28th Jul 2015 06:57
LONDON (Alliance News) - Virgin Money Holdings (UK) PLC Tuesday reported a 37% increase in underlying profit, which the FTSE 250 lender said was a result of growing its balance sheet, an improvement in its net interest margin, and managing costs, though it warned of competition in the UK mortgage market.
Virgin Money, which is now more than halfway through its first full year as a listed company after floating in November 2014, said it made GBP81.8 million underlying pretax profit in the six months ended June 30, compared with GBP59.7 million in the corresponding period the prior year.
Backed by Richard Branson and Wilbur Ross, Virgin Money is one of several lenders to join the London Stock Exchange of late and aim to challenge Barclays PLC, HSBC Holdings PLC, Lloyds Banking Group PLC and Royal Bank of Scotland Group PLC on the UK high street.
Chief Executive Jayne-Anne Gadhia said the company increased its share of the mortgage market while making sure the quality of its loan book was protected. Gross mortgage lending amounted to GBP3.6 billion, a 44% increase than the corresponding period last year.
Developments at the bank's credit card business, which is now fully operational on its own platform, mean Virgin Money is in a "strong position" to grow credit card balance to its GBP3 billion target by the end of 2018.
"Competition in the mortgage market, reflected in asset spread compression, remains a headwind in the second half of the year. We will protect spread by a continued focus on managing volumes," Gadhia said in a statement.
"We remain confident that will deliver a full-year net interest margin slightly ahead of our guidance of up to 160 basis points in 2015," the CEO added.
The 8% surcharge on banks' profits being introduced by the UK government from January 2016 was unexpected, Gadhia said, adding that the tax "is expected to slow our progress to mid-teens returns on tangible equity and we now expect to achieve this by the end of 2017".
Virgin Money said it will pay an interim dividend of 1.4 pence per share.
Shares had closed at 374.40 pence on Monday, considerably ahead of the 283p pricing of its initial public offering.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Virgin Money Holdings