Member Article

Growth in mortgage market sees profits soar at Virgin

Newcastle bank Virgin Money has reported a surge in pretax profits to £55m, up from £6.7m at this point last year.

The bank, which operates under the stewardship of Richard Branson,listed on the stock exchange last year and released its half yearly results this morning.

Virgin reported impressive financials across the board following a strong half to the year. Underlying profit before tax increased by 37 per cent to £81.8m, from £59.7m in H1 2014.

The business continued growth in mortgage, credit card and retail deposit balances, performing especially well in the mortgage market. Mortgage balances increased to £23.6 billion, up 8 per cent from FY 2014.

Jayne-Anne Gadhia, Chief Executive Officer said: “I am pleased to report a 37 per cent increase in underlying profit for the first half of 2015. This was driven by balance sheet growth, strong improvement in our net interest margin and effective cost management.

“We continued to increase our share of the mortgage market while protecting the quality of our book. Gross mortgage lending increased by 44 per cent to £3.6 billion in the first half of the year, representing a 3.8 per cent market share of gross lending and a 20.5 per cent share of net lending to the end of May.”

Gadhia also explained that Virgin now expects to grow its credit card business, to match the success of the company’s mortgage dealings. Credit card balances stood at £1.1 billion at H1 2015, after the successful migration of the credit card business in March 2015.

She said: “In our credit card business we successfully completed the migration of the credit cards acquired from MBNA to our own platform and launched our new range of cards to customers. This puts us in a strong position to grow our credit card business to our target of £3 billion of credit card balances by the end of 2018.”

In addition Virgin revealed that an interim dividend of 1.4 pence per ordinary share to be paid in October 2015.

Gadhia added: “We remain focused not only on delivering growth but also generating sustainable returns to shareholders. As such, we are pleased to announce that, after taking into consideration our strong performance in the first half of the year and the growth prospects of the company, the Board has declared an interim dividend of 1.4 pence per share.”