused on laying the foundations this year to become a leader in this area. It's probably worth highlighting a couple of recent deliverables. Earlier in the year, we launched our Poverty Premium strategy and introduced Macmillan guides to support customers with cancer. These types of initiatives will enable us to support our customers when they are most vulnerable. From an energy perspective, we recently switched to biogas. This means that all of our energy is now 100% sourced from renewable sources, and this gives us a strong platform to continue building the momentum towards a greener future with our colleagues and our customers. As we look forward to the second half of the year, we're delivering some innovative new products. For instance, we will be the first bank in Europe to have developed a framework to offer Sustainability Linked Loans in commercial banking to all companies, regardless of size. We're also on track to pilot a new green mortgage product in the coming months. Diversity also remains a key priority for me, and I'm absolutely committed to delivering gender and ethnicity equality. What I will provide some revised targets at the year-end. I think overall, I'm very encouraged that we've been able to build momentum across a wide range of ESG initiatives. As we build more momentum in this area, I expect to provide more detailed commentary in future presentations. That concludes my overview of the business. Let me now hand you over to Clifford to take you through the results in detail. Thanks, David. I joined as CFO in March. I'm delighted to be here. I bring to Virgin Money considerable experience of U.K. retail financial services and more recently of banking in the Netherlands, which in many ways is ahead of the U.K. in digital adoption. It's great to be back. What attracted me to Virgin Money is the strength of our brand and its unique position to disrupt U.K. banking. The bank has strong fundamentals and real momentum in our strategic delivery. We have a clear path to delivering double-digit returns and profitable growth. Turning to slide 11. As you know, we have followed a consistent strategy since our Capital Markets Day in 2019. Despite the distractions of COVID, we've made good progress on our four pillars, and as David described, we're now accelerating further our ambitions around digital. I'm convinced our strategic execution will deliver value to investors over time in three phases set out here. Short-term, we maintain our resilience through the tail end of COVID, and you see that in our first half results. We continue to manage the balance sheet prudently with our defensive portfolio, stable provision coverage, and a healthy CET1 ratio. We're now moderating our growth in lending until COVID is fully behind us. Through next year, you'll see improved returns as our digital transformation lowers costs further and growth in our relationship deposit propositions supports NIM. As market conditions normalize in the medium term, we will tap into lending growth opportunities and deploy capital profitably. I'm confident we'll achieve lending growth medium term by utilizing the power of our brand and our improving digital customer propositions, as David described earlier. In summary, our strategy will deliver value over time through a phased approach that will first see continued resilience followed by further cost reduction. We have a clear roadmap to double-digit returns with the key elements of that improvement within our control and the necessary foundations for a profitable growth-led future. Turning to our results for the half year as set out from page 12. I'll comment on profitability first. David has given you the highlights, and I'm pleased to report a strong performance with underlying profits more than doubling year-on-year. That performance reflects improved NII as NIM increased relative to the second half of last year by seven basis points. Clearly, impairments are significantly reduced from this time last year when we first booked COVID-related charges, and with limited loss emergence in this portfolio this year-to-date. Other income at GBP 66 million reflects ongoing reduced activity levels and costs are relatively flat. Taken together, this delivered a solid improvement in underlying return on tangible equity to 10%. Moving now to statutory profit on slide 13. It's good to see a return to statutory profit for the group in the first half of this year. You'll recall we took a GBP 49 million charge related to PPI in the first quarter. There was an additional GBP 10 million charge in the second quarter, and pleasingly, that program is now drawing to a close with no further charges expected. There was a GBP 8 million tax credit, which reflects a deferred tax credit for historical losses that were recognized in the period, which more than offset the tax charge on profits. I'll now talk you through the details of our balance sheet, income, costs, provisions, and capital. Turning to funding on slide 14. We saw customer balances continue to grow during the first half as customers save more and businesses carry additional liquidity. As David mentioned, a large proportion of that growth was in current accounts, and as a result, relationship deposits increased 12% across the half. We improved our funding mix, reducing more expensive term funding during the period, which alongside repricing, drove the overall reduction cost of funds in our NIM expansion. We also reduced our wholesale funding given the growth in customer deposits as maturing this secured funding has not needed to be replaced. Taken together, we expect to see a continued reduction in the overall cost of funds during the second half of the year. Moving now to lending on slide 15. You'll see here that we're managing volumes prudently through this year as we navigate the pandemic. In our mortgage business, we entered the year more cautious on HPI and chose to prioritize margin amidst strong market conditions with balances broadly flat during the half year. Business lending balances were also stable during the period as growth in government guaranteed lending offset lower BAU lending, where we remain focused on managing margin over volume. Personal lending continues to be impacted by tougher market conditions and declined by 3% over the half year. This was a resilient performance given the market context as we continue to benefit from a high proportion of balance transfer card balances, which are typically more stable than revolving credit facilities that rely on consumer spending. As restrictions have started to ease in recent weeks, we have seen some encouraging signs in customer spending patterns, which we expect will support card balances in the second half of the year. As we navigate the tail end of COVID, and for the remainder of the year, we'll continue to be focused on maintaining pricing discipline and underwriting criteria in what continues to be an uncertain