Virgin Money mortgage book grows to £20.9bn ahead of IPO

The bank said it was confident of its position following the Bank of England's issue of guidance on leverage ratios

Virgin Money chief executive Jayne-Anne Gadhia
Virgin Money chief executive Jayne-Anne Gadhia

Virgin Money has reported 3% growth in its mortgage book to £20.9bn in the third quarter of 2014.

The North East-based bank, which recently postponed its planned IPO due to volatile market conditions, issued a trading performance for the three months to the end of September.

During the period the company estimated it took a 4.5% market share of new mortgage applications.

On Friday the Bank of England revealed it intends to increase the minimum reserves to loans balance of banks, known as the leverage ratio.

At 3.8% leverage ratio, Virgin Money said it was confident of its position with regard to the new framework, which could see the required leverage ratio rise to 4.95% from 2019.

During the quarter the Company increased retail deposit balances by over 3% to £21.8bn, and successfully issued £1bn of Residential Mortgage Backed Securities.

Profitability improved during the quarter with an underlying cost:income ratio in line with the company’s expectations, and impairments performing better than expected.

Jayne-Anne Gadhia, chief executive officer at Virgin Money, said: “Following a very strong performance in the first half of the year, we have accelerated our growth in the third quarter of the year, while continuing to build a high quality balance sheet to deliver increasing returns to our shareholders.

“One of Virgin Money’s core strengths is our robust capital position and high asset quality. As such we welcome the new leverage ratio framework announced by the Financial Policy Committee, and are pleased to note that we operate in excess of the recommended requirements.

“In mortgages and savings, we achieved strong growth during the quarter, particularly in terms of new mortgage applications where we took a market share of around 4.5%. We also saw strong growth in our net interest margin and maintained a tight grip on costs despite investing in the build of our credit card and current account platforms.

“Looking to the future, we have a powerful brand, a strong balance sheet, a strong core business franchise and considerable opportunities to continue to extend our product range. The business has performed strongly in 2014 to-date and we are confident that we can continue to deliver progress against our strategy as we continue to grow the business.”

During the period Richard Hemsley was appointed as chief banking officer, and will join the business, subject to regulatory approval, in 2015.

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