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Virgin Money Group 2015 Results


  • Virgin Money Holdings (UK) plc delivers strong performance in its first full financial year since listing
  • Market-beating growth across core mortgages, savings and credit card businesses
  • Underlying profit before tax increased by 53 per cent to £160.3 million, from £104.8 million in 2014

Financial Highlights

  • Underlying profit before tax increased by 53 per cent to £160.3 million, from £104.8 million in 2014.
  • Underlying net interest margin increased to 165 basis points, from 150 basis points in 2014.
  • Underlying cost:income ratio improved to 63.6 per cent, from 72.5 per cent in 2014.
  • Underlying return on tangible equity increased to 10.9 per cent in 2015 from 7.4 per cent in 2014.
  • Statutory profit before tax of £138.0 million, compared to a statutory profit before tax of £34.0 million in 2014.
  • The Board recommends a final dividend of 3.1 pence per ordinary share. The total dividend for the year will be 4.5 pence per ordinary share.

Delivered significant growth across our core businesses

  • Retail deposit balances increased to £25.1 billion, up 12 per cent versus market growth of 7 per cent.1
  • Credit card balances increased to £1.6 billion, up 44 per cent versus market growth of 4 per cent.1
  • Mortgage balances increased to £25.5 billion, up 16 per cent versus market growth of 1.8 per cent.1
  • Gross mortgage lending of £7.5 billion, representing a market share of 3.4 per cent, and net lending of £3.6 billion, representing a market share of 10.6 per cent.1

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

  • Strong capital position, with a Common Equity Tier 1 ratio of 17.5 per cent at 31 December 2015.
  • Total capital ratio of 20.2 per cent and a leverage ratio of 4.0 per cent at 31 December 2015.
  • Mortgage arrears held at low levels, with loans over three months in arrears of 0.22 per cent compared with the latest industry average of 1.12 per cent.2
  • Low credit card arrears maintained, with credit card balances two or more payments in arrears of 0.96 per cent, compared with the latest industry average of 2.7 per cent.3

Continued to work with our stakeholders to deliver on our philosophy of making ‘everyone better off’

  • Customers - overall Net Promoter Score, a key measure of customer advocacy, increased from +14 to +19 and customer numbers increased to over 3 million.
  • Communities – over £92.5 million was donated to charities in 2015, including Gift Aid, through Virgin Money Giving, Virgin Money’s not-for-profit online donation service.
  • Corporate partners - over 12,500 Intermediary Partners introduced mortgage business to Virgin Money in 2015, and the Group was awarded the prestigious ‘Best Lender Award’4 at the Legal & General Mortgage Club Awards.
  • Colleagues - increased colleague engagement to 88 per cent, with 92 per cent of colleagues fully supporting our values and 86 per cent believing strongly in Virgin Money's goals and objectives.

1 Source: Bank of England | 2Source: Council of Mortgage Lenders | 3Source: Argus Industry Benchmark 2015 | 4 ‘Best Lender for Partnership’

Jayne-Anne Gadhia, Chief Executive at Virgin Money, said:

“I am delighted to report a 53 per cent increase in underlying profit for 2015 which ended the year at £160.3 million. We have performed strongly against our objectives, including delivering market-beating growth in our core mortgages, savings and credit card businesses, maintaining the quality of our balance sheet and delivering a customer satisfaction rating among the highest scoring retail banks in the UK.

Growth in our mortgage book outpaced the market as we continued to support demand in the UK housing market. Our savings franchise continued to flourish and deposit balances are now higher than at any point in our history. The success of our new credit card business, following the successful migration of credit card accounts to our own platform, means we now expect to grow card balances to at least £3 billion by the end of 2017, a year earlier than planned.

We will continue to put our customers at the heart of everything we do and look to the future with confidence.”