environment. Looking ahead, we expect customer lending to remain stable during the second half of the year and to grow after that. Moving now to net interest margin performance on slide 16. I'm pleased with our net interest margin performance of 156 basis points in the first half. This reflects a strong improvement compared with the Q4 2020 exit rate of 152 basis points, and with the second quarter of this year rising to 160 basis points, we're clearly showing good momentum. Deposits continue to be a big driver in that margin improvement as the impact of deposit repricing actions play through and we continue to improve our mix. This resulted in the overall cost of deposits declining 20 basis points- 61 basis points. From a customer lending perspective, the lower interest rate environment has contributed to a reduced gross contribution with asset yields declining in the half. That is primarily influenced by reductions in headline mortgage pricing, lower yielding government backed lending, and competitive personal loan pricing. As David mentioned, we're upgrading our guidance for this year and expect NIM of around 160 basis points for the full year. That improvement also includes a modest benefit from our structural hedging program, which we restarted in Q2, and I'll now talk more about this on slide 17. You'll recall in Q3 last year, the bank unwound the structural hedging position we've now restarted. I'll explain why we changed and the positive financial impact. We unwound the hedge last year for two reasons. The yield curve was flat, there was no benefit of extending maturity. At the same time, the Bank of England hadn't started consulting on negative rates. Our view was therefore that the lower bound floor had been reached. We saw neither a pickup nor a need to extend duration last year. This year, things changed, we've reintroduced the hedge. That is, the yield curve has steepened, the MPC have made it clear that negative rates are in the policy toolkit. By rehedging, we benefit from extended duration and mitigate the downside risk of negative rates. Turning to the financial impact. Our decision to unwind the hedge last year locks in NII contributions as the previously hedged position unwinds. To remind you, our previous hedge was around GBP 24 billion of notional and has been locked in at around 80 basis points since Q3 2020. 1/60th of this rolls off each month. The 2020 contribution was around GBP 210 million, and that is gradually reducing out to full year 2025. That existing contribution is unaffected by a decision to restart the structural hedging program. The group's hedging capacity is now around GBP 26 billion, higher than last year, reflecting the growth in current account balances. We are very largely fully rehedged using swaps with an average duration of two and a half years and an average yield of around 30 basis points. We expect that at current rates, there would be a benefit of around GBP 60 million in full year 2022 with a more modest contribution this year. I now move on to non-interest income, slide 18. Our non-interest income during the first half remained subdued. Relative to H1 2020, non-interest income declined by GBP 49 million, although that includes GBP 16 million from one-off gilt sales last year. When compared with the second half of last year, performance has been much more stable. In our personal division, our performance relative to last year has been impacted by lower credit card transaction fees as spending reduced significantly under lockdown. The removal of some overdraft fees following the high-cost credit review also had an impact. Business was a bit more resilient, but still lower than last year, reflecting reduced activity levels. Mortgage income has been broadly stable and improved relative to the second half of last year with increased mortgage activity. In the near term, we expect non-interest income will remain subdued until lockdown restrictions are fully eased and recover after that towards the end of the current financial year. We're working hard to develop further non-interest income opportunities over the medium term, including progress from our joint venture with Aberdeen. We're also working hard on building out our business banking fee earning services. Turning now to costs on slide 19. At full year 2020, we reported underlying costs of GBP 970 million. Targeting less than GBP 875 million for full year 2021. You can see for the half year, we've reported GBP 460 million of underlying costs in line with last year. Relative to the second half of last year, our first half performance was broadly stable. We saw a continued good delivery on our cost saving programs. We've also had some one-off costs in the first half and increased our investment in cost saving programs, which will support our cost reduction through the remainder of the year and beyond. As we move into the second half of the year, we expect reducing costs, reflecting a good exit rate from the first half, together with additional cost savings as our transformation program continues to deliver, including the benefit of that additional investment in H1. We'll also see reduced investment spend and D&A relative to H1, and no expected one-offs. Given the COVID restrictions, we've seen delays in the delivery of some of our planned cost reductions, whilst we remain confident of our trajectory, we're now targeting less than GBP 430 million for the second half, which will result in less than GBP 890 million for the full year, with a strong exit trajectory into next year. Looking ahead, we're accelerating our digital transformation activity to take further costs out of the business. We're of course striking an appropriate balance between cost reduction, the cost to deliver this, and investment back into the business. We're raising our guidance in integration and transformation costs this year to around GBP 100 million. We'll talk more about the longer term cost outlook at our full year results later this year. Moving to asset quality on slide 20. As David mentioned, credit qualities remained stable in the quarter, and the proportion of stage three loans remained at 1%. Arrears and default levels remain low across all portfolios, and forbearance levels remain stable. We continue to support customers with payment holidays where appropriate, although we're only seeing around 1% of portfolio balances on a payment holiday, with the vast majority of those that have expired returning to making payments. We've maintained prudent credit provisions of GBP 721 million and broadly maintained coverage ratios across portfolios, with our total coverage ratio at 100 basis points. This produces a GBP 38 million income statement impairment charge, equivalent to a cost of risk of 11 basis points. During the second quarter, we updated our economic scenarios in order to reflect greater optimism and also refreshed scenario weights to include a higher upside weighting. As a