Virgin Money insists its credit card business is safer than the bigger banks

Virgin Money chief executive Jayne-Anne Gadhia
Virgin Money chief executive Jayne-Anne Gadhia Credit:  Ian Rutherford

Virgin Money has insisted it has a safer credit card business than Britain’s big banks, amid growing fears over ballooning consumer credit.

The challenger bank’s chief executive Jayne-Anne Gadhia told analysts today the company had conducted its own “extreme” in-house stress test of its expanding credit card book and found in a downturn it would face fewer problems than its peers.

Last month the Bank of England warned lenders they risked losing as much as £30bn on personal lending if the economy took a turn for the worse, with as much as a quarter of credit cards defaulting.

But Ms Gadhia said Virgin’s own credit card business - which has grown balances to £2.9bn - would fare better than its peers.

She said: “Because of the quality of the book, we do not get to the 25pc level (default rate) that the big banks get in. We are materially better than that.”

Ms Gadhia said her confidence came from a tough internal stress test simulating UK unemployment hitting 12.5pc. The jobless rate currently stands at 4.5pc.

Virgin Money is spared the full rigours of Bank of England stress testing, but the central bank nonetheless said last month that the challenger bank would come under greater scrutiny on its personal lending.

In a third quarter trading update, Virgin Money said it increased mortgage balances by £1.1bn to £33bn, while deposit balances were up £500m to £30bn.

Gross mortgage lending for the year to date was £6.5bn, in line with the previous year. The bank said it had seen robust customer demand due to low unemployment and a resilient housing market.

Virgin Money’s share price was up almost 5pc to 302.6p in mid-afternoon trading.

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