Virgin Money swings to profit as it rules out plans for imminent IPO

 

Two years after its takeover of Northern Rock, Virgin Money has swung out of the red and firmly  into the black.

The major challenger bank in the UK, Virgin is set to launch its first current account this year and is eyeing a multi-billion-pound stock market flotation — probably for next year.

Chief executive Jayne-Anne Gadhia said: “I can’t rule in or rule out flotation this year.

“It is something that we want to do eventually but we have not appointed bankers to advise on it yet.”

Virgin swung from an underlying loss of £2.5 million in 2012 to a profit of £53.4 million last year. It grew its savings deposits by 17 per cent to £21.1 billion which was well ahead of the UK market which grew by 5 per cent. A similar 17 per cent rise in the mortgage book to £19.6 billion also outstripped the wider market’s growth of 1 per cent.

Virgin said it now had a “fortress balance sheet” with all the key ratios well above the Basel III levels required by regulators.

Virgin’s net interest margin rose from 0.54 per cent to 1.26 per cent boosted in part by its taking full control of the £1 billion credit-card business it used to run jointly with MBNA. Virgin Money today published a full report and accounts as part of preparations for the float.

These disclose that Gadhia’s pay and bonus package jumped from £883,000 to £1.19 million last year and that her base salary will rise 16 per cent to £637,000 this year. All the bank’s 2,750-plus staff were also told today that they will be getting a 5 per cent pay bonus for their work last year.

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