Virgin Money profits boosted by credit card sign-ups

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According to Virgin Money, households are increasingly turning to credit cards as the big bank revealed an increase in profits.

Bosses said pre-tax profits soared to £315m in the six months to the end of March, from just £72m in the same period a year ago.

However, that was down from profits in the previous six months to the end of September, which stood at £345m, as the bank set more money aside for potential provisions over the course of the year. last period.

In the half-year to September, Virgin Bank released £169m previously set aside for Covid provisions, but set aside £21m for the current period.

The bank said it was too early to tell whether the cost of living crisis was affecting customers, but warned it expects the economic outlook to be more uncertain.

He said: “Our strategy remains the right one in a macroeconomic environment that has become more uncertain over the six months.

“After a period of strong recovery in Gross Domestic Product (GDP) as Covid restrictions were lifted and consumer spending levels improved, the impact of rising inflation has seen expectations d ‘new growth begin to temper.’

The warning came as the major bank said it had seen particularly strong growth in credit card sign-ups.

Unsecured lending rose 7% in the period to £5.8bn, while by comparison business lending fell 2.5% to £8.3bn.

The bank added that it was not exposed to the conflict in Ukraine, but said it was monitoring the situation to ensure there was no ripple effect on its business.

He said: “As a UK national bank, the group has no direct lending exposure to Ukraine or Russia, but we are carefully monitoring any second-order impacts from the conflict, particularly on inflationary pressures in the UK.

“To date, we have seen only limited changes in the quality of assets in the portfolios, but we have taken steps to factor in the higher cost of living into our affordability assessments.

“It is still too early to assess the full implications of the changing environment and we will continue to assist customers as needed.”

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.

The bank also added that inflationary pressures were affecting cost-cutting measures, which included branch closures, as other costs had risen.

Costs are only 1% lower due to higher spending on its digital transformation and salary increases for staff, he said.

The size of Virgin Money’s mortgages fell slightly in the six-month period from the previous six months by 0.5% to £57.8bn, with bosses saying the bank preferred to “negotiate tactics” in a competitive market.

Chief Executive David Duffy admitted that the macroeconomic outlook is uncertain and consumers are under increased cost pressures.

He added: “We have positive momentum in attracting new customers to Virgin Money thanks to record credit card sales, good growth in personal current account openings and strong uptake of our new digital no-fee business current account. .”

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