Virgin Money FY profit up 33%, lifts dividend
Virgin Money reported a 33% jump in pre-tax profit for 2016 as gross mortgage lending grew and the bank lifted its dividend.
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Virgin Money Holdings (UK)
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16:34 12/10/18
For the year ended 31 December, underlying pre-tax profit rose to £213.3m from £160.7m in 2015, while statutory pre-tax profit was up 41% to £194.4m.
Gross mortgage lending increased 12% to £8.4bn, giving the bank a market share of 3.4%, while net mortgage lending grew 20% to £4.3bn, giving a market share of 11%.
Mortgage balances increased by 17% to £29.7bn and credit card balances were up 55% to £2.4bn.
Virgin Money said its total income came in at £586.9m, up 12% on the previous year, but its common equity tier 1 capital ratio slipped to 15.2% at the end of 2016 from 17.5% the year before.
The company proposed a final dividend of 3.5p per share, taking the total dividend for the year to 5.1p, up 13% on the year.
Chief executive Jayne-Anne Gadhia said: "I am delighted to report another very successful year for Virgin Money in 2016. Our customer-focused strategy of growth, quality and returns continues to achieve and maintain outstanding customer approval ratings, excellent asset quality and strong financial performance.
"We are confident of sustaining strong asset growth and maintaining our excellent asset quality. We are excited about the strategic opportunities ahead of us including the build of our digital bank, which will be transformational for the business, and our partnership with Virgin Red, which will give our customers access to great deals from across the broader Virgin Group of companies. We will continue to put customers at the heart of everything we do and remain on track to sustain a solid double-digit return on equity in 2017."
Numis, which rates the stock at 'buy', said full year income was ahead of its estimate of £583m, while adjusted pre-tax profit was 9% better than it had expected.
"We believe there is a near-term opportunity for investors to benefit from a significant improvement in Virgin's underlying fundamentals. Steady mortgage stock expansion and accelerated credit card growth, combined with a sharp reduction in the cost income ratio are expected to drive a modest improvement in the return on tangible equity and strong earnings per share in coming years."
At 1300 GMT, the shares were down 0.8% to 332.20p.