Virgin Money’s profits soaring as households turn to credit cards

“We have positive momentum in attracting new customers

Households are turning to credit cards in increasing numbers, according to Virgin Money.

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

However, this was down on the profits for the previous six months to the end of September, which sat at £345m.

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

The bank said it is too early to say whether the cost-of-living crisis is affecting customers but did warn it expects the economic outlook to be more uncertain.

It said: “Our strategy remains the right one against a macroeconomic backdrop that has become more uncertain over the course of the six months.

“Following a period of strong recovery in gross domestic product (GDP) as Covid restrictions were lifted and consumer spending levels improved, the impact of higher inflation has seen expectations for further growth start to temper.”

The warning came as the high street bank said it saw particularly strong growth in credit card sign-ups.

Unsecured lending grew 7% during the period to £5.8 billion, while, by comparison, business lending fell 2.5% to £8.3bn.

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

The size of Virgin Money’s mortgage lending fell by 0.5% to £57.8bn, with bosses saying the bank preferred to “trade tactically” in a competitive market.

Chief executive David Duffy admitted the macroeconomic outlook is uncertain and there are increased cost pressures on consumers.

He added: “We have positive momentum in attracting new customers to Virgin Money through record credit card sales, good growth in personal current account openings and a strong uptake of our new digital fee-free business current account.”