4th July 2016

Borrowing across the country – Q4 2015

Latest GB borrowing details for individuals and businesses are available for more than 9,000 postcode sectors.  The industry-wide data is compiled jointly by the BBA and the Council for Mortgage Lenders.  Participating lenders also publish their own figures on their websites.

Notes to editors

1. Which lenders are included?
Participating lenders in the personal loan datasets are Barclays, Lloyds Banking Group, HSBC, RBS Group, Santander UK, Clydesdale & Yorkshire Banks and Nationwide Building Society.

Participating lenders in the SME lending datasets are Barclays, Lloyds Banking Group, HSBC, RBS Group, Santander UK and Clydesdale & Yorkshire Banks.

Collectively, these institutions account for about 60 per cent of bank lending to SMEs, 73 per cent of mortgage lending and 60 per cent of unsecured personal loan markets in Britain. The BBA is publishing data for SME lending and unsecured personal loans. The CML is publishing data for residential mortgage lending. Participating lenders are publishing their own data.

2. Protecting customer confidentiality
Lenders have taken care to strike a balance between the desire for transparency and the need to protect customer confidentiality. To protect the privacy of business and personal customers, a set of parameters were agreed with the Government to ensure customer confidentiality is protected and that there is compliance with data privacy rules. This has led to some postcode sectors at both individual bank and aggregate level being redacted.

Business groups have stressed that great care must be taken to ensure that the borrowing of commercial customers cannot be identified.

3. What do borrowing levels indicate?
Stock levels are not equivalent to current demand or new borrowing – they reflect drawn-down amounts from agreed borrowing facilities.  They will comprise borrowing agreements made in the past and new agreements, less partial or full repayments or borrowing written off.

The postcode attributed to a personal loan is determined by the correspondence address of the applicant. The postcode attributed to SME lending is derived from the business’s primary trading location.

Borrowing is not a direct indication of the financial health of borrowers.  Levels will reflect the demographic or characteristic make-up of a sector and its population.

For example, predominantly residential sectors will be unlikely to see high levels of SME borrowing. Predominantly commercial or industrial areas will be unlikely to see high levels of mortgages or personal loans.

4. What is being reported?
Lenders report on three separate product streams: SME lending, residential mortgages and unsecured personal loans. All figures reflect the total amount of borrowing outstanding on customer accounts.

This figure will fluctuate over time for a number of reasons including:

  • new borrowing agreements
  • customers repayments, either in part or in full
  • existing agreements mature
  • borrowers moving location
  • borrowers switching into or out of alternative finance products
  • borrowers switching to a different lender

5. What is a sector postcode?
This exercise centres on the postal addresses represented by Royal Mail postcodes.  The postal address is a sorting and routing instruction to Royal Mail staff.

They are made up of several components, as follows:

postcode
The Royal Mail periodically reviews and makes changes to its postcodes, for example, when there are new homes or businesses in a development area, new or re-routed roads or a lack of codes for extra capacity.

The data published here reflects borrowing in ‘live’ postcodes (according to the list published by the Royal Mail in November 2014), and is therefore an up-to-date picture of its geographic distribution across Great Britain. There are around 1.8 million full postcodes, 10,000 sector postcodes, 3,000 districts and 120 postal areas.

There are a number of alternative geographical classifications, for example county, local authorities and parliamentary constituencies, but these do not necessarily directly map across to sector postcodes.

6. Why are some figures not available?
One of the key roles played by the BBA and CML has been to ensure that participating lenders report as fully and as meaningfully as possible, whilst also adhering to all relevant data privacy, competition and other laws. As highlighted above, a major consideration and necessary requirement has been to maintain customer confidentiality.

A general level of protection for customers is afforded by publishing postcode figures six months in arrears. This is a deliberate part of the design of this exercise, and will be an on-going feature.

To protect customer confidentiality the BBA and CML have agreed three filters with Government to ensure the protection of individual customers and their confidential data. Therefore, individual borrowing data should not be imputable directly, or in conjunction with other third party data.

Borrowing amounts outstanding for a postcode sector are not disclosed if;

  • There are fewer than 10 borrowers active in the postcode sector, or
  • Borrowing within the postcode sector is highly concentrated amongst a small number of borrowers.

In addition

  • Individual lenders are not obliged to publish borrowing at postcode sector level if they hold less than 10 per cent of SME borrowing, 3 per cent of mortgages or 3 per cent of personal loans in a postcode sector.

