there’s money and there’s virgin money...clear strategy to deliver mid- teens rote in the...

THERE’S MONEY AND THERE’S VIRGIN MONEY

Virgin Money at a glance

A strong, uncomplicated, retail-only bank

Unburdened by legacy

Proven track record of growth, quality and returns

Consumer focus of the Virgin brand

Underlying profit before tax increased by 127 per cent to £121.2 million in 2014, from £53.4 million in 2013

Clear strategy to deliver mid-teens ROTE in the near-term

Sizeable and scalable operating platform

Conference Presentation

A strong record of Growth, Quality and Returns

2014

Change on 2013

Cost of Risk 7bps (53%)

Net Promoter

Score +16 +5 pts

Leverage Ratio 4.1% 30bps

CET1 Ratio 19.0% 3.5ppts

2014 Change on 2013

Statutory PBT £34.0m (82%)

Underlying PBT £121.2m 127%

Underlying NIM 1.50% 24bps

Underlying RoTE 7.4% 510bps

2014

Change on 2013

Mortgages balances 21.9bn 11.8%

Savings balances 22.4bn 5.9%

Credit Card balances 1.1bn 41%

Non Interest Income

£72.1mn -

Growth Quality Returns


We have a clear strategy to deliver mid-teens ROTE

Mid-teens ROTE

7.4%

Strong Asset Quality

Lending Funding

NIM Expansion

Operational Leverage

Capital Optimisation

Non-Interest Income

• Maintain gross mortgage market share of over 3.0%

• Grow credit card balances to at least £3 billion in 5 years

• Grow deposits, with expected market share of stock under 2.0%

• LDR in excess of 100%

• Maintain current asset quality whilst continuing to grow

• Increase balance sheet exposure to credit cards

• Widen retail margins with increasing BBR

• Grow retail NIM towards 170bps in the near to medium term

• Tight cost management

• Highly scalable platform

• Target cost:income ratio of around 50% in the near to medium term

Minimum: • 12.0% CET1 • 15.0% total

capital ratio • 3.75%

leverage ratio

• Significant capacity for growth and increasing share of wallet

Growth Quality Returns

2014 ROTE

Targeting mid-teens ROTE in the near term

Source: Company Information for all data


Building sustainable growth for the future

Core Systems

Single customer view

Channels (origination and servicing)

Digital Stores Contact centre Intermediary Lounges Social media

Mortgages Credit cards Current accounts Savings Investments Insurance

Integration middleware

Sizeable and scalable platform


The Virgin brand: a consumer champion for 40 years


The Virgin Money difference, drives superior returns

• The coolest FS brand, 2013 and 2014

Net Promoter Score Staff Engagement

Mass appeal and footprint Differentiation

11% 5%

13% 16%

11%

1% 7%

13% 8%

3% 6% 7%

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Customer Base UK Population Distribution


Delivering the Virgin brand difference

Virgin Money Giving Virgin Money Lounges


Driving commercial advantage through the Virgin brand


Successful acquisition and

integration

Straightforward and transparent

products

Credit card capability

Powerful and disruptive brand

Strategic Partnerships

Sizeable and scalable operating

platform

Ready to disrupt UK retail banking


THERE’S MONEY AND THERE’S VIRGIN MONEY

Q&A

Disclaimer

This document contains certain forward looking statements with respect to the business, strategy and plans of Virgin Money Group and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about Virgin Money Group’s or its directors’ and/or management’s beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, plans and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements made by the Group or on its behalf include, but are not limited to: general economic and business conditions in the UK and internationally; inflation, deflation, interest rates and policies of the Bank of England, the European Central Bank and other G8 central banks; fluctuations in exchange rates, stock markets and currencies; changes to Virgin Money’s credit ratings; changing demographic developments, including mortality and changing customer behaviour, including consumer spending, saving and borrowing habits; changes in customer preferences; changes to borrower or counterparty credit quality; instability in the global financial markets, including Eurozone instability and the impact of any sovereign credit rating downgrade or other sovereign financial issues; technological changes; natural and other disasters, adverse weather and similar contingencies outside Virgin Money’s control; inadequate or failed internal or external processes, people and systems; terrorist acts and other acts of war or hostility and responses to those acts; geopolitical, pandemic or other such events; changes in laws, regulations, taxation, accounting standards or practices; regulatory capital or liquidity requirements and similar contingencies outside Virgin Money’s control; the policies and actions of governmental or regulatory authorities in the UK, the European Union, the US or elsewhere; the implementation of the EU Bank Recovery and Resolution Directive and banking reform, following the recommendations made by the Independent Commission on Banking; the ability to attract and retain senior management and other employees; the extent of any future impairment charges or write-downs caused by depressed asset valuations, market disruptions and illiquid markets; market relating trends and developments; exposure to regulatory scrutiny, legal proceedings, regulatory investigations or complaints; changes in competition and pricing environments; the inability to hedge certain risks economically; the adequacy of loss reserves; the actions of competitors, including non-bank financial services and lending companies; and the success of Virgin Money in managing the risks of the foregoing. Any forward-looking statements made in this document speak only as of the date they are made and it should not be assumed that they have been revised or updated in the light of new information of future events. Except as required by the Prudential Regulation Authority, the Financial Conduct Authority, the London Stock Exchange plc or applicable law, Virgin Money expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained in this document to reflect any change in Virgin Money’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

there’s money and there’s virgin money...clear strategy to deliver mid- teens rote in the...

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