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Bank surcharge will 'slow progress'

Virgin lifts mortgage share in tough market

Jayne-Anne GadhiaVirgin Money increased its share of a highly-competitive mortgage market which helped to drive up profits in the first half.

The Edinburgh and Newcastle based group saw gross mortgage lending increase by 44% to £3.6 billion, representing a 3.8% share of gross lending and a 20.5% share of net lending.

Underlying profit rose by 37% and profit before tax increased from £6.7m to  £55m. Total income was £254.4m, 19% higher than in the first half of 2014.

The company has migrated the credit card business acquired from MBNA to its own platform and launched a new range of cards to customers. This involves 675,000 accounts.

“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,” said Ms chief executive Jayne-Anne Gadhia.

The company has declared an interim dividend of 1.4p.

However, it said competition in the mortgage market “remains a headwind” in the second half of the year.

Control of costs mean it is well positioned to achieve a cost:income ratio of no more than 50% as planned in 2017.

The company said the “unexpected” addition of the 8% bank surcharge, introduced by Chancellor George Osborne in his July Budget, is expected to slow progress.


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