Virgin Money hails mortgage surge as market share hits 3.5 per cent

Virgin MoneyVirgin Money, the challenger bank which employs 200 in Edinburgh, has reported a leap in mortgage lending in 2015 so far, with its share of the UK gross mortgage lending market at 3.5 per cent for the eight months to August.

Virgin Money, which is headquartered in Newcastle, with operations in Edinburgh and Norwich, runs around 75 branches across the UK.

It is one of a number of challenger banks, such as Metro Bank and Aldermore, set up to compete with the UK’S dominant high street lenders and has previously identified the SME sector as an area of growth for the business.

The bank, which floated last year having absorbed the former Northern Rock assets, said that gross mortgage lending jumped 38 per cent to £5.5 billion for the nine months to the end of September, while net mortgage lending almost doubled to £2.6bn from a year earlier.

It said its share of the gross mortgage lending market for the first eight months of the year rose to 3.5 per cent, from 2.8 per cent in 2014.

The bank, which is headed by chief executive Jayne-anne Gadhia and backed by founder Sir Richard Branson and US financier Wilbur Ross, added that its retail deposits lifted by 3 per cent to £23.7bn from the end of June.

Jayne-anne Gadhia
Jayne-anne Gadhia

In July Virgin reported core pre-tax profit was up 37 per cent at £81.8m in the first half, with the underlying net interest margin 22 points higher at 1.65 per cent. Core return on tangible equity rose by 2.6 points to 10.2 per cent.

Analysts at Citi said in a note that the bank’s growth had been stronger than anticipated, especially in credit cards, and this could led to upgrades of around five percent in earnings forecasts.

Gadhia said: “I am delighted with the strong performance of the business in all areas in the first nine months of 2015. I am particularly pleased with the continuing strength of our mortgage business.

“The demand for our new range of credit cards has exceeded expectations in the quarter as customers have responded to the quality and breadth of our proposition. As a result we remain confident that we can grow our credit card business to our target of £3bn of balances by the end of 2018.”

The bank said it hired George Ashworth from Dutch bank ABN Amro Lease, where he was managing director of the UK branch, to head its small and medium sized enterprises banking unit.

The group said it “continues to be confident of delivering on its medium-term targets as previously guided.”

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