result, our stage two balance has reduced in the second quarter. Nonetheless, we remain prudent facing into an uncertain outlook, particularly as support measures are withdrawn, and as a result, reductions in model ECL from improved staging have been offset by increases in post-model adjustments reflecting economic uncertainty. We expect the group's near-term cost of risk through full year 2021 to remain subdued, likely increasing into full year 2022 as government COVID related support measures are removed. I'll now turn to capital on slide 21. I'm pleased with our capital position of 14.4% at half year. This includes the benefit of software intangibles of 46 basis points and IFRS 9 transition relief of around 120 basis points. We saw strong capital generation during the period, reflecting 100 basis points of underlying profits and 22 basis points from lower RWAs, offset by 12 basis points of AT1 distributions and 55 basis points of exceptional items. Looking into the remainder of the year, we're confident we will be in excess of our previous guidance of around 13%, excluding software. We expect credit risk RWA inflation to be pushed out. As it emerges, we expect it to be modestly dampening CET1 progression. Our full year RWA expectation does not now include benefits from RWA initiatives, including the move to IRB for our credit card portfolio and the adoption of hybrid mortgage models. Both of these are dependent on regulatory approval, and if delivered this financial year, would be incrementally beneficial. I want to finish on our full year guidance and medium term outlook on slide 22. We're making good progress on driving the key pillars of our strategy, as David spoke to earlier, which forms the foundation of delivering double-digit statutory returns and then profitable growth in the medium term. We have given guidance on KPIs throughout our presentation and set this out on the right-hand side, which in general reflect upgrades. I will now hand back to David for his concluding remarks. Thank you very much, Clifford. Let me just make a few comments now before we turn to questions to close things out. I think you'd agree it's been a very difficult year for all of us, both professionally and personally. I hope that, like some of us, you're beginning to see light at the end of the tunnel and perhaps seeing family and friends and enjoying a bit more of an involvement in your community. I believe that as a bank, we've responded well to the pandemic, and in particular, I think we have really delivered for our customers, and I'm also very proud of the results that the team and our staff have delivered for this half year, given the circumstances. From my own perspective, I think that the bank is in a good place. We are well capitalized and funded, and we have good quality assets and are well positioned for the next phase of the pandemic. We also have a clear line of sight to a medium-term growth strategy, which I think is very important. The other key factor in my view is that we are leaving legacy issues behind us now and we are close to completing our rebranding and integration activities. Also we have built unique products and propositions, as I mentioned earlier. These plans are all supported by a strong digital capability and a powerful loyalty strategy. As I have said, it has been a difficult journey, but the leadership team and I are looking forward and focusing on growth in the future as a purpose-led digital bank. We're confident that Virgin Money is probably at an inflection point, and we're looking forward to delivering for our shareholders and other key stakeholders over the next few years. Let me just bring this to a close. Thank you all for your time. For those of you that have been following on the webcast, the live Q&A conference call will begin shortly. Thank you. Ladies and gentlemen if you would wish to ask a question please press star followed by one on our telephone keypad now. To withdraw your question please press star followed by two. Our first question comes from Ed Henning of CLSA. Ed, your line is now open. Please go ahead. Thank you. Thank you for taking my questions. A couple from me. Firstly, can you just touch on the cost savings you've identified going forward beyond your previous guidance? Are you talking about the previous guidance of GBP 780 as a first question? Sure. I should say that the basic situation is the previous guidance was GBP 780. We would look to deliver beyond or below GBP 780 when we give you details at year-end of what we're going through right now and analyzing. We will improve on that guidance, and we'll also deliver what is a phased delay in some of those savings for this year. Think of it as our GBP 780 still stands. We have a slight delay. We're going to deliver that in the first half of 2022. We're going to deliver further improvements in our guidance once we have the full detail worked out this year. Does that make sense, Ed? Yeah, that does. Then the second question, just on NIM. Now, in the second half, the implied NIM of 164 basis points. If we look forward from there, do you have more deposit tailwinds or repricing you can do in FY 2022? Yeah. It's Clifford here. Look, I won't comment on future pricing. What I can say is we've got good momentum on NIM going into the second half of the year from the repricing that we've done already. You see our Q2 is obviously stronger than our Q1. The structural hedge is now pretty much implemented, that will no longer be a strong headwind. Sorry, a tailwind into second half of the year. We would carry a little bit of caution because on the asset side, for example, the mortgage market remains competitive. It's got more competitive the last few months. Also demand certainly around deposit market. We're sitting together with many other banks on quite a bit of deposits, as the consumer comes out of lockdown, it's possible that the deposit market becomes a little bit more competitive. That's the balanced picture, but we're sufficiently confident to give you that guidance at around 160 basis points, which will obviously be a stronger exit rate at the second half of the year. I know FY 2022 is a long while away, but you've got an increased benefit from the hedge in 2022, and then the question is more around can you see more on the deposit side or it's just a little bit unsure at this point in FY 2022? Yeah, that's too far off. I think there'll be a whole balance of things. David talked about, we're very confident in our relationship deposit, our current account propositions really coming through, getting real commercial momentum. You see the structural hedge, we've guided to GBP 60 million full year benefit that will come through that year. That's five basis points. On the lending side, I think we're looking forward to growing into full year 2022. Clearly that we'll be opening the deals at that point, and we'll look forward to that. This year we've got a bit of work to