Staff at Virgin Money are set to receive an average bonus of 11% of their salary following a 127% rise in underlying profit.
Jayne-Anne Gadhia, Virgin Money’s chief executive, said spirits were high at the bank’s Gosforth headquarters this week as it was revealed underlying pre-tax profits more than doubled to £121.2m in 2014.
Some of the 2,700 staff eligible for the bonus will receive the money in their March pay packet, on top of their normal bonus and £1,000 shares gifted on the bank’s listing.
Following its debut on the London Stock Exchange last year, Virgin Money is poised to enter the FTSE 250 as mortgage lending increased 11.8% to £21.9bn.
Mrs Gadhia reinforced the idea of Virgin Money entering the business lending market, mooted by the bank’s billionaire part owner Richard Branson while speaking to The Journal this week.
Mrs Gadhia said: “The board have always known that it makes sense to enter the business banking market. We’ve already done a lot of research in the area, particularly with existing Virgin Money customers, who have shown they want to use us for business banking.
“A lot of entrepreneurs identify with Richard Branson and his own journey, so the brand is already there. Business banking services is definitely a case of ‘when’ and not ‘if’.
“Like all of the parts of our business this will require gathering the right people to run it.”
The Virgin Money chief outlined some of the new services to be introduced in the second quarter of 2015, including home and motor insurance products, via its partnership with Ageas Retail.
Credit card balances rose 41% over the period to £1.1bn — in line with an ambition to reach £3bn by the end of 2018.
The “landmark” year for the bank was tempered only by an 82% fall in statutory pre-tax profit to £34m, owing to some £23m costs associated with last November’s IPO and a payment of additional consideration for Northern Rock plc to HM Treasury following its successful listing. £36m of the £50m payment to the Treasury, agreed as part of Virgin Money’s £747m deal to buy Northern Rock in 2011, was recognised in the 2014 accounts.
Retail deposit balances increased to £22.4bn, up 6% during the year while net lending stood at £2.3bn — a market share of 10.2%.
Mrs Gadhia said the bank was well on its way to becoming a credible and effective “challenger” to the large incumbent banks.
She added: “The term challenger bank can make us seem smaller than we actually are.
“We’ve now got a Common Equity Tier 1 ratio of 19%, and we’re about to be admitted to the FTSE 250. Both of these features give us more status than the term challenger implies.
“We are challenging the established banks in the sense that we have no legacy and we’re bringing new faces to the industry.”
Mrs Gadhia said that while there were no public plans to create more jobs in line with growth, the bank’s ambition was to play a key role in cultivating a healthy labour market in the North East.