(Sharecast News) - UK bank Virgin Money on Wednesday said it had lifted provisions for bad debts as customers struggled to meet credit card payments amid the cost of living crisis, while also unveiling plans for a £175m share buyback this financial year.
The group said third-quarter provisions for loans expected to turn sour rose to £547m from £526m in the previous three months. It took a £55m impairment charge in the quarter to June 30.
In a third-quarter trading update, the bank said it would start a £50m buyback immediately, with plans for the rest to follow when it announces full-year results in November.
While overall borrower arrears were "modest", Virgin said it continued to see a "gradual increase in credit card arrears".
Mortgage lending fell 0.4% to £57.5bn in a "subdued" market as borrowers facing soaring borrowing costs amid surging interest rates as the Bank of England tries to quell inflation.
Customer deposits grew 5% to £67.3bn with savers looking for better returns after years of feeble interest rates on cash accounts, leading to accusations of profiteering in the sector. Virgin's net interest margin - a key metric that measures the difference between what is paid out on savings and charged on loans rose to 1.93% from 1.87% a year earlier.
Reporting by Frank Prenesti for Sharecast.com