Challenger bank Virgin Money has said it would keep a close eye on rising consumer debt levels as its credit card balances jumped 8 per cent in the first quarter.
The lender, which has a key base in Edinburgh’s St Andrew Square, said credit card debt rose to £2.65 billion in the three months, while it was seeing “stable” customer behaviour and arrears levels in spite of the jump.
• READ MORE: Virgin Money eyes Co-op Bank after profits surge
It comes after the Bank of England’s financial policy committee warned earlier this month that the recent surge in consumer borrowing could pose a risk to the UK financial system, leaving banks exposed if their lending rules are too loose and people cannot make their repayments.
Virgin Money said in its latest trading statement that it was taking a cautious approach to lending and while credit card competition had increased, it was not following rivals into “top-of-the-table pricing”.
It also explained that it continues to “lend responsibly to our prime books of mortgage and credit card customers who are showing no signs of strain in the current environment. We prioritise asset quality over balance growth, despite which we remain confident of achieving £3bn of prime credit card balances by the end of 2017.”
The financial services firm also reported that net mortgage lending, which accounts for redemptions, dropped by about 18 per cent to £900 million from the equivalent period last year.
Chief executive Jayne-Anne Gadhia said: “I am delighted with the ongoing momentum and performance of the business so far in 2017.”
She said last month that the sale of parts of Co-op Bank was a “strategic opportunity”, but added that no approach had been made.