These filters are applied to the data in the hierarchical order above. When applied to the aggregate dataset, the total value of borrowing redacted is relatively small: such borrowing accounts for 4 per cent of SME lending, under 1 per cent of mortgage lending and less than 0.5 per cent of personal loans.
In the BBA and CML aggregate datasets, the BBA and CML take further steps to protect against disclosure in redacted postcode sectors as the data is aggregated.

For example, if 6 lenders publish data in a postcode sector but 1 lender is required to redact their total for that sector, the publication of the full (7 lender) total by the BBA/ CML in the aggregate data set  would disclose the redacted value of the 7th lender.

To protect against this inadvertent discloser, the BBA/ CML only publish the sum of all 7 lenders where either no lenders have been required to redact their totals or where there are 2 or more lender redactions in the sector.  If either one or two lenders are required to redact their sector total (as in the example above), BBA / CML will only publish the sum of the publishable lenders data.

The effect of the redaction filters may vary from quarter to quarter, which can make direct comparisons from quarter to quarter for some postcode sectors difficult. The BBA and CML are continually looking at ways to make the analysis of this data more informative. However, all data that is not disclosed as a result of these filters is included in the postcode area level totals to make the regional and postcode area level comparisons as meaningful as possible.

The aggregated data shows NIL for any postcode sector where there is no lending by the banks in this exercise and “0” where there is lending but the data has been redacted to preserve confidentiality.

7. What is the market coverage of this initiative?

As at end – Q4 2015

SME borrowing

Mortgages

Personal Loans

Publishable at postcode sector level (£bn)

83.4

919.5

33.4

Publishable only at postcode area level (£bn)

10.2

5.6

0.3

of which: Lending in sectors redacted to preserve confidentiality (£bn)

9.7

4.0

0.3

of which: Other lending which cannot be allocated at sector level, but included at Area level (£ bn)

0.5

1.6

0.0

Total lending publishable (£ bn)

93.6

925.1

33.7

Number of sectors publishable at postcode sector level

7,839

9,001

8,960

Number of sectors redacted to preserve customer confidentiality

1,810

151

316

8. Population composition of postcode sectors
The population and geographical size of postcode sectors vary greatly. Similarly, the number of small businesses in each postcode sector differs significantly.

The BBA has produced two tables: one on small business lending and a second for the personal loans dataset.

Table 1 – SME lending across the regions
We have used figures compiled by the Department for Business, Innovation and Skills that provide a regional breakdown of SME turnover to produce a table which shows that regions outside London and the South East receive a higher proportion of SME lending than their share of SME turnover. Regional data is used for this table as there is no postal sector data available for SME turnover.

Percentage of Britain’s SME Turnover
(estimated)

Percentage of Britain’s Gross Value Added
2014

Percentage of Britain’s SME Lending
December 2015

London

30%

23%

20%

South East

18%

15%

13%

North West

8%

10%

11%

South West

5%

8%

11%

West Midlands

8%

7%

9%

Scotland

6%

8%

8%

Yorkshire and the Humber

6%

7%

8%

East of England

9%

9%

8%

East Midlands

6%

6%

6%

Wales

2%

3%

5%

North East

2%

3%

3%

Source: BIS / BBA

Table 2 – Postcode Areas with the highest amount of personal loans per person

Postcode areas with the largest populations will usually have the highest levels of personal loans. However, using official records from the 2011 Census it is possible to show a ranking of postcode areas in England & Wales on a personal loans per capita basis.

Postcode Area

Outstanding Balances (£m)

Per Capita (£)

1 SP Salisbury 155.1 680
2 CW Crewe 206.4 676
3 NN Northampton 435.8 676
4 RG Reading 505.3 661
5 MK Milton Keynes 327.0 654
6 WA Warrington 397.7 653
7 SL Slough 239.6 653
8 RH Redhill 337.2 644
9 DA Dartford 274.1 644
10 ME Rochester 385.4 641

 

9. Other postcode lending data
Individual lenders will publish consistent data relating to their own customers’ borrowing. This can be found on the following websites:

Barclays – http://www.barclays.com/news.html
Clydesdale (& Yorkshire) – http://www.cbonline.co.uk/media/postcode-lending/
Lloyds Banking Group – www.lloydsbankinggroup.com/media/postcode-lending-data/
HSBC – www.hsbc.co.uk/1/2/about-us/sustainability/postcode-lending-data
Nationwide Building Society – www.nationwide.co.uk/
RBS – www.rbs.com/
Santander – www.aboutsantander.co.uk/

The BBA will publish aggregated data for SME lending and unsecured personal loans on its website at http://www.bba.org.uk/statistics/postcode-lending

The CML will publish aggregated data for mortgage lending on its website at www.cml.org.uk/

 

Please register or login to add this to your interests.