New current account openings have jumped at Virgin Money driven by demand from personal banking and business customers.
The challenger bank - which has its main offices in Newcastle, Leeds and Glasgow - said current account sales rocketed 45% in its third quarter of 2022 as unsecured lending grew 3.8% to £6bn. The rise was driven by card balances thanks to higher retail spending and new digital propositions. Around 160,000 new credit cards were opened during the period.
But in an indication it was strapping in for possible challenges posed by the rising cost of living, Virgin Money said it had tightened up its lending criteria across all of its portfolio, while it also said arrears were low with "limited signs of stress". Mortgage lending remained broadly flat at £57.7bn, reflecting what the bank called "continuing competitive conditions".
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Business lending was "stable" at £8.3bn against what was described as a subdued market backdrop, as the bank pointed to a reduction in Government support scheme balances offset by growth in "business as usual" balances. Higher interest rates were said to have benefited margins and the lender now expects full year net interest margin (NIM) - a key measure of performance - to be higher than it previously anticipated at 185 basis points.
David Duffy, Virgin Money chief executive officer, said: "Virgin Money has had another positive quarter, financially and strategically. We've grown our balance sheet across all target areas, grown our customer base with innovative and compelling products, and recently announced Slyce, our responsible buy now pay later product. I was also pleased to commence our buyback programme in the quarter.
"Looking out into an uncertain economic environment, while our asset quality remains resilient and customers aren't yet showing signs of financial stress, we are helping our customers and colleagues navigate what will be a more difficult period for many."
In a section of the update addressing economic outlook, the bank said: "We remain cautious as the 海角视频 economic outlook has weakened, reflecting intensified global inflationary pressures. The BoE expects inflation to peak at 11% this year and GDP growth to slow sharply across 2023 and 2024, though expectations for unemployment remain low. Following the MPC's decision to increase rates in June, the group notes market expectations that further rate rises are likely in 2022.
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"Across key portfolios, there are currently limited signs of credit concerns; overall arrears remained low and stable during the period and there were no significant changes in individually assessed provisions. However, the group recognises the potential affordability issues that higher living costs will cause for households and is ready to support customers, as was the case throughout the pandemic.
"For prudence, VM海角视频 has tightened its affordability and underwriting criteria for new customers across all lending categories to account for the higher levels of inflation and has retained the c.£25m affordability post model adjustment (PMA) for any affordability impacts on existing customers."
Earlier this month, Virgin Money announced its new 'buy now, pay later' product called Slyce, with which it hopes to target the Gen Z market.
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