The latest figures from the Major British Banking Groups, for February 2006, show that:
- Total sterling lending to the UK private sector showed a net underlying increase of £13.3bn (+1.1 per cent) to £1,178bn. This was weaker than the previous month’s underlying rise of £16.0bn, but stronger than the average of +£10.4bn over the previous six months.
- Net mortgage lending rose by an underlying £4.4bn. This was lower than both the £4.6bn rise in January and the average of + £4.8bn over the previous six months. Underlying growth in overall unsecured personal lending (£0.7bn) was only marginally higher than the average of the previous six months (+£0.6bn). Loans & overdrafts accounted for most of the rise (+£0.5bn), whilst the underlying rise in credit card borrowing (£0.2bn) was in line with the average for the previous six months (+£0.2bn).
- Lending to real estate companies was the largest component of lending to non-financial companies, rising by £1.1bn and lending to hotels & restaurants rose by £0.2bn. Elsewhere, there was a general net repayment from companies, in particular from transport, storage & communication (-£0.4bn), but notably also from food, beverages & tobacco companies, wholesalers and retailers.
- Deposits from the private sector rose by £11.0bn (+1.3 per cent) to £838bn. Of the total, personal deposits increased by £3.6bn compared with average growth of £2.4bn in the previous six months.
David Dooks, BBA director of statistics, said: "Just as we did not regard the above-trend rises in the major banks’ net mortgage lending towards the end of 2005 as heralding a sustained upturn in mortgage market activity, we do not now see the moderately weaker figures since as signalling a downturn, particularly with reports of house prices picking up in 2006 so far.
"Behind these monthly fluctuations, mortgage lending is on a stable trend, though not at the high 2004 levels. There continue to be signs of consumer caution, as unsecured credit demand remained relatively subdued and deposit growth was above average."
Analysis of MBBG sterling lending to UK public and private sectors
- Lending to individuals (after allowing for the effects of securitisations, loans acquired from special purpose vehicles, transfers, acquisitions, etc)
Total net lending rose by an underlying £5,112m in February, compared to £5,319m in December and £5,416m in February 2005. Of the total, mortgage lending accounted for £4,431m of the rise, compared to January’s rise of £4,582m. Within consumer credit, personal loans & overdrafts rose by £503m compared to January’s £640m, while an underlying rise of £183m in credit card lending, though stronger than in January (+£113mn), was much in line with the average over the previous six months (+£173mn).
- Lending to financial firms
Lending to financial companies rose strongly, by £5,974m in February mainly reflecting borrowing by investment & unit trusts (+£2,923m, largely reflecting internal group transactions) and miscellaneous financial intermediaries (+£1,875m).
- Lending to non-financial firms
The main contribution to lending to non-financial firms came, as has become the norm, from lending to real estate companies (+£1,105m) and there was also a small net rise in lending to hotels & restaurants (+£221m). These increases were partly offset by repayments from transport, storage and communication (-£429m), wholesale and retail trade (-£353m) and food, beverages and tobacco companies (-£223m).
