Virgin profits soar as digital bank grows
Virgin Money unveiled a sharp rise in profits and said its digital bank will be “transformational” for the business.
Underlying profit before tax increased by 33% to £213.3 million, from £160.7m in 2015. The board has recommended a final dividend that takes the total dividend to 5.1p per share.
Jayne-Anne Gadhia, chief executive of the Edinburgh and Newcastle headquartered bank, said the company had enjoyed “another very successful year”, recording “market-beating growth” in our core mortgages, savings and credit card businesses.
Strong new mortgage lending and improved customer retention resulted in 17% growth in mortgage balances to £29.7 billion, significantly outpacing the market.
The credit card business produced 55% growth in prime credit card balances to £2.4 billion putting the group on target to reach £3 billion high-quality credit card balances at the end of 2017.
The performance the Essential Current Account was particularly strong and customer balances increased more than fivefold over the year.
The savings franchise continues to perform with 12% growth in deposit balances to £28.1 billion. Ms Gadhia said she was “pleased with the increasing contribution and momentum in our Financial Services business.”
The overall customer base increased by 15% to 3.3 million, supported by growth in customer numbers across every product category.
“We are excited about the strategic opportunities ahead of us including the build of our digital bank, which will be transformational for the business, and our partnership with Virgin Red, which will give our customers access to great deals from across the broader Virgin Group of companies,” said the CEO.
“We remain on track to sustain a solid double-digit return on equity in 2017.”
The bank’s cost-income ratio reduced from 63.5 to 57.2, indicating a tighter control of costs.
· Mortgage balances increased by 17% to £29.7 billion.
· Gross mortgage lending grew by 12% to £8.4 billion, a market share of 3.4 per cent.
· Net mortgage lending grew by 20% to £4.3 billion, a market share of 11 per cent.
· Retail deposit balances increased by 12% to £28.1 billion.
· Credit card balances increased to £2.4 billion, up 55%, a 3.5 per cent market share.