Bank of England Trends in Lending

31.10.2011

Bank's latest Trends in Lending publication produced and available via links below.

Selective extracts from the reports are :-

• The BIS data over recent months have indicated that growth rates of the stock of lending to SMEs are more negative than the position six months ago. The annual growth rate stood at -5% in August 2011 (Chart A). Lending growth for SMEs has been below that for private non-financial corporations (PNFCs) as a whole since May 2011.
• Data published by the British Bankers' Association (BBA) on the stock of lending to small businesses, defined as turnover of up to £1 million, and which are available up to June 2011, have shown negative lending growth rates for this sector, with the annual rate standing at -10% in June 2011
• Results from this survey suggested that SMEs' demand for finance remained muted, in part because companies were reluctant to borrow in the current climate. But some respondents also reported that they had felt directly or indirectly ‘discouraged' from applying for finance, for reasons such as issues with the process of borrowing from banks or an anticipation of refusal.
• Concerns about credit availability have been reported, however, by business contacts of the Bank's network of Agents. Contacts of the Agents reported that credit conditions continued to be tighter for SMEs compared to larger corporates. Small businesses and new business start-ups still found it difficult to gain access to credit.
• Estimates of median interest rates charged on new variable-rate loan and overdraft facilities to medium SMEs remained broadly unchanged over the past six months, according to BIS survey data (Chart B). However, estimates of rates charged to smaller SMEs, in particular, continued to drift upwards. The Bank's Agents reported that small businesses had commented that where loans were available, fees remained elevated and the application process was often drawn out.

http://www.bankofengland.co.uk/publications/other/monetary/TrendsOctober11.pdf

Quarterly Credit Conditions Survey - a survey of the major UK lending banks asking about actual and expected lending: http://www.bankofengland.co.uk/publications/other/monetary/creditconditionssurvey110928.pdf

Project Merlin stats: www.bankofengland.co.uk/publications/other/monetary/additionaldata.htm