Credit card

Virgin Money profits jump as credit card sales hit record highs

Virgin Money’s profits rose on strong growth in unsecured lending, including new credit card customers.

The Newcastle-based challenger bank said underlying pre-tax profit for the six months to March 31 rose 58% to £388m, from £245m in the same period of the year previous period, although a decline of £556m over the previous period.

In its interim financial results, Virgin said it had attracted new customers to its current accounts via attractive switch offers and now had around 8% of the UK current account market.

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Unsecured lending rose 7% to £5.8bn, driven by record sales of around 175,000 credit cards. The bank has added “installment credit” capability to its credit cards, allowing customers to access “buy now, pay later” features in the mobile app.

Growth in unsecured loans was offset by a reduction in mortgages and business loans. Total customer deposits fell 3.7% to £64.4bn, which the bank said reflected “prudent management” and mortgage balances were reduced by 0.5% to 57, £8 billion. Business loans fell 2.5% to £8.3bn.

Virgin said the mortgage market remained competitive and pointed to a slowdown in demand following the stamp duty holiday in the first half of the financial year.

Elsewhere, the bank said it had seen few instances of fraud associated with government bounce-back loans and some business customers opted to repay in full while others made monthly payments.

David Duffy, Managing Director: “We have made good progress against our strategy, while achieving a significant increase in our profits. We have positive momentum in attracting new customers to Virgin Money thanks to record credit card sales, good growth in personal checking account openings and strong uptake of our new no-fee digital business checking account.

“We have raised our net interest margin guidance given strong growth in unsecured lending, combined with rising interest rates. Looking ahead, although the macroeconomic outlook is uncertain and consumers are experiencing increased cost pressures, we remain cautiously provisioned and are confident in the quality of our loan portfolio.”