Virgin Money profit up 41% to £194m in digital push

Jayne-Anne Gadhia

Newcastle and Edinburgh-based challenger bank Virgin Money said its 2016 statutory profit before tax increased 41% to £194.4 million and its gross mortgage lending grew 12% to £8.4 billion, giving it a market share of 3.4%.

Virgin Money said its customer base increased by 15% in 2016 to 3.3 million — at rate of more than 35,000 customers per month, driven predominantly through digital channels.

It said its mortgage balances increased 17% to £29.7 billion, retail deposit balances increased 12% to £28.1 billion, and credit card balances increased 55% to £2.4 billion.

Underlying basic earnings per share increased to 32.7p, up from 26.8p in 2015, and total dividend for the year will be 5.1p per ordinary share, an increase of 13%.

Underlying profit before tax increased 33% to £213.3 million and total income was up 12% to £586.9 million.

Virgin Money CEO Jayne-Anne Gadhia told Reuters the bank may look at buying some assets from The Co-operative Bank which put itself up for sale earlier this month amid a neeed to build its capital and meet longer term UK bank regulatory capital requirements.

Gadhia said: “The bank has not approached anybody in Co-op Bank yet … but at some point we will look at this strategic opportunity.”

On the results, Gadhia said: “We increased our overall customer base by 15% to 3.3 million, supported by growth in customer numbers across every product category …

“We are confident of sustaining strong asset growth and maintaining our excellent asset quality.

“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.”