A RISE in mortgage lending helped North-East bank Virgin Money report post a sharp 37 per cent increase in underlying pre-tax profit in its latest results.

The strong performance has also meant the group has declared an interim dividend of 1.4p a share, which will be paid in October this year.

Gross mortgage lending rose 44 per cent to £3.6bn in the six months to June 30, compared to the same period in 2014, while mortgage balances increased to £23.6bn - an increase of 8 per cent compared to 2014.

The Newcastle-based lender, which listed last year and is backed by billionaire Richard Branson, said its credit card business is now fully operational on Virgin Money’s own platform and new business has been strong since the successful migration. The bank reported it was well positioned to meet its target of £3bn of credit card balances by the end of 2018.

Jayne-Anne Gadhia, Virgin Money Chief Executive, said: “I am pleased to report a 37 per cent increase in underlying profit for the first half of 2015. This was driven by balance sheet growth, strong improvement in our net interest margin and effective cost management.

"We continued to increase our share of the mortgage market while protecting the quality of our book. Gross mortgage lending increased by 44 per cent to £3.6 billion in the first half of the year, representing a 3.8 per cent market share of gross lending and a 20.5 per cent share of net lending to the end of May.

"In our credit card business we successfully completed the migration of the credit cards acquired from MBNA to our own platform and launched our new range of cards to customers. This puts us in a strong position to grow our credit card business to our target of £3 billion of credit card balances by the end of 2018.

"We remain focused not only on delivering growth but also generating sustainable returns to shareholders. As such, we are pleased to announce that, after taking into consideration our strong performance in the first half of the year and the growth prospects of the company, the Board has declared an interim dividend of 1.4 pence per share.”

Virgin Money employs more than 2,500 staff, with about 1,700 people based in Newcastle.

In 2011, it paid the Government £747m for the so-called ‘good bank’ element of Northern Rock, while the ‘bad part’ was subsumed into UK Asset Resolution, which also runs the former Bradford & Bingley mortgage book.