Northern Rock takeover boosts Virgin Money

VIRGIN Money, the financial services firm backed by Sir Richard Branson, expects to deliver an annual profit this year after moving into the black at the end of its fourth quarter.

The Edinburgh-based bank said its strong performance stemmed from last year’s takeover of nationalised lender Northern Rock, which has now seen all 75 of its branches converted into Virgin Money stores.

Chief executive Jayne-Anne Gadhia said that, with the integration of the Northern Rock business now complete, the group was focusing on “bringing real competition to UK banking”.

She added: “Most importantly, we have been able to return the business to profitability.”

The number of customer accounts has risen by 1.7 million since the acquisition, while retail deposit balances and mortgage balances have seen growth of 14 per cent and 19 per cent respectively.

Virgin Money posted an underlying loss of £8.4m for 2012, down sharply from £59.1m a year earlier, and forecast an annual profit on an underlying basis for 2013.

The bank also said its core tier one ratio stood at 18 per cent, well above the 7 per cent that regulators have demanded that British banks achieve by the end of this year.

Gadhia said: “We are well positioned for continued strong growth and look forward with great optimism.”

In January, Virgin Money bought £1 billion of credit card assets from MBNA and, as well as preparing to launch its own credit card business, it is considering a move into the current account market, possibly by the end of this year.