* Analysts say surcharge will hit challenger banks* Virgin Money CEO says won't curb business growth* Plans to restructure mortgage business due to tax changes* Shares jump nearly 10 pct after H1 profit surges (Adds CEO comment, context)By Aashika JainJuly 28 British lender Virgin Money does not expect a new bank surcharge to reduce growth in its business overall and will adapt its buy-to-let mortgage business to account for tax changes coming into effect in 2017, its CEO said. Virgin Money, which counts itself among the bigger challenger banks in Britain and went public in November, reported a 37 percent jump in first-half profit on Tuesday, sending its shares up nearly 10 percent. It was bolstered by a surge in mortgage lending as it expanded its market share to 3.8 percent as of the end of May, from 3.6 percent in the first quarter.
British banks face a new 8 percent surcharge on annual profits above 25 million pounds from January 2016, to replace the balance sheet levy from which so-called challenger banks are exempt. Analysts have said the surcharge could make it more difficult for fledgling banks to challenge the big lenders. Virgin Money CEO Jayne-Anne Gadhia said the bank's target to deliver a mid-teens percentage return on tangible equity would be delayed by a year to 2017 due to the tax surcharge, but she did not expect the tax to curb business growth. British Chancellor George Osborne in his budget this month also said tax relief on mortgages for wealthy landlords would be cut from 2017.
Gadhia, who is the first female CEO of a listed British bank, said she did not expect any material impact on Virgin Money's business relating to the new tax regulations as it did not have a high proportion of buy-to-let mortgages. However, it would restructure its mortgage business. The new regulations are expected to prompt many landlords to let properties via a company to get more favourable tax relief."We will be reconstituting our buy-to-let business such that we are able to offer buy-to-let mortgages to landlords who buy their business through corporate entities but that does not mean we'll be moving into commercial mortgages, for example," Gadhia told Reuters in a telephone interview.
Buy-to-let loans account for 16 percent of Virgin Money mortgages, a spokesperson for the bank said. The lender reported a 44 percent surge in gross mortgage lending for the first-half ended June 30 to 3.6 billion pounds, but said a competitive mortgage market put pressure on asset spreads in the first half of 2015, which would continue in the second half. Shares in Virgin Money surged as much 9.5 percent after its results and have now risen about 32 percent since listing in November. The bank said underlying net interest margin for the first half rose to 1.65 percent, from 1.43 percent last year, and it posted a nearly 28 percent jump in net interest income for the period to 220.3 million pounds. British lawmakers and regulators want to break the dominance of Lloyds Banking Group, Royal Bank of Scotland , Barclays Plc, HSBC and the British arm of Spain's Santander.
(The writer is a Reuters contributor. The opinions expressed are his own.)By Chris TaylorNEW YORK, June 24 When Kristi Sullivan quizzed her husband about how much money she made last year, the Denver financial planner was shocked to discover he was off by a wide margin. Although they have been married for 18 years, with two kids, her hubby missed the mark by $8,000."He should have known, because I told him once," laughs 43-year-old Kristi. "But I'm not sure that men always listen."And that's in a power marriage comprised of a certified financial planner and a management consultant. Imagine how clueless the rest of us are about our partners' finances. Boston-based money managers Fidelity Investments asked that very question in its just-released 2015 Couples Retirement Study. It found that an amazing 43 percent of people could not say what their partner earns. Most couples claim to communicate about money exceptionally well, notes John Sweeney, Fidelity's executive vice president of retirement & investing strategies."Despite that, 10 percent of people guessed (the salary of their significant other) wrong by $25,000 or more," Sweeney says. Before we scoff at clueless partners, though, think about the nature of the modern economy. Within a few years, an estimated 40 percent of the workforce will be comprised of contractors, freelancers or temp workers, according to a study by software company Intuit Inc.
And as any freelancer knows, income can be wildly different from one month to the next - just as it is for Kristi Sullivan, a fee-only planner who does not know her annual earnings "until December 31.""Our grandparents worked at a company for 40 years and brought home steady paychecks," says Sweeney. Today's economy is project-based, "which makes predicting income extremely hard," he notes. Partners may be guessing off-the-mark for legitimate reasons, but couples are not where they need to be, either in understanding their finances, or each other. The reason often comes down to deep-seated emotions, experts say."A lot of it is about fear," says Elle Martinez, the Raleigh, N. C.-based founder of CoupleMoney.com and host of the Couple Money podcast on iTunes. "Maybe you are embarrassed about your salary, or maybe you have debts."How can people get more comfortable with sharing numbers with their significant others?
JOINING FORCES Step one is basic transparency. Have at least one joint account to handle everyday expenses and monthly bills, for example. And going over the joint tax return before April 15 will provide the headline numbers of what each partner is bringing in. To get a real money conversation started, one clever strategy is very Zen. If you want to know about wages, don't come right out and ask. Instead, go at the issue indirectly."I know it sounds counterintuitive, but talk about your goals instead," says Martinez. "Something simple, like wanting to go on vacation next year."
Then you can get into where you are right now financially, and how you can achieve that goal together, Martinez says."It's an easy way to get a discussion started, without directly asking how much money they make," she adds. Interpersonal habits can be hard to break, though, especially when you've been in a relationship for many years. In those cases, consider drafting a third party to broach issues you're not comfortable bringing up on your own. Your financial planner or accountant, for instance, can give both of you financial updates that can fill in any blanks. After all, both partners deserve to know where things stand financially, even if one of you tends to handle the bills or the investments. If you don't have such a support team in place, here's another simple option: Take Fidelity's nine-question Couples Quiz