do, as you know, based on the things we've discussed earlier today. Okay, thanks. I'll leave it there. Thank you. Our next question comes from Grace Dargan of Barclays. Grace, your line is now open. Hi. Good morning. Thank you for taking my questions. Just a couple from me. I think firstly, on the costs, how do you see costs evolving into 2022, particularly bearing in mind sort of the guidance from today? What items do you think will be driving a delta in cost, say from 2021 to 2022? Secondly, just picking up on the NIM. I guess, just very quickly, what mortgage spreads are you assuming in that NIM guidance? Maybe if you could add any color on what spreads you're currently seeing on your mortgages. Thank you. Yeah. I'll pick up starting with the second and talk about costs. I think on NIM, look, we don't guide to our NIM spreads or mortgages. I know other banks do, we've not done that. I don't propose to start. What I can say is that NIM spreads have come down somewhat sort of Q1 into Q2, as we've seen the market become a little bit more competitive. That may well continue, and give rise to some modest dilution in NIM, but we're sufficiently confident in the round to confirm the guidance of around 160 basis points. I think on costs, you've seen page 19 in our deck. We're expecting quite a step down from H1 to H2. As David indicated, I started as CFO towards the tail end of the second half of the year. You can imagine I spent quite a bit of time looking at costs and our cost plans and sufficiently confident to confirm the guidance you've heard today, the less than GBP 430 for the second half of the year. We've got good momentum. David talked about phasing issues, that means you'd expect to see cost savings really coming through the second half of the year, which means we'll have a good exit rate from full year 2021- 2022. We'll update on the three drivers of cost savings that David indicated, really around digital and the post-COVID world that gives us confidence to indicate the long-term guide that David gave earlier of less than GBP 780. We'll update you on the timeframe for that, the specific plans, and any costs associated with delivering it. Okay. Thank you. Our next question comes from Rob Noble of Deutsche Bank. Rob, your line is now open. Morning. Can I ask a couple of questions? One on the structural hedge, why do you not go further down the yield curve? The weighted average life is pretty low. How are you going to manage it going forward? Are you back to purely mechanical, or can we expect you flipping it around again if the yield curve changes sufficiently? Clifford, just as you've just started, is there anything you'd like to see done differently at Virgin going forward, having been there for not so long now? Thanks. Yeah. I'll answer those two questions, especially the second one. I think in terms of the structural hedge, we made a strategic decision driven by the two things I mentioned on my little presentation. One is, we've now got an upward-sloping yield curve. Secondly, the possibility of negative rates in the policy toolkit. That was a, I call it a strategic decision. Albeit one different from last year. When conditions change, we change our strategy. I don't foresee us changing our strategy again. It's not a trading position. Our duration is set by our behavioral duration of the relationship deposits. You can model that out. We think that duration is two to three years. I don't expect that to change materially. We won't change it. I expect that we will continue to mechanically roll that as we've done in the past. That means we'll lock in the five-year rate. As each month goes by, we'll roll 1/60th of that position. I think coming in new, I used to work in a bigger bank. What attracted me to Virgin Money was we've got scale. We're a full-service digital bank across products, both assets and liabilities, but we're small enough to be agile. You really see that coming through in our results. Really quite resilient during the tough year or so that the whole sector has had. We've also got the ability to drive double-digit returns through further cost reduction, which we talked about earlier, and importantly, profitable growth. Right. As a medium-sized bank, we can continue to grow profitably in this market. That was the attraction. We're doing a lot of good things. I think you've seen that in the results today, and we have ambitious plans. I think cost is clearly something that will be a big focus for me. We continue to make progress, but also all the possibilities that David talked about earlier, particularly for a bank of our scale, to really deliver. We're a national bank that can deliver digitally, cost efficiently, and we'll talk some more about that at the full year. I think capital gets a lot of focus for any CFO. I'm pleased coming in with the strength of the capital position. We've got our first solvency stress test this year with the PRA, so that's clearly a lot of focus. What I'm excited about is the prospect for the franchise. We're now very largely digital. We've very largely rebranded. I think we've only just started in terms of the commercial momentum behind our new product. There's exciting times to come. Great. Thanks a lot. Our next question comes from John Cronin of Goodbody. John, your line is now open. Good morning. Thanks for taking my questions. The first one is a point of detail on the acquisition accounting unwind charges. I know you'd said previously that we should expect circa GBP 150 million of unwind charges over the next five years. I think you said that at the full year results stage. GBP 57 million in H1. Just wondering, is the guidance still intact there? If not, why not? Second question, just on loan growth. Look, I hear your point in terms of prioritization of margin over volume, but I guess this is the second time we'll probably see consensus downgrades to loan growth following an update. We're hearing some very bullish commentary from your peers in terms of volumes. Look, I appreciate the desire to keep NIM up. From a risk-adjusted return perspective, could there be an argument that you could go faster on loan growth in the current environment, in mortgages particularly? Then thirdly, on capital guidance. Look, I know that your guidance is for in excess of 13%, which I suppose leaves it open to one interpretation. That 13% number does tend to anchor people towards that level. Just working through the numbers and in light of your comments, particularly Clifford, on subdued cost of risk for the remainder of FY 2021, albeit rising thereafter potentially. It strikes me that, look, about 14% would seem more appropriate guidance given where capital is perched at end H1 and the various moving parts through H2. Is there something I'm missing there or is my assessment broadly correct in your view? Thank you. Maybe, John, I'll pick up just on the growth point that you make, and Clifford will pick up on the other