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Virgin Money has posted an 8 per cent surge in its credit cards business but has warned of an increase in competition as the watchdog intensifies its scrutiny of the sector.
The Newcastle-based lender said in its first quarter update to the market that credit card balances have grown to £2.7bn as of the end of March, up from £2.4bn at the end of last year.
However, the bank warned that “cards competition has increased”, but noted that it has not engaged in a price war to reach the top of comparison tables.
Virgin Money said: “We prioritise asset quality over balance growth, despite which we remain confident of achieving £3bn of prime credit card balances by the end of 2017.”
The Richard Branson-backed bank’s results come soon after the Financial Conduct Authority clamped down on consumer credit, proposing that lenders have to do more for customers struggling with severe credit card debt which in some cases means waiving interest.
Virgin Money said on Tuesday that it does not expect “there will be any material financial impact” if the FCA’s plans are implemented in their current form.
The bank said that although the UK economy has remained stronger than expected following the Brexit vote, it will watch the increase in consumer indebtedness closely.
Virgin Money lent £2bn of mortgages over the quarter, representing a 3 per cent market share. Net lending amounted to £900m, marking a 12 per cent share.
Deposits swelled by £900m during the quarter to £29bn.