Continued strong performance in 2015 provides a solid platform for future growth


  • The fundamentals of the UK economy remain stable, with high levels of employment, positive wage growth and lower oil prices boosting disposable incomes. The continuation of positive domestic economic factors supports consumer confidence and our organic plan for growth albeit in a lower interest rate environment.
  • We have considered the changes regarding the buy-to-let market and believe buy-to-let mortgages will continue to support the demand for private rented accommodation. Our mortgage business is comprised of 83 per cent residential and 17 per cent buy-to-let mortgages and our buy-to-let lending is high-quality. We do not expect the new tax regulations for buy-to-let landlords to have a material impact on our business.
  • In addition to growing our core businesses, we continue to explore new opportunities in SME banking and we are conducting a Personal Current Account (PCA) feasibility study with a view to defining our expansion into the broader PCA market, beyond our market-leading Basic Bank Account.
  • As a result of the strength of the business and our continued ability to manage our cost base, we are confident of hitting our targeted returns despite the challenges of a lower for longer interest rate environment. We are able to absorb the impact of the new bank tax surcharge and we are well placed to achieve a mid-teens return on tangible equity by the end of 2017.
  • Our philosophy regarding acquisitions is unchanged. We will consider potential opportunities that are a good fit with the business, value accretive and within our prudent risk appetite.

Underlying Basis - Consolidated Income Statement

£ million
£ million
Net interest income456.1366.125%
Other income167.072.1(7)%
Total income523.1438.219%
Impairment (net of debt recoveries)(30.3)(15.8)92%
Underlying profit before tax160.3104.853%

1 Other income reduced by 7 per cent in 2015. This was anticipated and was primarily as a result of the absence of card origination commissions from MBNA in 2015, and partially offset by a 12 per cent increase in Current account, Insurance and Investment income.

Consolidated Balance Sheet

£ million
Cash and balances at central banks888.6851.34%
Loans and receivables27,724.623,822.216%
Available-for-sale financial assets1,296.91,539.6(16)%
Total assets30,229.026,536.814%
Liabilities and equity   
Deposits from banks1,298.7846.753%
Customer deposits25,144.922,365.712%
Debt securities in issue2,039.41,594.128%
Total liabilities28,888.725,293.014%
Total equity1,340.31,243.88%
Total liabilities and equity30,229.026,536.814%

Basis of preparation of financial results

In order to present a more meaningful view of business performance, the results of the Group and its divisions are presented on an underlying basis of reporting as described below. The following items have been excluded from underlying profits:
  • additional Northern Rock consideration;
  • other costs associated with IPO including share based payment charges; and
  • strategic items and compensation for senior leavers.

Key Ratios

Net interest margin1.651.5015bps
Cost:income ratio163.672.5(8.9)pp
Cost of risk20.120.075bps
Statutory basic earnings per share (pence)22.9(0.4)23.3 pence
Tangible net asset value per share (pounds)2.542.3618 pence
Loan-to-deposit ratio107.5102.84.7pp
Common Equity Tier 1 ratio17.519.0(1.5)pp
Leverage ratio4.04.1(0.1)pp
Return on tangible equity10.97.43.5pp

1 Including FSCS levy
2 Defined as impairment charges net of debt recoveries divided by average gross balances for the period
Key ratios are presented on an underlying basis except where stated

Reconciliation To Statutory Profit

£ million
Underlying profit before tax160.3104.853%
Additional Northern Rock consideration-(36.0)(100)%
Share based payment costs associated with IPO(10.5)(28.4)(63)%
Strategic items and compensation for senior leavers(11.8)(6.4)84%
Statutory profit before tax138.034.0306%


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

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

Virgin Money Investor Relations
Adam Key
020 7111 1311 or


2015 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; the ability to access sufficient sources of capital, liquidity and funding when required; changes to Virgin Money’s credit ratings; the ability to derive cost savings; 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, the potential for one or more countries to exit the Eurozone or European Union (EU) (including the UK as a result of a referendum on its EU membership), and the impact of any sovereign credit rating downgrade or other sovereign financial issues; technological changes and risks to cyber security; 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 EU, the US or elsewhere including the implementation and interpretation of key legislation and regulation; the ability to attract and retain senior management and other employees; the extent of any future impairment charges or write-downs caused by, but not limited to, 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 offers savings, mortgages, credit cards, current accounts, currency services, pensions, investments and protection products to customers across the UK
  • 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 £315 million, including funds raised through Virgin Money Giving the not-for-profit online fundraising service, since 2010.
Virgin Money Holdings (UK) plc - Registered in England and Wales (Company No. 03087587). Registered Office - Jubilee House, Gosforth, Newcastle upon Tyne NE3 4PL.