two. I think, as you say, we were cautious coming in. The outlook has improved, and so we are very thoughtful about that. You can take it as read that we're still a little bit conservative in the short term, but absolutely confident about growth of the balance sheet in the medium term. That's our overlay. Underneath that, you will see us probably stable overall as a balance sheet for this year. Building momentum in growth. You'll see in the mortgages, which you mentioned specifically, our March lending is up circa 50% from previous levels. That's moving along to the stock levels, which is we have indicated we would like to hold at around 4%. I see that progressing stronger as well for the full year. We have in the Business Bank is really a function of the government lending, but we've also gone national on the Digital Bank now and as of the last few weeks, and that will build a BCA-driven growth model of customers. You've seen that in the personal level. We're 90% up in our personal accounts. What I would say is we're looking at still an element of conservatism, and I know people want us to just charge out there in an environment where frankly, mortgages, as we predicted, are coming down in margins quite significantly. We've protected the margin. We'll still defend that. That's why we have them, and we have. We are starting to grow now, but we're laying the foundations across every single product area, including with the propositions and the loyalty programs. We're expecting to come through the pandemic next year and deliver in 2022 above-market growth. That's the sort of trajectory that you should be thinking about when looking at growth going. Let me hand over to Clifford just on the other two items you raised. Yeah. Thanks, John. You talked about, I think two questions. One was acquisition accounting on one, the other was CET1 ratio guidance. I think on the acquisition accounting, we said at the full year 2020 that we would have roughly GBP 150 million of acquisition accounting on one over the next five years. With the bulk of that in the next two years. We've seen GBP 47 million in the first half of this year. There was, I would say, a little bit more than we expected, reflecting the slight shrinkage in the card book. I call that a technical phenomenon. We expect the bulk of the remainder of around GBP 100 million in the second half of this year and next year. I don't think anything's materially changed. Just an update and a reminder of the dynamics there. I think around the 13%, I take your point around anchors. We wanted to refer back to our previous guidance of 13%, so we're feeling good. I'm not capping our ambition at any level. I think just to remind you that that guidance excludes the benefit of software intangibles, which we expect to reverse. We also have not included in that guidance the benefit of the hybrid model, mortgage model, which we think is unlikely this financial year. Our year ends in September. Then finally on RWA inflation, whilst we've seen little of that today, we just remain cautious. It's possible we get some RWA inflation, although we think in all likelihood that will be into next year. That's the background on our caution. In terms of our guidance. Overall, we're feeling good about our capital position. That puts us in a position to take advantage of moderate profitable growth opportunities for lending as the economy clearly recovers from the lockdown. Thank you. Our next question comes from Rohith Chandra-Rajan of Bank of America. Your line is now open. Hi. Thank you very much. Good morning. I wondered if I could ask a return to costs, please. A few questions. The first one is really just to understand what changed in terms of your 2021 cost expectations between Q1 and now. Sort of following on from that, I know that you'll be giving us a fuller update on 2022 and beyond at the full year results. Could you sort of help us just scale, I guess the relationship between underlying costs, which you said less than GBP 780, but you're also indicating an increase in sort of investment spend. If I take the underlying plus transformation and investment spend together, how should we be thinking about the 2022 costs overall? On that sort of digital acceleration program, what sort of timescale do you envisage that being over? I appreciate on cost you'll give us more update, but if you could give us some sense of how that you think that will play out now, that would be very helpful. Thank you. In terms of costs, I think actually that guidance predated me personally. I think in terms of our cost plans, it was always clear we were looking for a step down in costs in the second half of the year, of this year. We've been in lockdown consistently. I'm calling from my kitchen, actually. I'm sure you are too. I think that's meant some phasing in our cost saving plans. Those plans remain very much in progress. I'm expecting to deliver on the guidance we announced this morning, which gives us a good entry way into next year. I think in terms of overall ambition, timeframe, and costs, then I've got a lot to add, maybe David can. We have signaled higher integration than transformation costs this year, from our previous guidance of GBP 74 million to around GBP 100 million. That's, if you like, some guidance ahead of what to expect at our full year results when we'll be more specific about our plans, phasing, and necessary costs. Yes. Rohith, maybe just to provide some context. The digital side of this is really to continue the transformation that we've been doing, where we see the potential to accelerate. That can come in terms of the way we have an operating model on a remote basis, which we think is a significant opportunity. It comes in terms of transformation of some of the space that we have in the terms of total real estate footprint. It also comes in the sweet spot of providing services to customers online. As you saw, we have in the presentation, a very strong level of progress in terms of digital sales, and that's key. Behind that, we want to make sure that the customer experience we're delivering is at the same level of digital functionality. We're joining up the two to create an end state, which is almost seamless and straight through. An example just being by the end of the year, being able to deliver straight through mortgages in 2021. It is in a similar way, looking at the process behind every digital delivery and service in 2022 to make sure it's at the same level. In effect, offering a fintech equivalent model in terms of how we provide services to our customer and the level of experience they should expect. That's the framework. What we're doing right now, Rohith, which I know is a little unclear right now, but what we're doing is doing the detailed work on all of the different elements of the remote model, the service provision of real estate, so that we can provide you with what you would expect, which is reasonably detailed