Virgin Money reports strong profits and positive outlook in half-year results

 
Caitlin Morrison
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Virgin Money said the UK economy remains strong despite Brexit uncertainty (Source: Flickr/Michael Coghlan)

Challenger bank Virgin Money today reported an increase in profits for the six months to 30 June and said it's enjoying the strong UK economy, despite Brexit-related uncertainty.

The figures

Underlying pre-tax profit rose by 15 per cent to £128.6m in the first half of the year, from £101.8m in the same period of last year.

Statutory profit before tax was up 23 per cent, from £100.7m to £123.8m.

The challenger bank said retail deposit balances went up five per cent to hit £29.6bn, while mortgage balances increased seven per cent to £31.8bn and credit card balances went up 13 per cent to £2.8bn.

Shares in the company fell 3.4 per cent to 295.9p at the open, and have since fallen 8.5 per cent to 280.5p.

Why it's interesting

The company's outlook was largely positive: it cited current all-time low unemployment figures, which is helpful to the business.

However, it warned that while the UK housing market is expected to remain resilient, "in the near term there may be some areas of weakness to be navigated".

"The growth in new homes represents an opportunity which we expect to take advantage of through our new build, shared ownership and custom build propositions," the firm said. "We remain vigilant about the potential for certain regions to see house price weakness and will continue to manage this through strict application of our existing lending policies and risk appetite."

The group also said it reduced travel insurance business in the first half of 2017, because "some pricing (had) become uneconomic".

Meanwhile, Virgin Money's chairman Glen Moreno has decided to retire from the board in 2018 and return to the US. The search for a new chair has begun, the firm said.

What Virgin Money said

"The momentum of the business demonstrates the strength of our strategy and the focus we have on serving our customers," said chief executive Jayne-Anne Gadhia.

"Our drive to maintain excellent asset quality, deliver customer satisfaction and retention, combined with continuing operational leverage, helped deliver a 26 per cent increase in underlying profit before tax to £128.6m.

"We will continue to drive growth, quality and returns, put customers at the heart of everything we do, and we remain on track to sustain a solid double-digit return on tangible equity in 2017."

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