Shares in Virgin Money rose sharply on Wednesday despite the bank setting aside £232m in provisions for the impact of COVID-19.

The £232m hit meant, like the UK’s top traditional banks, challenger bank Virgin Money’s profit was almost entirely wiped out by the negative impact of COVID-19.

Virgin Money’s profit fell to £120m, but would have been £352 before the impairment charge due to coronavirus.

A profit of £352m would have represented a 3% drop in first half profit from a year ago, which was expected due to a reduction in net interest margin.

The market has been rewarding those banks who recorded strong performance before the impact of COVID-19, and this was the case with Virgin Money.

Virgin Money shares were up as much as 11% before falling back in afternoon trade.

“The COVID-19 outbreak and its impact on the nation’s businesses and consumers has markedly changed the operating environment, driving an increased impairment charge of £232m against future loan losses and a reduction in underlying profitability,” said David Duffy, Chief Executive Office of Virgin Money.

“While we delivered a resilient performance and continued to make good progress on our self-help strategy in the first half of the year, our primary objective now is safeguarding the health and well-being of our colleagues, customers and communities while also protecting the bank.”

The Virgin Money CEO continued to say the impact of the pandemic will persist for a prolonged period but he felt Virgin Money had the necessary measures in place to continue delivering their services.

“Amid the uncertainty, it is clear that the pandemic will have long-lasting and wide-ranging effects on how companies do business and on what customers will expect from the organisations they choose to interact with.”

“Although the full impacts from the COVID-19 outbreak will take time to emerge, I’m confident that our agility, digital capabilities and focus on disrupting the status quo will make us stronger and well-equipped to support changing customer needs and play our part in the UK’s economic recovery.”