The group, which has a major Scottish base in Edinburgh, said: “The UK housing market is expected to remain resilient; however, in the near term there may be some areas of weakness to be navigated.”
It added: “We remain vigilant about the potential for certain regions to see house price weakness and will continue to manage this through strict application of our existing lending policies and risk appetite.
“Mortgage spreads are expected to continue to face some pressure.”
Virgin Money’s comments came as it announced that pre-tax profits rose to £123.8 million in the six months to end-June, up from £93.7m.
Jayne-Anne Gadhia, group chief executive, indicated that she thought the share price reaction was overdone and that the bank had just wanted to add “a bit of balance” to a generally stable GDP, employment and mortgage market story.
Virgin Money’s gross mortgage lending came in at some £4.3 billion, taking its share of the market to 3.5 per cent. The lender has 7 per cent of its mortgages in Scotland, mirroring its general share of Scottish business.
“We are not seeing any particular slowdown in Scotland,” Gadhia said. She added that the bank was not in riskier areas such as car finance and unsecured personal loans, but its credit cards business, which contributed 28 per cent of total income in the first trading half, saw balances rise 13 per cent to £2.8bn.
Virgin Money said it planned to hit its target of £3bn in credit card balances by the end of 2017, saying it could do so with no deterioration of loan quality.
Bank of England policymakers have warned recently that banks are edging towards a “spiral of complacency” on consumer lending. Gadhia welcomed the central bank’s interventions to make people look hard at their lending criteria, but added that Virgin Money had written 8 per cent less credit card business than traditionally.
• READ MORE: Virgin Money reveals jump in credit card balances
The bank said post-EU referendum uncertainty remained, but that historically low interest rates and wage growth lagging inflation were still encouraging consumers to borrow. Shares in the group closed down 26.9p, or 8.8 per cent, at 279.6p.
Virgin Money also said yesterday that its chairman Glen Moreno is to step down and retire in 2018.