() said it had clawed back more bad debt provisions as the UK economy reopens after Covid-19 while it also raised its guidance on margins.
The group released £19mln of impairment charges in the third quarter of its fiscal year to end of September, with the balance sheet total dropping to £678mln (£721mln).
VMUK added that if the current situation continues it might be able to release more provisions with the full-year results.
Net interest margin (NIM) also rose slightly to 1.68% and for the year as a whole VMUK expects it now to exceed 1.6% with lower deposit rates offsetting competition and wholesale funding costs.
Mortgage lending increased by 0.7% to £58.7bn, while personal lending recovered by 2.5% to £5.2bn as credit card spending activity picked up again after lockdown.
Deposits dropped slightly to £68bn.
The bank reiterated it would consider the level of dividend payments once the next set of government stress tests has been completed.
David Duffy, chief executive, added: “We have increased full-year NIM guidance and, while COVID continues to impact the near-term, we have a strong capital position and robust provisions.
“We see great opportunities from further developing our digital capabilities to deliver an improved customer experience and greater efficiencies.”