Virgin Money profits surge as products enjoy ‘market-beating growth’
Pre-tax profits rose 28% to £273.3 million.
Virgin Money has seen profits outstrip expectations, jumping by nearly a third after it secured “market-beating growth” across its financial products.
The challenger bank’s underlying pre-tax profits rose 28% to £273.3 million, as mortgage balances and retail deposits climbed 13% and 10% respectively.
Total income also lifted 14% to £666 million in 2017, up from £586.9 million the year before.
It came as the bank hiked its total dividend 18% to 6p, prompting shares to climb more than 5% in morning trading on the London Stock Exchange.
Chief executive Jayne-Anne Gadhia said: “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.
“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.”
On a statutory basis, pre-tax profits soared by 35% to £262.6 million after its cost-to-income ratio improved, dropping by 5% to 57%.
Credit card balances rose 24% to £3 billion for the period, with the lion’s share of the growth coming from customers who already had deposit accounts.
However, the firm cast a dim outlook for 2018 trading as it braces for “relatively benign” economic conditions, “modest economic growth” and stiffer competition.
Virgin Money, which has 3.34 million customers, pushed into small business banking in January in an attempt to narrow the gap on Britain’s biggest lenders.
It launched an SME savings account and set sights on securing £5 billion of SME deposits within five years.