Virgin Money to move into credit cards; appoints chairman designate

Source: Virgin Money

Glen Moreno is appointed as Chairman Designate of Virgin Money.

o Glen Moreno will replace Sir David Clementi as Chairman in mid-2015
o He will join the Board as an Independent Non-Executive Director and Chairman Designate, from January 2015
o His appointment remains subject to regulatory approval
Strong growth in profits and returns in first half of 2014
o Underlying profit before tax increased to £59.7m (1H 2013: £13.1m)*
o Total income increased 28.3% to £210.0m (1H 2013: £163.7m)
o Growth in underlying net interest margin (NIM) to 1.43% (1H 2013: 1.10%)
o Increase in underlying return on tangible equity to 6.2% (1H 2013: (1.5)%)
o Statutory cost:income ratio improved by 12.5 percentage points to 70.9% (1H 2013: 83.4%)
Balance sheet strength and asset quality maintained
o Strong Common Equity Tier 1 ratio of 14.4% on a Basel III basis (31 Dec 2013: 15.3%)
o Leverage ratio increased to 3.8% (31 Dec 2013: 3.7%)
o Mortgages more than 3 months in arrears reduced to 0.32% (31 December 2013: 0.35%)
o Underlying cost of risk reduced to 11 basis points (30 June 2013: 13 basis points)
o Successful debut issue of £160 million Additional Tier 1 capital instrument in July 2014
Significant progress made in the development of our business lines
o On target to launch a wholly owned credit card business in the second half of 2014, with the ambition to grow the credit card book to £3 billion within five years
o 3.7% growth in gross mortgages to over £20bn (31 December 2013: £19.6bn)
Continued commitment to customers and communities
o Creation of 200 jobs in 2014 to support further growth
o Donations to charity through not-for-profit fundraising website Virgin Money Giving reached £300 million since launch
Virgin Money is incorporated in England
o Our registered office is in Gosforth, Newcastle upon Tyne

Virgin Money today announces that Glen Moreno is to join the Board of Virgin Money as an Independent Non-Executive Director and Chairman Designate, with effect from January 2015, subject to regulatory approval. He will assume the Chairmanship of Virgin Money in mid-2015, taking over from the current Chairman, Sir David Clementi.

Sir David Clementi, Chairman of Virgin Money said: "The appointment to the Board of Glen Moreno is part of the long-term succession planning at Virgin Money and I am delighted he has agreed to join us. I became Chairman in October 2011 and committed to serving for three years. During that time the company has successfully gone through the biggest transition in its history following the acquisition of Northern Rock. I am proud of what the company has achieved and look forward to working with Glen in the coming months before I hand over the Chairmanship to him. I have agreed to remain in office for a further nine months before handing over to Glen."

Glen Moreno is presently Chairman of Pearson PLC and a Non-Executive Director of Fidelity International Limited. He has more than four decades experience in business and finance. His earlier positions include serving as Deputy Chairman of The Financial Reporting Council, Senior Independent Director at Lloyds Banking Group plc, Senior Independent Director of Man Group plc and Acting Chairman of UK Financial Investments Limited, the company set up by HM Treasury to manage the government's shareholdings in UK banks.

Glen Moreno said: "I have huge admiration for the way in which Virgin Money has continued to act as a voice of competition in the banking sector. The bank's strategy has delivered sustainable, responsible growth and a strong return to profitability. It is now one of the best performing challenger banks and I look forward to joining Virgin Money at such an exciting time."

Jayne-Anne Gadhia, Chief Executive Officer of Virgin Money said: "Glen will bring a wealth of experience to the Board of Virgin Money and add significant value as we continue to grow the business. Sir David Clementi has led the Board with distinction during the past three years and I am grateful he is staying with the company to ensure a smooth transition. He has offered huge support and wise counsel during a period of significant business change and growth."
Virgin Money also announces its trading update for the six months ended 30 June 2014

Commenting on the 1H 2014 results, Jayne-Anne Gadhia said: "I am delighted to report that the strong momentum seen in our 2013 results has continued into the first half of this year, as we continue to make progress against our strategy of delivering profitable growth while maintaining a strong capital position and a high quality asset base. Strong revenues, driven by mortgages and savings, combined with improving net interest margins and controlled cost growth, have resulted in an improved underlying return on tangible equity of 6.2% for the first half of 2014.

"We continue to look for opportunities to enhance the service we provide to customers and to build further on the growth we have achieved thus far. Despite the investment in building our capabilities and associated infrastructure our cost income ratio has continued to decrease. Similarly, the growth in our mortgage and credit card businesses has not been at the expense of asset quality, as we maintain our rigorous approach to underwriting and risk management.

"Looking to the future, we are not burdened by the historical conduct and legacy challenges that face many incumbent banks. We have a powerful brand, a strong balance sheet, a strong core business franchise and through our ambition to make 'everyone better off', a clear set of values that live throughout our business. For all these reasons, we remain confident that we can continue to make real progress on our quest to make banking better and can continue to grow our business strongly, profitably and responsibly."

*Statutory profit before tax was £6.7 million (1H 2013: £199.7 million), reflecting, amongst other items, the charge of £16.6 million in FSCS levies and a £26.0 million change in the provision for contingent consideration payable to HM Treasury in the event of a successful, profitable IPO of the business between 2012 and 2016. This provisioning change reflects the view of the company's Board of the possibility of an IPO. 1H 2013 statutory profit before tax was positively impacted by a £202.0 million gain on sale of the credit cards subsidiary to MBNA

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