Virgin Money has said it would keep a close eye on rising consumer debt levels as credit card balances jumped 8% in the first quarter.

The lender said credit card debt rose to £2.65 billion in the three months to March 31, but said that it was seeing "stable customer behaviour and arrears levels" despite the jump.

It comes after the Bank of England's Financial Policy Committee warned earlier this month that the recent surge in consumer borrowing could pose a risk to the UK financial system, leaving banks exposed if their lending rules are too loose and people cannot make their repayments.

Virgin Money said in its latest trading statement it was taking a cautious approach to lending and while credit card competition had increased, it was not following rivals "into top of the table pricing".

"We watch the increase in consumer indebtedness closely and continue to lend responsibly to our prime books of mortgage and credit card customers who are showing no signs of strain in the current environment."

The company added: "We prioritise asset quality over balance growth, despite which we remain confident of achieving £3 billion of prime credit card balances by the end of 2017."

Virgin Money said that the UK economy has "remained stronger than expected" following the Brexit vote, cheering rising employment and the "continued, if slower growth" in house prices since June.

But it also noted strong competition in certain segments of the mortgage market.

Virgin Money's latest results show that net mortgage lending - which accounts for redemptions - dropped by around 18% to £900 million from the £1.1 billion reported in the same period last year.

The lender also saw a 4.8% drop in gross mortgage lending to £2 billion in the first quarter, but managed to maintain its 3.4% market share.

The mortgage pipeline - which counts the mortgages approved but not yet released - was £2.3 billion at the end of the first quarter, which is 14% higher than the end of the fourth quarter.

Mortgage balances also grew to £30.7 billion as of March 31, up 3% from the end of December.

Chief executive Jayne-Anne Gadhia said: "I am delighted with the ongoing momentum and performance of the business so far in 2017.

"Our customer-focused strategy of growth, quality and returns continues to deliver excellent results and demonstrates the benefits of our low-risk business model, strong balance sheet and ongoing focus on operational excellence."