Virgin Money, the banking group formerly known as CYBG, said its unsecured lending grew 3% to £5.6 billion in the three months to December 31, 2021 “driven by growth in credit cards from increased activity and compelling new digital propositions.”

The bank said overall deposits fell 2% to £65.5 billion and mortgages decreased 0.5% to £57.8 billion “as the group broadly maintained market share while continuing to prioritise margin in a competitive environment.”

RBC Capital Markets director Benjamin Toms said the slight fall in mortgage balances was a deliberate strategy.

“I don’t think the weakness in the mortgages is a function of weakness in their brand,” said Toms.

“It’s more them choosing to turn off the taps because they want to keep their net interest margin stable.”

Virgin Money CEO David Duffy told reporters: “We’ve done it smartly to protect margins but broadly maintain market share — it’s reaching a good balance now.”

Virgin Money’s net interest margin (NIM) improved to 1.77% in its first quarter from 1.70% in the fourth quarter and the bank forecast that its net interest margin would increase from 1.7% to 1.75% for the full year.

Business lending reduced 2.2% to £8.3 billion “as anticipated.”

Duffy said: “Virgin Money’s performance in the first quarter has been strong.

“Our balance sheet is performing well, asset quality remains robust and we have increased guidance on net interest margin for 2022.

“We are optimistic about the pace of recovery of the UK economy based on growing consumer and business confidence, underpinned by lower unemployment.

“We’ve continued our strong delivery of new digital propositions, including the launch of our fee-free digital business current account and innovative new unsecured lending products, with more to come later this year.”