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Virgin Money Group 2014 Results


  • Record performance and profits in a landmark year for the business
  • Underlying profit before tax increased by 127 per cent to £121.2 million, from £53.4 million in 2013


Delivered strong growth in mortgage, savings and credit card balances

  • Mortgage balances increased to £21.9 billion, up 11.8 per cent against market growth of 1.4 per cent.
  • Net lending of £2.3 billion, a market share of 10.2 per cent.
  • Credit card balances increased to £1.1 billion, up 41 per cent.
  • Retail deposit balances increased to £22.4 billion, up 6 per cent.


Maintained focus on a high-quality balance sheet, underpinned by high asset quality and a conservative risk appetite

  • Held mortgage arrears at low levels, with loans over three months in arrears of 0.31 per cent compared with the latest industry average of 1.33 per cent.
  • Maintained low credit card arrears, with credit card balances two or more payments in arrears of 1.46 per cent, compared with the latest industry average of 2.64 per cent.
  • Strong capital position, with a fully-loaded Common Equity Tier 1 ratio of 19.0 per cent in 2014, compared to 15.5 per cent in 2013.
  • Strong leverage ratio, increasing to 4.1 per cent in 2014 from 3.8 per cent in 2013.


Delivered significant improvement in profitability, reflecting balance sheet growth and higher margins

  • Underlying profit before tax increased by 127 per cent to £121.2 million, from £53.4 million in 2013.
  • Underlying net interest margin grew by 24 basis points to 1.50 per cent, from 1.26 per cent in 2013.
  • Underlying cost:income ratio improved to 68.7 per cent, from 77.2 per cent in 2013.
  • Underlying return on tangible equity grew by 5.1 percentage points to 7.4 per cent, from 2.3 per cent in 2013.
  • Statutory profit before tax of £34.0 million despite costs associated with the Initial Public Offering and payment of additional consideration for Northern Rock plc to HM Treasury following the successful listing on the London Stock Exchange.


As well as delivering a strong corporate performance, Virgin Money also delivered to other stakeholders in 2014

  • Customers – increased overall Net Promoter Score, a key measure of customer advocacy, to +16, one of the highest scores of any UK bank.
  • Communities – over £88 million was donated to charities in 2014, including Gift Aid, through Virgin Money Giving, Virgin Money’s not-for-profit online donation service.
  • Corporate partners – over 13,000 Intermediary Partners introduced mortgage business to Virgin Money in 2014, and the Group was awarded the coveted Five Star Financial Adviser award for intermediary service.
  • Colleagues - increased colleague engagement to 86 per cent, the level of a large high-performing UK company and an overall share in success bonus and IPO share award, averaging over 11 per cent of base salary, was awarded to eligible employees, on top of their normal bonus awards.

2014 was a landmark year in Virgin Money’s history, culminating in our successful listing on the London Stock Exchange in November.

“I am delighted to report a 127 per cent increase in underlying profit for 2014 which ended the year at £121.2 million.

“We have made great progress against our objectives to achieve strong growth, maintain our high quality balance sheet and deliver returns to shareholders. We set out to be a credible and effective challenger to the large incumbent banks and I believe we have laid an excellent foundation on which to realise our ambition. We now rank in the top six of all UK net mortgage lenders and are among the highest rated retail banks in the UK by Net Promoter Score.

“We aim always to live up to the consumer champion ethos of the Virgin brand and our conservative approach to risk and strong financial performance go hand in hand with our commitment to serve the needs of customers and communities.

“Following the progress made in 2014 I am pleased to report that we expect to be admitted to the FTSE 250 on 20 March 2015.

“Our staff are at the heart of Virgin Money and I would like to thank them for their hard work throughout what has been a landmark year for the business. I am pleased we are able to reward all eligible employees with a share in success bonus on top of their normal bonus awards, to add to the £1,000 of shares that all employees received on listing.”

Jayne-Anne Gadhia
Chief Executive

Strategic update and outlook

Continued strong performance in 2014 provides a positive platform for the future

Strategic update

Delivered strong growth in mortgage, savings and credit card balances

  • Overall our guidance for the mid-term is unchanged from that given prior to listing.
  • We continue to target mid-teens return on tangible equity by the end of 2016.
  • We will continue to maximise our net interest margin within our prudent risk appetite.
  • Our net interest margin will be further enhanced in the longer term by the growth of our credit card business which we are building in partnership with TSYS.
  • We will continue to take advantage of our operational leverage to deliver a cost:income ratio of around 50 per cent by 2017.
  • 2015 will see us continue to enhance our existing capabilities, and develop our current account, insurance and digital offerings.
  • As announced in September 2014, Glen Moreno will assume the Chairmanship of Virgin Money in May 2015, taking over from the current Chairman, Sir David Clementi. Sir David will stand down as Chairman of the Board on 21 May 2015 and will retire as Non-Executive Director of Virgin Money on 30 June 2015.


