Mortgages  

Virgin Money increase mortgage market share

Virgin Money increase mortgage market share

Virgin Money Group has seen mortgage balances increase 11.8 per cent to £21.9bn against market growth of 1.4 per cent, boosting net lending of £2.3bn and increasing its market share to more than 10 per cent, results published this morning reveal (5 March).

Overall underlying profit before tax increased by 127 per cent to £121.2m, from £53.4m in 2013.

The company’s statutory profit before tax was £34m, down from £185.4 million in 2013 mainly due to costs associated with the Initial Public Offering and payment of additional consideration for Northern Rock to the Treasury following the London Stock Exchange listing.

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The reduction in statutory profit was also a reflection of an exceptional gain of £203.4m in 2013 related to the disposal of Virgin Money Cards.

Jayne-Anne Gadhia, the bank’s chief executive, confirmed that the firm expect to be admitted to the FTSE 250 on 20 March.

“As well as completing our IPO, we delivered excellent business performance, maintaining our strong growth momentum, continuing to build our high-quality balance sheet and delivering improving returns.”

On an underlying basis, total income grew by 21 per cent to £438.2m, driven mainly by strong growth in the mortgage business and a 24 basis point increase in net interest margin to 1.50 per cent, while total costs increased by 8 per cent to £301.2m.

The lender delivered gross mortgage lending of £5.8bn in 2014, with 12 per cent growth in mortgage balances to £21.9bn.

In terms of outlook, the lender stated that despite an increasingly competitive market environment, it aims to achieve a market share of annual gross mortgage lending of over 3 per cent by building on the existing mortgage business, without significantly increasing risk appetite.

“Our performance was particularly pleasing given the changes in the mortgage market in 2014 following the introduction of the Mortgage Market Review,” stated Ms Gadhia.

“We had prepared thoroughly for the implementation of these requirements in April 2014 and were able to continue to build our business with confidence following the introduction of the new rules.”

The report explained that mortgage distribution performed particularly strongly last year, with significant growth in the intermediary channel.

The group also developed its insurance capabilities through the build of a new life insurance proposition with Friends Life and the establishment of a contractual relationship with Ageas for home and motor insurance.

As announced in September, Glen Moreno will assume the chairmanship of Virgin Money on May 21, taking over from the current chairman David Clementi, who will retire as non-executive director on 30 June.

peter.walker@ft.com