This quarterly publication presents the Bank of England’s assessment of the latest trends in lending to the UK economy.
It draws mainly on long-established official data sources, such as the existing monetary and financial statistics collected by the Bank that cover all monetary financial institutions, and on newer data collections, established since the start of the financial crisis to cover the major UK lenders, some of which are being extended across a wider range of reporters.
These data are supplemented by discussions between the major UK lenders and Bank staff, giving staff a better understanding of the business developments driving the figures and this intelligence is reflected in the report.
The major UK lenders are Banco Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide and Royal Bank of Scotland and together they accounted for around 70% of the stock of lending to businesses, 45% of the stock of consumer credit, and 75% of the stock of mortgage lending at end-December 2011. The report also draws on intelligence gathered by the Bank’s network of Agents and from market contacts, as well as the results of other surveys including the Bank of England’s Credit Conditions Survey.
The focus of the report is on lending, but broader credit market developments, such as those relating to capital market issuance, or trade credit, are discussed where relevant.
The report covers data up to May 2012 and intelligence gathered up to end-June 2012. The discussions with the major UK lenders were conducted in the first week of July. This was prior to the publication of the details of the Funding for Lending Scheme on 13 July 2012, following the announcement of the scheme on 14 June. Unless stated otherwise, the data reported cover lending in both sterling and foreign currency, expressed in sterling terms.
This Bank of England quarterly publication presents the Bank’s assessment of the latest trends in lending to the UK economy.
Report Overview
The annual rate of growth in the stock of lending to UK businesses was negative in the three months to May. The stock of lending to small and medium-sized enterprises also contracted. The annual rate of growth in the stock of secured lending to individuals was broadly unchanged. Mortgage approvals by all UK-resident mortgage lenders for house purchase were broadly unchanged in the three months to May. Net monthly consumer credit flows were positive over this period.
Spreads over reference rates on new lending widened for small and medium-sized businesses in 2012 Q2 and were broadly unchanged for large businesses, according to the Bank of England’s Credit Conditions Survey. Spreads over Bank Rate on some quoted floating-rate mortgages have widened over the past six months, though the rate of increase has lessened over the recent past. Effective rates on credit cards were broadly unchanged in the three months to May.
Credit availability was broadly unchanged for businesses, according to respondents to the Bank of England’s 2012 Q2 Credit Conditions Survey. Contacts of the Bank’s network of Agents noted that credit was normally available for firms with strong balance sheets, while some smaller firms reported that they were still often unable to secure loans. In recent discussions, the major UK lenders noted that demand from small and medium-sized enterprises remained subdued. Lenders in the Credit Conditions Survey reported that demand for secured lending for house purchase had increased significantly in 2012 Q2 and expected it to remain broadly unchanged in Q3.
The full report can be viewed here.