Virgin Money profits boost as Clydesdale merger looms

Virgin Money, which is headquartered in Newcastle but employs 200 at its Edinburgh hub in the capital’s St Andrew Square, has reported a better-than expected rise in profits ahead of its merger with with CYBG.

For the six months to June 30, underlying pre-tax profit rose 10 per cent to £141.6 million, up from £128.6m.

Statutory profit before tax increased to £127.2 million, compared to £123.8 million in H1 2017

Other highlights included:

The figures come ahead of a proposed merger with the owner of the Clydesdale Bank, Yorkshire Bank and B brands.

Virgin Money chief executive Jayne-Anne Gadhia, said: “The recommended offer made by CYBG for Virgin Money in June reflects confidence in our strategy, our track record of delivery and the complementary models of the two businesses and will accelerate the delivery of our strategic objectives.”

The takeover values the bank, which is backed by Richard Branson, at £1.7 billion, but the deal is likely to lead to 1,500 job losses.

CYBG’s David Duffy will stay on as chief executive, leaving Ms Gadhia to serve in a consultancy role as his senior adviser.

Commenting on Virgin Money’s latest performance data, she added: “I am delighted to report that our customer-focused strategy of growth, quality and returns continued to drive strong financial and operational performance during the first half of the year. We also made good progress in delivering on our strategic initiatives.

“As a result of our disciplined approach to growth across our core markets and rigorous management of our cost base, underlying profit before tax was up 10 per cent to £141.6 million, our cost:income ratio improved to 49.9 per cent and our return on tangible equity was strong at 14.2 per cent.

“We continue to maintain a strong balance sheet, as shown in our common equity tier 1 ratio of 16.3 per cent. This benefited from recent changes to our capital models to ensure they fully reflected the excellent credit quality of our lending portfolios.

“Our SME savings franchise gathered real momentum and is on track to deliver £500 million of new deposits by the end of 2018. Our partnership with Virgin Atlantic has got off to a flying start and the development of our digital banking platform is progressing well.

“We remain focused on providing our customers with good value, straightforward products and an overall Net Promoter Score (NPS) of +37 continues to make Virgin Money one of the best-rated UK retail banks for customer satisfaction.

“I am delighted that we have continued to improve our gender pay gap, which reduced by a further 9 per cent over the last year. We remain committed to achieving 50:50 gender balance throughout the company by the end of 2020.”