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Virgin ‘close to becoming challenger bank’ on record profits

Jayne-Anne GadhiaVirgin Money chief executive Jayne-Anne Gadhia today unveiled record maiden profits since its flotation and said it was making inroads into the established banks’ market share.

Underlying pre-profit at the Edinburgh-based bank soared 127% to £121.2 million and it now expects to be admitted to the FTSE 250 index next week, reflecting its rate of growth.

The bank grew across a range of businesses and is now in the top six of mortgage lenders with a 3% market share. According to Bank of England data it took almost 4% in January.

“We have made great progress against our objectives to achieve strong growth, maintain our high quality balance sheet and deliver returns to shareholders,” said Mrs Gadhia.

“We set out to be a credible and effective challenger to the large incumbent banks and I believe we have laid an excellent foundation on which to realise our ambition.”

The bank said that it expects to have the core infrastructure needed to achieve its target of £3 billion of credit card balances by the end of 2018. Growth in credit cards will enhance the net interest margin and its return on equity, and enable the bank to drive further capital efficiency. The underlying cost:income ratio (a measure of efficiency) improved to 68.7% from 77.2% in 2013.

As announced in September, Glen Moreno will succeed Sir David Clementi as chairman in May.

On an underlying basis, total income grew by 21% to £438.2m, driven mainly by strong growth in the mortgage business.

The total impairment charge fell by 15% to £24.7m, excluding a further benefit of £8.9m arising from the sale of credit card debt.

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