Virgin Money  

Virgin Money profits helped by mortgage lending

Virgin Money profits helped by mortgage lending

Virgin Money has seen its profits increase to £192m after growing its mortgage lending during 2017.

The lender increased its profits after tax by 37 per cent on the back of capturing "high-quality market share" in the mortgage sector.

Virgin Money's mortgage lending grew by 13.2 per cent to £33.7bn during 2017.

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The bank said it managed to keep its market share in the mortgage sector at 3.3 per cent "despite increased competition from incumbent lenders and new entrants" looking to increase their presence.

Evidence of this competition is that Virgin Money's net interest margin (NIM) - the difference between the interest generated from mortgages to that paid out on deposits - fell to 1.57 per cent.

Virgin Money said it was predicting a NIM for 2018 of between 1.65 per cent and 1.70 per cent but it has now warned it expects this to be "at the lower end of that range" because of lower spreads in the mortgage market.

The bank predicted these "competitive pressures" were likely to continue into 2018 and beyond, particularly because bank ringfencing would lead to more competition in mortgage pricing.

Jayne-Anne Gadhia, chief executive of Virgin Money, said: "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."

Virgin Money's retail deposit balances increased by 10 per cent to £30.8bn while its mortgage balances grew by 13 per cent to £33.7bn.

Total income increased by 13.5 per cent to £666m.