science to underpin our medium term cost output, but also the level of digital capability that will underpin our growth agenda. Which is what we're very focused on in that medium term. I'm very confident that we'll deliver that cost agenda, but I'm also very ambitious about delivering the digital agenda to ensure that it underpins our growth strategy. Thank you. Could I just come back on the 2022 costs? If I take the GBP 780 existing guidance, then consensus has about GBP 40 million in, I think, for restructuring or transformation costs. GBP 820 in total. I appreciate the plans aren't fully formed, should we be thinking about something higher or lower than that? I don't know if you're able to comment. Yeah, that GBP 780, we backed off that guidance for full year 2022 at the start of the pandemic. If you recall, just to remind you. I'm not in a position to give specific. I know consensus for costs for full year 2022, which is materially in excess of GBP 780. I would cross-check that. On exceptionals, again, I've guided to full year 2021. This year, that will be in investments to, amongst other things, take out costs for the next few years. Well, I'm afraid you'll have to wait till November for further specific guidance on numbers on full year 2022. Understood. Thank you. Our next question comes from Benjamin Toms of RBC. Benjamin, your line is now open. Please go ahead. Thank you. Welcome, Clifford, and thank you for taking my questions. In relation to the reintroduction of the hedge. How close the structural hedge comes to speculation versus risk management? Speculation versus risk management is obviously kind of a spectrum. I think- Category hedge. We lost you there. We lost you there, Ben, that last bit. Can you hear me now? Yeah. I think you talked about is the structural hedge speculation or risk management? Then you went on something else. I guess the crux of my question is, should we expect something in terms of your P2 regulatory target, an add-on of some kind because you're switching on and off the hedge? I guess that's the crux of my first question. And then on non-interest income. I think you've given guidance before for full year 2021 of GBP 150 million. It's obviously fair to say now probably that you'll come in well below that guidance. Is the GBP 150 million now a more achievable number for full year 2022? Thank you. I'll tackle that. That 150 is guidance for OOI. Is that what you mean, Ben? Yes. The OOI. Yeah. I think that we've been pretty vague about our current guidance for OOI. I think today, and any previous guidance, I think isn't relevant when you go through a pretty tough lockdown, and now we're emerging from it. I would say as of today, that GBP 66 million has reached a sort of base, a stable low reflecting low activity levels. England was in lockdown right the way through that period. I'm hopeful that we'll see growth from here. It may take some time to come through. We'll see that particularly on our credit card business, activity levels on current accounts and business accounts. We also have launched some fee earning products that you've seen that David talked about, which gives us medium-term confidence in fees. I'm not going to give specific guidance for next year. I think in terms of the hedge, I think it's sensible risk management in the light of the current environment. I indicated further this was a strategic step. I think we are in unprecedented times. The extremely flat yield curve that we saw last year, together with negative rates not really being a possibility, it was very unusual and in those unusual circumstances, the bank unwound the hedge. We've made the strategic decision to put it back on in quite a mechanical way. You should not expect us to be trading that. I think both measures were, call it sensible risk management. I think I'm very comfortable with our approach now because it gives stability to our earnings output and really allows the commercial momentum of the bank to deliver earnings going forward rather than movements in the curve, at least over time. As you know, the hedge is more a smoothing mechanism than a hedge per se. I think on the capital side of things, I don't really want to speculate on that and how the PRA may or may not react. We're obviously in close dialogue with the PRA. We're going through our first solvency stress testing. I think that'll be an important driver of our capital framework, which we've indicated we will update on once the results of that testing are clear. Thank you. Our next question comes from Guy Stebbings of BNP Paribas. Your line is now open. Good morning David and Clifford. Just a couple follow up from me. Firstly on margin, just on the deposit side of things, I'm just trying to gauge sort of how much more tailwind this can be. You're still priced quite competitively in some areas. I guess you could adjust down on those. Equally you've hinted at competition potentially coming back. I'm just trying to sense how much more we could see there. Is it more now just about kind of mix effects and moving more towards current account and away from term still, or is there sort of actual repricing within individual products still to come as well? Secondly on macro assumptions, just on the timing of how these get made and flow through into the models, because they're still quite a lot more conservative than some of your peers. Certainly the forecast you set out on slide five. I'm just trying to gauge the sort of conservative, is that a sense of your sort of conservative perception of risk and driving some of your actions on mortgage risk appetite, for instance? Is it more about timing of when things get signed off? It looks like there could be some sort of sizable revisions still to come. Thank you. Yeah. Thanks, Guy. I'll take those two. I think on deposits, I won't talk about future pricing. What I would note is you've seen the decline in the cost of deposits half year to half year to 61 basis points. Clearly the Q2 cost of deposits was lower than 61 basis points. In the mid-fifties. That was the exit rate. We're really benefiting from the growth in relationship deposits. Some of that is the effect of the lockdown, people being at home. Some of it's our proposition. I think what will drive the cost of deposits going forward is how quickly people spend those deposits as they come out of lockdown, not just the money they hold with us, but obviously the money they hold across the sector, which will drive how competitive market is for deposits, including NS&I that has been a big player in this market in the past. I think there's some benefit of, let's call it, the exit rate earnings through into the second half of the year, but clearly some uncertainties there underpinned by some strong propositions in the medium term. In terms of macro assumptions, yeah, it does take time. IFRS 9 takes time to crank the handle on models. The macroeconomic forecasts that underpin IFRS 9 were