Virgin Money sees profits rise 53 per cent

The result marks a strong performance for the lender, which employs 200 at its headquarters in the Scottish capital, in its first full financial year since listing on the stock market.

Virgin said its funding position was strong with record deposit balances.

Statutory pre-tax profit leapt from £34m to £138m 2015, the bank said.

Shares jumped 8 per cent to 367.6p in morning trading on the news.

The shares have risen just over 30 per cent since it listed in November 2014, meaning the company is worth £1.6bn.

Balances rose by 12 per cent to £25.1bn, giving the bank a 1.5% share of the savings account market.

The savings market had grown strongly, helped by a positive economic backdrop and “supportive” government policy on Isas, Virgin said.

It also highlighted “improving consumer confidence in the UK”, which it said was responsible for the rise in demand for unsecured borrowing.

Virgin said credit card balances were 44 per cent higher at £1.6bn, giving the bank a 2.5 per cent market share.

It expected to increase credit card balances to at least £3bn by the end of 2017 - ahead of target.

Its growth in mortgage lending, deposit balances and credit card balances outstripped the market, according to the company.

Mortgage balances increased by 16 per cent to £25.5bn. In contrast, overall mortgage lending across the whole market edged up just 1.8 per cent last year.

Virgin said its mortgage and savings business remained the key profit driver, contributing 69 per cent of total income last year.

The mortgage business was dominated by residential lending (83 per cent), with buy-to-let accounting for 17 per cent.

The bank said its gross mortgage lending was £7.5bn, up 29 per cent on the previous year, giving it a market share of 3.4 per cent.

In December, the Bank of England’s Financial Stability Report raised concerns over the growth in buy-to-let lending and the impact that a shift to the private rental sector could have on market stability.

Virgin said tax and regulatory changes may make buy-to-let less attractive to investors: “These changes have added uncertainty to the outlook of buy-to-let for both landlords and lenders, particularly over the medium to long-term.”

Looking to 2016 the bank said it was aware of the risks related to the UK referendum on EU membership, as well as market turbulence caused by the slowdown in emerging markets and falling commodity prices.

“All of these have the potential to adversely impact the UK economy,” Virgin Money said.