Board moves as Virgin Money H1 profit hits £128m

Peter Bole

UPDATE 1 — Edinburgh and Newcastle-based challenger bank Virgin Money Holdings on Tuesday announced changes to its board and said underlying profit before tax rose 26% to £128.6 million in the half year to June 30, 2017.

Despite the profit increase, Virgin Money shares fell more than 5% with analysts pointing to a decline in its common equity tier 1 ratio of 1.5 percentage points to 13.8% and a caution from the bank that its full-year net interest margin will be “towards the lower end” of previous guidance.

Citigroup analysts wrote: “The weaker capital position may raise concerns on the ability to keep growing the loan book at the current rate …

“Overall we view this as a slightly disappointing set of results.”

Virgin Money said its chairman Glen Moreno will retire from the board in 2018 and to return home to the United States and that the search for a new chairman has started.

The company also said its chief financial officer Peter Bole will become an executive director on the firm’s board from July 25, 2017.

Bole recently joined Virgin Money from Edinburgh cross-town rival Tesco Bank in a high-profile move involving a bumper remuneration package of up to £3 million.

Bole worked at Tesco Bank from 2009 to 2016 and previously held a senior role at RBS and worked as an investment director at Standard Life.

Moreno said: “I am delighted to welcome Peter to the Virgin Money board. 

“He brings an extensive background in strategic financial management and has already made a strong contribution to our strategy aimed at delivering growth, quality and returns.”

Virgin Money said its retail deposit balances increased to £29.6 billion during the half year, 5% higher than full-year 2016, and mortgage balances increased to £31.8 billion, 7% higher than FY 2016.

Credit card balances increased to £2.8 billion, 13% higher than FY 2016.

Virgin Money said it will become Virgin Atlantic’s UK retail financial services partner in 2018, with the partnership offering customers a range of benefits, including Flying Club miles.

Virgin Money CEO Jayne-Anne Gadhia said: “Our drive to maintain excellent asset quality, deliver customer satisfaction and retention, combined with continuing operational leverage, helped deliver a 26 per cent increase in underlying profit before tax to £128.6 million …

“Our deposit franchise is flourishing, we have maintained our stringent focus on the prime segment of the credit card market, and continue to deliver high-quality mortgage lending growth …”