Virgin Money welcomed the Prudential Regulation Authority's statement on consumer credit on Tuesday, insisting that it will continue to prioritise asset quality over balance growth in its credit card business.
The statement came after the PRA said earlier that it will give lenders until September to prove they are adequately protected against consumer credit risks.
The company pointed out that it has a high quality credit card book and does not lend in the unsecured personal loan or motor finance markets. “Ours is a prime credit card book with higher than industry credit quality, driving lower than industry credit losses. Our models and assumptions are regularly reviewed and externally validated as part of our ongoing governance and control framework,” it said.
Chief executive Jayne-Anne Gadhia said: ” Our excellent asset quality and the strength of our underwriting, with very strict credit score cut offs to maintain that quality, means that we demand higher affordability than does the industry as a whole. We have always focused on the prime segment of the card market and have a stringent policy of no down-selling.”
The PRA's review of the consumer credit market found that in an environment of rapid growth in consumer credit, interest margins have fallen and there was evidence of weakness in some aspects of underwriting, so lenders are more vulnerable to losses in stress.
At 1600 BST, Virgin Money shares were up 5.9% to 286.30p.