set at the early part of Q2 or before March. We're comfortable that they reflect a realistic view of the balance sheet date because we published our accounts. Clearly they're a little bit dated versus what you're seeing today in terms of economic outlook, whether that's our own provider, Oxford Economics or the market generally. We'll clearly keep that under review. What you've seen in terms of our provisioning at the half year is while we have reflected the more positive economic outlook that's in our economic forecast, we've also strengthened the post-model adjustments because we are uncertain as to how borrowers will behave when the support mechanisms wind down. That wind down is expected to take place, I would say around maybe in a little bit after our full year balance sheet date, because we have a September balance sheet period, as you know. That maybe gives you a bit of a feel for how we're thinking about economic forecasts and how it might affect provision levels. Great. Clear. Thank you. Our next question comes from Chris Cant of Autonomous Research. Chris, your line is now open. Good morning. Thank you for taking my questions. If I could just come back on costs, I'm afraid. I just wanted to come back on what you were saying about your momentum through the second half of this year. 430 run rate for the second half, with a strong exit, presumably below 430 as the December exit level. Consensus for 2022, if I look at the operating costs number, is at 820. Do you think you're at that run rate at the end of this year, there or thereabouts, before you take additional cost actions looking into next year? I'm cognizant that you don't want to talk about the quantum of those additional actions, just in terms of where you think you get to by the end of this year versus 2022, that would be helpful. Just to come back on capital as well, I'm afraid. I'm also a bit confused by your greater than 13. You're at 39x software. Agreed you're expected to be low. You're not expecting to grow the balance sheet much. You're not expecting procyclicality or anything significant on procyclicality. You guided us on the transformation costs, which are sort of in line with the first half. Am I missing something there? Is there sort of a big upside risk to that transformation charge number when you give us the new cost plan? Is that what you're trying to communicate there? Like others, I'm also struggling a little bit with the number. Looking into 2022, could you give us an update, please, on the quantum of the RWA benefits you expect to come through from the card IRB and the hybrid mortgage models? I think in the past you've guided that to be 5%-10% of RWAs. I guess that may be a little bit stale now, given that we haven't had the procyclicality, but an update there would be appreciated, please. Thank you. Yeah. Maybe I'll take those. I think we're kind of drilling into some of the detail, and you'll forgive me if I hold back a little bit. I think the 430, we're confident in at or less than that figure, and that will be a lower exit rate. I'm not going to quantify it further. I think around the 13%, I think what you might be missing is our caution in a very uncertain environment. I think we've guided to, for example, transformation costs this year already. We'll refine our plans and announce those. I think we're still a bit cautious around the environment, around the timing of RWA inflation, and we don't want to give capital guidance to one decimal point. I think in terms of the RWA initiatives, I don't want to give a very specific figure, but I think the effect is likely to be a little bit more muted than perhaps we thought a little while ago. I think HPI has been strong since then in particular. The guidance we've given of above 13% actually excludes these benefits. We do see it as incrementally beneficial, but we'll just see how it plays out. In particular, in our dialogue with the PRA around the hybrid model in common with the rest of the sector. I think that deals with your three questions, Chris. Okay, thanks. Our next question comes from Victor German of Macquarie. Your line is now open. Good morning. Thank you. I was hoping just to follow up actually on the hedges again. It looks like a material upside or a material change to guidance for margins is actually coming from that new hedge that's in place. I'm just interested if my interpretation is correct. Also, as we look into second half rather than full year, but from a second half perspective, going into 2022, if you can just perhaps from a total hedging perspective, would it be fair to assume that margins are kind of broadly flat, kind of second half going into first half 2022? Victor, it's Clifford. I think the structural hedge will deliver around five basis points next year, right? When we get a full year's benefit, assuming the yield curve remains in place. That translates to roughly two basis points. It's helpful, but it's not the only driver of our upgrade on NIM this year. I think the other primary driver was our cost deposits where we performed very well. I think in terms of full year 2022, I'm not going to provide any further guidance other than to say that our exit NIM, so for Q4, if you like, we expect to be above the around 160, given that guidance we've provided for the full year, and that was clearly low at the start of the year. We've got good momentum going into next year. Next year's NIM dynamics will play out driven by the factors I mentioned earlier. Yeah. No, I appreciate that. Maybe I didn't come across particularly clear. I get where you're saying. Based on your current guidance, it sounds like your margin in the second half should be sort of 163 or so. Those five basis points make sense. Would I be right to interpret that that five basis points will largely come through in the second half? If I look at second half kind of margins going into 2022 margins, structural hedge should broadly be neutral. Is that the right way to look at it? Yeah, that's right. That's the right way, because it's fully on now. Well, very largely on. It will be in the second half. Yeah. We indicated GBP 25 million for this year, and it came on at the beginning of the second half. It's now earning at a steady run rate through to full year 2022. We're basically over 95% done. I think the short answer to your question is yes. Okay. Understood. Conclusively speaking, kind of similar to the past, the hedge will basically roll off every month, 1/60th rolls off. That's right. We've slightly upsized it, reflecting the strength of the deposit book, and it'll be 1/60th, and you should model it at the five-year. The average duration is 2.5, but the marginal is five years. Because you've got an upward-sloping yield curve, you should expect the benefit of the structural hedge to creep up over time, assuming the yield curve is fixed. Understood. Just to confirm something on non-interest income. I mean, it looks like the big