MARKET-BEATINGgrowth in mortgages and savings helped Virgin Money deliver its first underlying profit since its takeover of Northern Rock today.
The bank, which bought the former failed lender from the government for an initial £820m in 2011, made an underlying profit of £53.4m, against losses of £2.5m a year earlier.
Virgin said retail savings balances were up 17 per cent to £21.1bn - in excess of market growth of five per cent - while mortgage balances rose 17 per cent to £19.6bn, compared with market growth of one per cent
The group also reported progress in its credit cards business after it completed the acquisition of £1bn of Virgin Money credit cards from its partner MBNA.
Chief executive Jayne-Anne Gadhia, who received a pay package worth £1.2m last year, said the group had maintained its “strong momentum” in mortgages and savings.
According to the company’s annual report, her base salary will rise from £550,000 to £637,000 this year but the maximum bonus will be cut to 200 per cent of salary - from 300 per cent previously - in line with new European rules. The overall maximum figure available is unchanged at £2.3m.
Virgin Money employs more than 2,500 staff, with 1,700 people based at Gosforth near Newcastle and another 200 at Norwich. It is owned by Sir Richard Branson’s Virgin Group, Wall Street billionaire Wilbur Ross and an Abu Dhabi investment fund.
The business acquired a network of 75 branches, a £14bn mortgage book and retail deposits worth £16bn when it bought Northern Rock in late 2011. But the failed lender’s multi-billion pound book of toxic loans was left in state hands to be wound down.
Virgin said its proportion of mortgages three or more months in arrears was 0.35 per cent, well below the industry average. The bank also has a core tier one capital ratio - a key measure of financial strength - of 16.2 per cent, putting it among the best-capitalised lenders in the UK.
Meanwhile its net interest margin - which measures the gap between its lending profits and borrowing costs - has increased on mortgages and savings to 0.95 per centfrom 0.54 per cent in 2012.