  • The UK economy is performing well although there remains uncertainty at home and abroad.
  • Despite an increasingly competitive market environment, we plan to continue to achieve a market share of annual gross mortgage lending of over 3 per cent. We will build upon our existing high-quality mortgage business, without significantly increasing our risk appetite.
  • We have the core infrastructure needed to grow to our target of £3 billion of credit card balances by the end of 2018. Growth in credit cards will enhance our net interest margin and our return on equity, and will enable us to drive further capital efficiency.
  • We are uniquely placed to provide effective competition to the large incumbent banks in the UK and we look forward to the outcome of the Competition and Markets Authority (CMA) investigation into Retail and SME banking.
  • According to Bank of England data, in January we took almost 4 per cent market share of mortgages, reinforcing our confidence in our strategy and in delivering our organic plan for growth.


Net interest income366.1289.227%
Other income72.172.3(0)%
Total income438.2361.521%
Underlying profit before tax121.253.4127%



Cash and balances at Central Banks851.31,423.5(40)%
Loans and receivables23,822.220,978.814%
Available-for-sale financial assets1,539.61,679.2(8)%
Other assets323.7483.5(33)%
Total assets26,536.824,565.08%

Liabilities and equity

Deposits from banks846.7389.2118%
Customer deposits22,365.721,121.46%
Debt securities in issue1,594.11,469.88%
Other liabilities477.2642.2(26)%
Total liabilities25,293.023,630.17%
Total equity1,243.8934.933%
Total liabilities and equity26,536.824,565.08%


Net interest margin1.501.2619%
Underlying cost:income ratio68.777.2(11)%
Cost of risk10.110.15(27)%
Basic earnings per share – underlying (pence)21.48.1164%
Loan-to-deposit ratio102.896.47%
Common Equity Tier 1 ratio19.015.523%
Leverage ratio4.13.88%
Underlying return on tangible equity7.42.3222%

1Cost of risk excludes benefit of debt sale of £8.9 million


Underlying profit before tax121.253.4127%
Additional Northern Rock consideration(36.0)(9.0)300%
One-off costs associated with IPO (2014) and intangible assets (2013)(23.9)(34.6)(31)%
Strategic transaction (costs)/income(10.9)189.0(106)%
FSCS levy(16.4)(13.4)22%
Statutory profit before tax34.0185.4(82)%


Virgin Money Press Office
Brian Giles / Simon Hall
0191 279 4676 or

FTI Consulting
John Waples
+44 (0) 7717 814 520 or

Virgin Money Investor Relations
Adam Key
020 7111 1311 or


2014 Annual Report and Accounts

Forward looking statements

This document contains certain forward looking statements with respect to the business, strategy and plans of Virgin Money Group and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about Virgin Money Group’s or its directors’ and/or management’s beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, plans and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements made by the Group or on its behalf include, but are not limited to: general economic and business conditions in the UK and internationally; inflation, deflation, interest rates and policies of the Bank of England, the European Central Bank and other G8 central banks; fluctuations in exchange rates, stock markets and currencies; changes to Virgin Money’s credit ratings; changing demographic developments, including mortality and changing customer behaviour, including consumer spending, saving and borrowing habits; changes in customer preferences; changes to borrower or counterparty credit quality; instability in the global financial markets, including Eurozone instability and the impact of any sovereign credit rating downgrade or other sovereign financial issues; technological changes; natural and other disasters, adverse weather and similar contingencies outside Virgin Money’s control; inadequate or failed internal or external processes, people and systems; terrorist acts and other acts of war or hostility and responses to those acts; geopolitical, pandemic or other such events; changes in laws, regulations, taxation, accounting standards or practices; regulatory capital or liquidity requirements and similar contingencies outside Virgin Money’s control; the policies and actions of governmental or regulatory authorities in the UK, the European Union, the US or elsewhere; the implementation of the EU Bank Recovery and Resolution Directive and banking reform, following the recommendations made by the Independent Commission on Banking; the ability to attract and retain senior management and other employees; the extent of any future impairment charges or write-downs caused by depressed asset valuations, market disruptions and illiquid markets; market relating trends and developments; exposure to regulatory scrutiny, legal proceedings, regulatory investigations or complaints; changes in competition and pricing environments; the inability to hedge certain risks economically; the adequacy of loss reserves; the actions of competitors, including non-bank financial services and lending companies; and the success of Virgin Money in managing the risks of the foregoing.

Any forward-looking statements made in this document speak only as of the date they are made and it should not be assumed that they have been revised or updated in the light of new information of future events. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange plc or applicable law, Virgin Money expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained in this document to reflect any change in Virgin Money’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About Virgin Money

  • Virgin Money provides savings, mortgages, credit cards, current accounts, pensions, investment and insurance products
  • Virgin Money’s business ambition is to make “everyone better off” – this philosophy underpins our approach to business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a profit to shareholders
  • Virgin Money is the official sponsor of the London Marathon, the biggest annual one-day fundraising event in the world. Virgin Money has helped London Marathon runners raise over £¼ billion, including funds raised through Virgin Money Giving the not-for-profit online fundraising service, since 2010.

Virgin Money plc - Registered in England and Wales (Company No. 6952311). Registered Office - Jubilee House, Gosforth, Newcastle upon Tyne NE3 4PL. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.