Virgin Money shares soar; profit up 28% to £273m

Jayne-Anne Gadhia

Shares of Edinburgh and Newcastle-based Virgin Money rose almost 6% after it said its underlying profit before tax increased 28% to £273.3 million in 2017 and total income increased 13.5% to £666 million.

Virgin Money is recommending a final dividend of 4.1p per share, resulting in a total dividend for the year of 6p — an increase of 17.6% on 2016.

The challenger bank’s retail deposit balances increased 10% to £30.8 billion, mortgage balances increased 13% to £33.7 billion, and credit card balances increased to £3 billion from £2.4 billion in 2016.

“We will continue to make progress with our SME banking roll-out and the development of our digital bank,” said Virgin Money.

“Over time, these initiatives will significantly increase the breadth of our proposition, drive enhanced returns and support sustainable value creation for shareholders over the longer term.”

Virgin Money CEO Jayne-Anne Gadhia said: “I am delighted to report that our customer-focused strategy of growth, quality and returns continued to drive strong financial and operational performance in 2017.

“We generated market-beating growth across our core products as we continued to capture high-quality market share in mortgages and credit cards.

“We maintained our uncompromising focus on asset quality and we continued to improve our operating leverage.

“In doing so, we met or exceeded all of our financial targets for the year.

“Underlying profit before tax increased by 28 per cent to £273.3 million and return on tangible equity improved to 14.0 per cent.

“We continue to experience robust customer demand and stable customer behaviour in a resilient housing market, and we expect to maintain solid double-digit returns in 2018 …

“We refreshed our strategy during the year to address and capture the strategic opportunities arising from the technological and regulatory changes shaping UK retail banking.

“Broadening our customer appeal through the development of our SME and digital bank propositions will provide access to a wider pool of UK retail banking revenues and further diversify our funding base.

“The strength of the business, our customer-focused strategy and our new strategic initiatives position us well to continue growing profitably while serving and growing our customer base.”