8th April 2014

Lenders set out levels of borrowing from across the country

Major lenders today publish details of borrowing to individuals and businesses classified by more than 9,000 postcode sectors for the second time.

The industry-wide data has been compiled jointly by the BBA and the Council for Mortgage Lenders.  Participating lenders will also publish their own figures on their websites.

BBA Chief Economist Richard Woolhouse said of this data:

“We’ve been working hard to make this data as accurate and comprehensive as possible and it now covers 96 per cent of lending to smaller businesses and 99 per cent of personal loans by postcode sector.

“But this data is complex and it remains very difficult to draw firm conclusions about lending at a local level.

“However, this work underlines how banks are in the business of lending to companies and people wherever they are based in Great Britain.”

ENDS

For more information please contact the BBA press office on 0207 216 8989 or the CML press office on 020 7438 8924/8923/8922

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 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, new agreements, repayments and 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 August 2013), 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.

Banks have sought to protect customer confidentiality and have applied a number of specific filters that have been agreed with the Government to ensure the protection of individual customers and their confidential data, which should not be capable of being imputed by users from other sources. These filters/rules are:

  • Borrowing stocks for a sector postcode cannot be disclosed where customer confidentiality would be compromised (i.e. where fewer than 10 borrowers exist in the sector or where borrowing is highly concentrated in a small number of the largest borrowers in the sector).
  • Individual lenders are not obliged to publish borrowing at 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 sector.

When applied to the aggregate dataset, the total value of borrowing that needs to be 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.

Redactions are thinly spread, meaning that for a number of geographies, we are not able to publish a borrowing total that represents the absolute sum of borrowing from all participating lenders.  While this means that aggregate figures shown may not be exactly comparable across different sector postcodes, in most cases the borrowing amounts not included will be fairly small.

Aggregate information provides a good overall picture. Individual lenders also need to ensure customer information is protected and, by necessity, will have a more redacted summary.

In a number of cases, lenders’ systems have not been able to reconcile fully their information back to live postcodes sectors, for example because of inadequate, historic or incomplete information.

While lenders will be able to mitigate some of these problems in future, in this publication such borrowing accounts for under 2 per cent of SME lending, under 1 per cent of mortgage lending and under 2 per cent of personal loans.

7. What is the market coverage of this initiative?

SME Borrowing

Mortgage Borrowing

Personal Loans

 

 

 

Total industry level, UK (£ bn)

168.2

1272.0

52.0 Approx.

Scope of this initiative, GB (£ bn)

102.4

901.5

29.9

Publishable at sector postcode level
: (£ bn)

87.7

891.5

29.0

: number of sectors

8,422

8,996

8,967

Sectors redacted to preserve confidentiality 
: (£ bn)

4.0

3.2

0.02

: number of sectors

1,251

805

448

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

13.3

2.5

0.4

Lending which cannot be allocated to geographies (£ bn)

1.4

4.3

0.4

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 SME Lending September 2013

London

29%

21%

South East

15%

13%

North West

10%

11%

South West

7%

11%

West Midlands

7%

9%

Scotland

6%

8%

Yorkshire and the Humber

7%

7%

East of England

9%

7%

East Midlands

6%

5%

Wales

3%

5%

North West

2%

3%

Source: BIS / BBA

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

The postcode sectors with the largest population will usually have the highest levels of personal loans. However, using official records from the 2011 Census it is possible to show the postcode sectors with the highest level of personal loans on a per capita basis.

Personal Lending – Per Capita
Postcode Area Postcode Sector Outstanding Balances (£) Per Capita
1 BA Bath BA1 9 £540,763 £2,311
2 EC London EC1V 2 £264,784 £2,188
3 NE Newcastle Upon Tyne NE66 4 £3,068,159 £2,065
4 PE Peterborough PE7 0 £283,804 £1,622
5 TD Galashiels TD12 4 £1,768,724 £1,571
6 NE Newcastle Upon Tyne NE13 9 £1,417,903 £1,513
7 LS Leeds LS17 0 £2,027,029 £1,513
8 RH Redhill RH6 7 £8,738,750 £1,471
9 M Manchester M3 3 £741,400 £1,365
10 PR Preston PR7 7 £5,596,080 £1,355

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://group.barclays.com/about-barclays/citizenship

Clydesdale (& Yorkshire) – www.cbonline.co.uk/media/results-financial-information/

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/

 

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