Clydesdale owner Virgin Money boosted by record credit card signups as profits rise

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The bank said pre-tax profits jumped to £315m in the six months to the end of March, from £72m in the same period a year ago.

However, that was down from profits for the previous six months, to the end of September, of £345million, as the group set aside more money for potential provisions over the course of the year. the last period.

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

He said it was too early to tell whether the cost of living crisis was affecting customers, but warned he expects the economic outlook to be more uncertain.

“After a period of strong recovery in Gross Domestic Product (GDP) as Covid restrictions were lifted and consumer spending levels improved, the impact of rising inflation has seen expectations d ‘New growth starting to temper,’ the bank noted.

The group said it saw particularly strong growth in credit card signups. Unsecured lending rose 7% in the period to £5.8bn, while by comparison business lending fell 2.5% to £8.3bn.

The Glasgow-headquartered group has rebranded its Clydesdale Bank and Yorkshire Bank branches under the Virgin Money banner. Picture: Virgin Money

Gary Greenwood, banking analyst at brokerage Shore Capital, said: “[First-half] March 31 results show earnings shattered consensus expectations. The group also declared a larger than expected interim dividend.

“Despite heightened macro-economic uncertainty and inflationary pressures, management remains optimistic given the well-funded nature of the balance sheet.”

Chief Executive David Duffy admitted the macro outlook is uncertain and there are heightened cost pressures for consumers, saying: “We have positive momentum to attract new customers to Virgin Money thanks to record sales. credit cards, good growth in personal current account openings and strong adoption of our new digital fee-free business current account.

The bank added that it was not exposed to the conflict in Ukraine, but said it was monitoring the situation to ensure there was no ripple effect on its business.

He noted: “As a UK national bank, the group has no direct exposure to lending in Ukraine or Russia, but we are carefully monitoring any second-order impacts from the conflict, particularly on inflationary pressures in the UK.

“We have seen only limited changes in the quality of assets in portfolios to date, but have taken steps to factor in the higher cost of living into our affordability assessments.”

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

Costs are only 1% lower due to higher spending on its digital transformation and salary increases for staff.

The size of Virgin Money’s mortgages fell slightly in the six-month period from the previous six months, by 0.5% to £57.8bn, with bosses saying the bank preferred to “negotiate tactical way” in a competitive market.

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