Virgin Money posts robust H1 profit on surge in mortgage lending | Fin24
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Virgin Money posts robust H1 profit on surge in mortgage lending

Jul 28 2015 17:08

England - British bank Virgin Money said its first-half profit jumped 37%, bolstered by a surge in mortgage lending.

The bank, which listed last year and is backed by billionaire Richard Branson, said it expected a short delay in the delivery of mid-teens return on tangible equity due to the new 8% tax surcharge on UK banks' profits to be levied from January 2016.

Challenger banks such as Virgin Money and TSB Banking Group were previously exempt from the bank levy given the small size of their balance sheets, but will now have to pay an 8 percent surcharge on their profits.

Gross mortgage lending for the first-half ended June 30 surged 44% to £3.6bn as the bank won 3.8% of gross lending market share at the end of May 2015, Virgin Money said on Tuesday.

Virgin Money said a competitive mortgage market put pressure on asset spreads in the first half of 2015, and it expected competition to continue to remain a headwind in the second half of the year.

Underlying pretax profit rose 37% to £1.8m, while net interest income jumped to £220.3m from £172.9m a year earlier.

British lawmakers and regulators want to break the dominance of Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC and the UK arm of Spain's Santander.

TSB Banking Group told Reuters last week that it would urge the government to consider raising the lower limit for exemption of the surcharge to about £200m or £250m.

Virgin Money said it did not expect any material impact on its business relating to the new tax regulations for buy-to-let landlords announced in the budget earlier this year as the bank is not exposed to a high proportion of buy-to-let business.

Shares in Virgin Money have risen about 32% since their stock market listing last November, and took their biggest one-day hit when the surcharge on bank profits was announced.

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