By Aashika Jain
(Reuters) - Virgin Money Holdings (UK) Plc (L:VM), an emerging challenger to Britain's big four banks, said its full-year profit more than doubled as margins improved and it sold more mortgages.
Shares of Virgin Money, set to enter the FTSE-250 index this month, rose more than 7 percent on Thursday to their highest since the bank went public in November.
Virgin Money, part-owned by billionaire entrepreneurs Sir Richard Branson and Wilbur Ross, forecast its share of the gross mortgage lending market would remain in excess of 3 percent for years to come, despite increasing competition.
Its share of the mortgage market in January was nearly 4 percent, the bank said, citing Bank of England data. Its mortgage balances rose 12 percent to 21.9 billion pounds in 2014 versus market growth of 1.4 percent.
Virgin Money is among a number of new banks looking to break the dominance of Lloyds Banking Group Plc (L:LLOY), Royal Bank of Scotland (L:RBS), Barclays Plc (L:BARC) and HSBC (L:HSBA), which account for more than three quarters of lending in the UK.
The bank's underlying pretax profit rose to 121.2 million pounds for the year ended Dec. 31 from 53.4 million pounds a year earlier. Net interest income rose 27 percent.
"We set out to be a credible and effective challenger to the large incumbent banks and I believe we have laid an excellent foundation on which to realise our ambition," Chief Executive Jayne-Anne Gadhia said.
Gadhia, the first female CEO of a listed British bank, said net interest margin - which increased by 24 basis points to 1.50 percent in 2014 - would keep rising as Virgin Money introduces more credit card lending and optimised liquidity.
The bank's ratio of underlying costs to income in 2014 improved to 68.7 percent from 77.2 percent. Gadhia said she expects it to reach 50 percent by 2017.
She said she hoped Britain's Competition and Markets Authority would, as part of its investigation of personal current accounts and small business banking, look into whether free in-credit banking was good for competition.
She also hopes the watchdog will consider introducing full account portability, which would enable customers to keep their existing account details when they change banks. The CMA will decide by May 2016 on which measures to take.
Virgin Money's shares rose 5.2 percent to 335.5 pence at 1130 GMT.