Bank lending to UK businesses increased in February, according to new figures from the British
Bankers’ Association (BBA).
The report from the BBA showed that lending to private non-financial businesses rose by around
£0.6 billion in February – offsetting the £0.3 billion drop seen in January. The figures could point to
the beginning of a recovery, comparing favourably to the average monthly drop of £1.3 billion seen
over the six months prior.
A separate report from the Bank of England highlighted that although the credit available is
generally good for larger companies, smaller firms with limited fixed assets may be unable to
provide the collateral required to secure lending.
Smaller privately-owned companies appear to be resorting to their own cash resources, rather than
agreeing to personal guarantees that are increasingly being sought by banks to enable lending.
The BBA also indicated a rise in mortgage approvals in February, with 29,923 house purchase
mortgages completed – an increase from 29,159 in January. The month also saw greater
remortgage activity – up to 27,144 from January’s figure of 26,417.
The BBA’s statistics director David Dooks said: “Mortgage lending remains subdued, with only
remortgaging on an upward trend, as borrowers lock into lower rate products currently available.
Household demand for unsecured credit is also weak, as people continue to cut back on borrowing
and build up deposits.”
