Virgin Money has nearly doubled the pay of its chief executive to £3.4m after the bank was pushed to a second consecutive annual loss by a £385m charge for mis-sold payment protection insurance.

David Duffy’s pay jumped by 84% from £1.8m in 2018, despite an investor revolt in January in which a third of shareholders opposed the bumper payout.

The big increase was driven largely by a bonus of £1.3m linked to the 2015 demerger of Virgin Money’s predecessor bank, CYBG, from National Australia Bank, as well as incentives from 2016. Duffy’s base salary was worth £1m, according to the bank’s annual report, published late on Thursday.

Duffy also had a car allowance of £30,000 and another £19,784 in further benefits that included travel from his home to work. The Irish executive splits his time between properties in Cork, Glasgow and London, according to a 2016 Irish Times interview.

Duffy’s bonus payments were reduced by £175,000 to account for weak share price performance over the year. Investors had questioned whether the bank would have enough money to meet regulatory requirements for capital buffers in case of a financial shock, as it battled a weakening British economy and the costs of merging CYBG and Virgin Money and rebranding to the latter.

However, investors shrugged off the PPI hit and piled back into shares on Thursday, as investors welcomed a capital preservation plan revealed separately earlier in the day which included suspending the dividend. Shares jumped by 19% to 170p, hitting levels not seen since the end of July, when the pre-merger CYBG reported pressure on its lending income.

The bank officially changed its name from CYBG at the end of October, but Duffy said it had made “great progress” on the integration and rebrand.

Virgin Money, created from the remnants of the failed Northern Rock, was the smaller bank before the merger, but executives it judged had a stronger, Richard Branson-backed brand than CYBG’s Clydesdale and Yorkshire banks.

The bank made a statutory loss after tax of £194m for the year to 30 September, because of the costs of restructuring following the deal, as well as the extra money set aside to pay for compensation for £385m in mis-sold PPI. The bank’s measure of underlying profit, stripping out those costs, came in at £539m, 7% lower compared with last year.xDuffy said the bank had experienced an “unprecedented surge in PPI information requests in August” after the City regulator set a final deadline of 29 August for the claims, which have so far cost banks more than £52bn. The provision was within the bank’s previous guidance to investors.

Banks and other financial institutions pushed PPI policies between 1990 and 2010 alongside loans, credit cards and other deals, telling consumers it would help them repay debts in the event of sickness or unemployment. However in many cases, exclusions in the small print meant customers could never make a claim.

The late summer deadline prompted a rush of claims by customers that has surprised bank executives and investors, and has led to massive provisions across the sector. Lloyds, which runs the UK’s biggest branch network, last month took a £1.8bn hit, while Barclays set aside another £1.4bn.

Banking analysts said Virgin Money had answered concerns over whether it had enough capital to stay above regulatory requirements, even after taking into account the PPI hit.

The suspension of the dividend had already been expected in order to preserve capital. The bank said its “progressive and sustainable dividend ambition remains”, and it would consider reinstating the payouts during the next year.

Investors were also heartened by growth of 16.1% year-on-year in personal lending. The company said this was driven by “high-quality” growth in the Virgin Money credit card, and improvements to its salary finance and online loans.

Duffy said the results represented “a good operating performance in challenging conditions”.

Banks and other businesses have set aside £2.1bn since PPI deadline day

28 November: Virgin Money – £385m

22 November: Nationwide – £36m

7 November: Cooperative Bank – £60m

31 October: Lloyds – £1.8bn

30 October: HSBC – £302m

30 October: Santander – £169m

25 October: Barclays – £1.4bn

24 October: RBS – £900m

2 October: Tesco Bank – £45m

12 September: N. Brown – £30m

23 October: Shop Direct – £241m