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Virgin Money shrugs off unsecured debt concerns
Despite growing concerns over levels of unsecured debt in the UK, Virgin Money (VM.) has confounded the doubters by producing a strong set of lending results.
The company now has credit card balances of £2.7bn with what it describes as ‘stable customer behaviour and arrear levels’. Credit cards are the company’s highest growth sector.
Investec says that credit card growth in the first quarter was particularly strong, up £204m on the previous quarter to £2.65bn.
That was well above Investec’s growth forecast of £160m and around 70% above the consensus prediction of £120m. It adds ‘the £3bn year-end target looks a breeze’.
Virgin Money is bullish on the UK economy, saying it has remained stronger than expected following the referendum result. The company admits it watches the increase of consumer indebtedness closely but claims its credit card customers are ‘showing no signs of strain in the current market’.
The Financial Conduct Authority is taking action over persistent debt. According to investment bank Jefferies, this should not concern Virgin Money as it views the company’s book of credit card business as ‘prime’. Virgin says it uses a ‘strict and consistent application of underwriting standards’ which lowers the risk of lending.
The bank’s mortgage lending and deposit balances are up 3% apiece to £30.68bn and £28.98bn respectively in the first quarter of 2017. (DS)