Virgin Money profits rose ahead of its Northern Rock acquisition

 
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VIRGIN Money made a £44.16m underlying pre-tax profit in the year leading up to its purchase of Northern Rock – while the bailed-out building society lost £110.9m.

Virgin, which spent £747m buying Northern Rock from the government in November, said profits rose 41 per cent in 2011, with its credit card venture with Bank of America “a significant driver of profitability”.

The firm’s mortgage portfolio fell slightly to £17.9m as it restricted lending ahead of the Northern Rock acquisition.

Meanwhile, Newcastle-based Northern Rock increased mortgage lending almost 17 per cent to £4.9bn, as its losses narrowed from £188.3m in 2010 to £110.9m. Excluding asset sales and restructuring costs, the firm announced statutory losses of £18m.

Virgin said that since the merger and subsequent advertising campaign, the enlarged group has attracted 400,000 new customers, taking its total beyond 4m. “This acquisition represents an important and exciting moment in the history of both companies,” Virgin said in a statement.