The BBA is now integrated into UK Finance. Please go to www.ukfinance.org.uk for new content and updates from UK Finance.
Material published by BBA prior to 1st July 2017 is still available on this website.
From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.x
Written by Richard Woolhouse, Chief Economist, BBA
This morning we have released the second quarterly instalment of postcode lending data for the period Q3 2013. This shows the stock of lending (amounts outstanding) for mortgages, personal loans and SME lending by postcode sector across the country (GB). There are 10,000 postcode sectors across the country – these normally consist of the first four or five digits or letters of a postcode.
This data has been improved significantly from last time and we now have coverage for 96% of lending by the major lenders to small and medium sized businesses and 99% of personal loans (mortgage data are published by the Council of Mortgage Lenders).
Given the way the data has been improved it is difficult to compare this with the initial data set released back in January. Indeed, it will be hard to say much until we have more data over time as this reports just stocks of loans and overdrafts outstanding. Whilst for mortgage data it is possible to contextualise the data to some extent, for SME lending it is very difficult to compare the data as there is very little data on business demographics available by postcode sector. Therefore the fact that lending is low in a particular postcode sector could represent the fact that there are very few businesses in that sector, or that the businesses which do exist are in sectors with low capital intensity and hence do not have significant borrowing requirements.
Where we do have some more meaningful data is at the regional level and it is worthwhile just noting a few aspects of the overall lending landscape as this data is digested.
So in aggregate whilst the SME sector continues to slightly reduce its stock of outstanding bank lending this is occurring against a context of rapidly rising new lending, rising deposits and a more diverse financing system with alternative forms of finance increasingly available. With the large firm sector now beginning to invest and credit availability and demand now more buoyant as we move down the size scale SMEs are increasingly likely to begin to invest, hire and grow and banks are well placed to help the achieve these goals.