Sinchita Mtra and Yadarisa Shahong

(Reuters] -British bank Virgin Money said Tuesday that credit card purchases were back at pre-pandemic levels because of pent-up demand. However, rising interest rates have helped raise its margin forecast for next year.

Since the outbreak of the pandemic, credit card spending has taken a significant hit as more people put money in savings and investments and cancelled travel plans. Lockdowns were also reduced.

Relaxing restrictions, however, has helped to boost consumer confidence and the business confidence.

Clifford Abrahams chief finance officer told Reuters that travel spending on bank credit cards is returning to the levels of before COVID-19.

Abrahams stated that customers who feel good about their job, and about future wage increases, have some money in deposit so they can spend.

Virgin Money predicts that the bank’s net interest margin (NIM), which is a crucial measure of an institution’s profitability, will reach 175 basis points by September 2022.

This outlook is based on the Bank of England raising interest rates in December. More increases are expected to counter rising inflation.

Analysts stated that Virgin Money’s third-quarter trading update, December 2013, was broadly positive for the industry. This is ahead of competitors’ full year earnings later this month.

“We see the recovery in unsecure balances as an informative read-across. Barclays Analysts at JPMorgan (NYSE) Cazenove stated in a note that they had received information from Lloyds (LON) and London (LON) about the UK banks.

Virgin Money shares rose 3% early in trading but then lost momentum. They were generally flat at 1200 GMT.

British Bank has launched instalment loans on credit cards. The bank plans to launch a subscription-based digital product for young people who want to improve their credit scores in the coming quarters.

Abrahams explained that “younger people want their credit histories to grow while trying to keep in control.”

In November, the bank said that it would digitalise services faster and also stated that 132,000 new accounts were opened in quarter one. This is the most since the outbreak of the pandemic.

Virgin Money (formerly CYBG) saw a drop in business and mortgage lending due to a decrease in government-backed lending within the sector, and weaker market demand.