Virgin Money profits soar on higher customer borrowing

Challenger bank Virgin Money has unveiled a 53 per cent jump in annual profits, driven by an increase in its lending balances.

Virgin Money chief executive Jayne-Anne Gadhia. Picture: Neil Hanna

The Edinburgh-headquartered lender, which floated in November 2014, posted an underlying pre-tax of £160.3 million for 2015, up from £104.8m the previous year.

That came as Virgin Money’s retail deposit balances swelled by 12 per cent to £25.1 billion, which it said outpaced the wider market growth of 7 per cent.

Lending figures also raced ahead of the market, with credit card balances soaring 44 per cent – compared with rivals’ growth of 4 per cent – to hit £1.6bn. Meanwhile, mortgage balances increased by 16 per cent to £25.5bn. In contrast, overall mortgage lending across the whole market edged up just 1.8 per cent last year.

Chief executive Jayne-Anne Gadhia said: “We have performed strongly against our objectives, including delivering market-beating growth in our core mortgages, savings and credit card businesses, maintaining the quality of our balance sheet and delivering a customer satisfaction rating among the highest scoring retail banks in the UK.

“Growth in our mortgage book outpaced the market as we continued to support demand for housing in the UK. Our savings franchise continued to flourish and deposit balances are now higher than at any point in our history. The success of our new credit card business, following the successful migration of credit card accounts to our own platform, means we now expect to grow card balances to at least £3bn by the end of 2017, a year earlier than planned.”

On a statutory basis, pre-tax profits came in at £138m, compared with just £34m in 2014. A final dividend of 3.1p a share was proposed, to be paid on 25 May, giving a total payout for the year of 4.5p.