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Virgin Money delivers first underlying profit since Northern Rock takeover

MARKET-BEATING growth in mortgages and savings helped Virgin Money deliver its first underlying profit since its takeover of Northern Rock today.

The bank, which bought the former failed lender from the government in 2011, made an underlying profit of £53.4 million, against losses of £2.5 million a year earlier.

Virgin said retail savings balances were up 17% to £21.1 billion - in excess of market growth of 5% - while mortgage balances rose 17% to £19.6 billion, compared with market growth of 1%.

The group also reported progress in its credit cards business after it completed the acquisition of £1 billion of Virgin Money credit cards from its partner MBNA.

Chief executive Jayne-Anne Gadhia, who received a pay package worth £1.2 million last year, said the group had maintained its "strong momentum" in mortgages and savings.

According to the company's annual report, her base salary will rise from £550,000 to £637,000 this year but the maximum bonus will be cut to 200% of salary - from 300% previously - in line with new European rules. The overall maximum figure available is £2.3 million.

Virgin Money employs more than 2,500 staff, with 1700 people based at Gosforth near Newcastle and another 200 at Norwich. It is owned by Sir Richard Branson's Virgin Group, Wall Street billionaire Wilbur Ross and an Abu Dhabi investment fund.

The business acquired a network of 75 branches, a £14 billion mortgage book and retail deposits worth £16 billion when it bought Northern Rock in late 2011. But the failed lender's multibillion pound book of toxic loans was left in state hands to be wound down.

Virgin said its proportion of mortgages three or more months in arrears was 0.35%, well below the industry average.

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