Virgin Money increases profits, as Brexit yet to wobble the business

 
Hayley Kirton
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Virgin Money London Marathon
The UK-centric lender has not felt much fallout from Brexit but warned there was still uncertainty down the line (Source: Getty)

Virgin Money said profits grew during 2016, as any Brexit fallout was yet to hit the challenger's bottom line.

The figures

The bank, whose business ambition is to make "everyone better off", reported statutory profits before tax of £194.4m, up 41 per cent compared with £138m in 2015.

The increase in underlying profits before tax was more subtle, growing 33 per cent from £160.7m in 2015 to £213.3m in 2016.

Virgin Money also announced its total income had increased to £586.9m, up 12 per cent compared with £523.5m the year before.

However, the bank also revealed its common equity tier 1 capital ratio dipped to 15.2 per cent at the end of 2016, down from 17.5 per cent at the end of 2015.

The lender proposed a final dividend of 3.5p per ordinary share, bringing its total dividend for the year to 5.1p, an increase of 13 per cent on the year before.

Why it's interesting

As a UK-focused lender, Virgin Money's financial figures are to some extent tied to the fate of the UK economy, which many feared would head south following last June's Brexit vote.

The bank revealed today it felt the economy had remained resilient throughout the second half of 2016. However, it added there were still some question marks over the long-term impact of the referendum as well as uncertainty surrounding when precisely the UK will depart from the EU.

Brexit is not the only problem lenders are facing at the moment, as they are also navigating a lower for longer interest rate environment. Virgin Money said today that, although rock bottom rates were putting the squeeze on its net interest margin, it was confident its business model can cope with the pressure.

What Virgin Money said

Jayne-Anne Gadhia, chief executive at Virgin Money, 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.

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