Credit card hit for Virgin Money

VIRGIN Money has cut income from its credit card unit by nearly £8m but impressed the City by reducing costs faster than expected. The challenger bank is being bought by Clydesdale and Yorkshire Banking Group (CYBG) in a £1.7bn deal.

Ahead of the tie-up Virgin Money’s credit card unit has attracted City scrutiny, including profits it booked early under a model of projected consumer behaviour, using an accounting practice known as EIR. In mixed half-year results yesterday, Virgin Money reduced profits it had previously recognised by £5.4m and took a £2.4m hit on the “present value of income not yet earned”. Pre-tax profits were up 3pc at £127.2m.