delta, in the half at least, came through fair value line. Appreciate it's a very difficult line to guide on, but, I mean, would you say the easiest way to think about it is just assume zero, and then kind of see where it lands? Is there any kind of indication you can give us- Yeah. I think that's broadly right. On that fair value line. I mean, you look at it over time, we've got a consistent hedging strategy. You get some noise through there. It's been modest negative, modest positive. The swing we've had this half year has been unfortunate. I mean, we disclose it so that you can really look through to the underlying fees, which have been pretty stable half year to half year. I think we should have reason to feel optimistic on that line coming out of lockdown, and as our propositions develop. I think the challenge is, what's the timing? Okay. Thank you. Our final question comes from Jason Napier of UBS. Jason, your line is open. Please go ahead. Good morning. Thank you for taking my questions. I had three quite simple ones, actually, if that was okay. First one, David and Clifford. Just to check, David, you said that the expectation ought to be for around stable loans at the full year period, I think you said. I just wanted to confirm that that was the case. Yes. Second, Thank you. That's handy. It leads on to the second one, which is, the strategy as previously shared, is one in which the business is looking to maximize spreads and shift mix to sort of a greater share of SME and higher spread business. I just wonder, in the light of the fact that despite very strong HPI, consistently upgraded macro, better government assistance, and so on, the bank is not growing its mortgage book where we would think the best return on risk-weighted assets are. I'm just wondering, going forward, even if the economy rebounds strongly, given how cautious you've been in the crisis, does it make sense for us still to be expecting you to pivot towards other things? Lastly, tomorrow, the Holyrood elections in Scotland, I just wondered whether you could talk to the exposure of the loan book to Scotland, and sort of strategic thoughts around what a potential drive for independence would mean for the bank. Thank you. Sure. Maybe I'll pick up some growth and Clifford can come back on Scotland. I think the position we have is, we were overweight versus our peers in mortgages as a business. We were looking at not short-term, but long-term rebalancing of that. That's not a one quarter or one year type mix issue at all. It's multi-years, clearly. At the same time, we're reacting to and can react to what we see in the market. As I mentioned earlier, we are stepping up in mortgages now at a 50% increase on last month in terms of volumes. Still keeping a careful eye on the margin gain. We are able to build that mortgage capability. The same with personal. We've seen the credit cards return to probably 94% in April of pre-pandemic levels. Then on the personal side, that will be a function of activity, and on the business side, we have launched the digital bank. We're waiting to see what the economy gives us as an opportunity. What we're doing is accelerating in all areas our plan with an element of caution, as you said. I don't overdo that, where we've built all the propositions around the products, the digital capabilities, and we're now leaving behind a kind of legacy period and stepping into a growth period. It's the pace of growth which we're trying to gauge for the short term correctly, but make myself very clear that the medium term is stronger. That's the way to think about it, if that makes sense. When you look at five months left in the year, that's why we talk about stable for this year, because our step-ups will bring it to in the mortgage, for instance, fourth have stopped. I would think this year is stable. We don't manage the business by quarter. This year will be stable and then there's an acceleration of our growth and coming out with stronger and stronger momentum as the pandemic becomes more clear. Maybe just try to pivot on the subject of Scotland as well. Yeah. I mean, just to build on that. Jason, I joined the bank because it was a growth bank or is a growth bank, in terms of the overall business, but also the opportunity to broaden the product range. I'm convinced the opportunity's there. It's just on the timescale that Dave referred to. Clearly, we're cautious in this very uncertain environment, coming out of the pandemic. Cautiously optimistic. Let there be no doubt, we are a growth bank. Right. We can open the doors, which we'll do over time. I think in terms of Holyrood elections, I mean, I've been following the polls, and the newspapers, as we all have. I think in terms of our loan portfolio, since the acquisition of Virgin Money, we're very much a national business. Mortgages, cards is around 10% of our portfolio in Scotland. Business and personal current accounts are a bit more than that, reflecting the heritage of former Clydesdale. I think we clearly, like other banks, we have the Scottish exposure, but perhaps it's a little bit more modest than people might think given our history. We have around 4,000 staff working in Scotland, so around half the team based in Scotland, which we think is actually a great location for a U.K. bank. We're clearly monitoring the situation closely and we'll follow the implications such as they may be in due course. Very much. I will now hand back to the management team for closing remarks. Okay. Thanks, and thank you, everybody, for the time today. Just to wrap up maybe, I think from our perspective, as I said in the presentation, I think we're in a strong position from capital and funding perspectives. We really feel good about that and see upside there. We do have real confidence, and I know you've plenty of questions about cost. We see this as a temporary phasing of cost and then a double down on cost drives, which will lead us to getting below the targets. We're very confident about that, but we just need a bit of time to get the details together so that we can present that to everyone. We have a tremendous amount of progress been made on the rebrand and the integration allowing us to put our products and our propositions out there with the Virgin Red loyalty scheme. We've launched the business digital bank. We see ourselves making a lot of progress in terms of our capability and emerging signs of growth in that from the personal accounts at 90%. We have a powerful digital agenda at work with all of those propositions and all of those products capabilities. We are therefore really quite optimistic about the medium term and growing our balance sheet. It's kind of the next evolution phase for this bank, but very confident about that future. We will close there. Obviously, you know how to reach us in the IR team if you need any further information. Thank you all for your time today, and we will close our call now. Thank you.