Falling costs, rising margins and selling more credit cards and mortgages helped Virgin Money (VM.) beat expectations in its first full financial year since listing in November 2014.

Shares climbed 7.7% to 366.4p at one point after pre-tax profits in 2015 were 11% higher than expected at £160.3 million – a 53% improvement in 12 months.

The market also welcomed a 4.5p a share total dividend, after management recommended a 3.1p a share final payment.

The results end the run of disappointing results posted by banks in the past week. The market gave Barclays (BARC), Standard Chartered (STAN) and Royal Bank of Scotland’s (RBS) finals a cold reception.

Even Lloyds Banking (LLOY), which saw its shares rise by more than 10% on results day, missed expectations.

Web - Virgin Money - 02 March 2016

Virgin’s credit card balances improved by 44% to £1.6 billion, while the value of the mortgage book expanded by 16% to £25.5 billion during the year.

Margins improved from the 1.5% recorded at the end of 2014 to 1.65%, higher than the 1.61% the market had pencilled in.

This was helped by a costs falling to 63.6% of income from 72.5% a year earlier. Bad debts were almost £2 million lower than anticipated at £16 million.

Other highlights included the bank taking 12% more cash on deposit to £25.1 billion compared to the previous year, and a common equity tier 1 ratio of 17.5%, which will offer protection against any rise in bad debts.

Virgin Money now boasts a 10.9% return on equity, up from 7.4% in 2014, meaning that it makes 10.9p on every £1 its shareholders invest in the business.

Issue Date: 02 Mar 2016