Virgin Money are (almost) in the money
Underlying pre-tax profits at Virgin Money were £121.2m for the year to 31 December, up 127% on 2013. Balances for mortgages, credit cards and retail deposits all grew in what chief executive Jayne-Anne Gadhia described as a "landmark year". But statutory pre-tax profits actually fell 82% to £34m.
This much lower figure reflects the costs associated with Virgin Money's flotation, or IPO [initial public offering], and its acquisition of Northern Rock in 2012. Under the terms of the acquisition of the then state-owned bank, which collapsed in 2008, Virgin agreed to pay the Government £50m if the financial services company was sold or had a successful IPO.
A £36m chunk of this payment to government was payable in 2014.
Mortgage balances increased 11.8% to £21.9bn, giving Virgin Money roughly 4% of the UK mortgage market. Credit card balances rose 41% to £2.3bn while retail deposits were also up, rising 6% to £22.4bn. Mortgage and credit card arrears were below industry averages, and this conservative approach to risk helped boost the company's financial position, it said.
"We have made great progress against our objectives to achieve strong growth, maintain our high-quality balance sheet and deliver returns to shareholders," said Ms Gadhia. The bank expects to be admitted to the FTSE 250 index on 20 March.