UK Banks Tighten Grip on Lending Standards in View of Brexit
Last updated on December 3rd, 2018
Borrowers and lenders across the British circuit are wary of the imminent Brexit. Borrowers are now extra careful not to advance loans unsecured and/or under secured credit facility given by UK Banks.
Banks across the European Union zone have a sizeable amount tied to unsecure credit to customers. This has been revealed by UK banks given the grip decided by the Bank of England. This, it revealed, is slowing down the growth of lending in the banking industry.
There has been a rise in unsecure lending, a trend that saw the rise grow to 7.7% in September, revealing a slowdown from the 8.2% reported in August. This is said to be the weakest growth experienced by the sector since 2015.
The drop in car finance borrowing has been blamed for the slide in the borrowing, pointing to “environmental concerns” as the major reason why there is a major drop in car finance borrowing as consumers show caution ahead of Brexit.
There is an obvious fall of Net Consumer Credit from £1.21billion in August to £785 million in September, accounting for a £425 million drop.
The weakened car sales due to special factors reinforces the impression that consumers are mindful ahead of Brexit. Consumers are cautious in the borrowing and lenders especially UK banks are also cautious about advancing unsecured credit facilities to customers.
The credit condition made available lately by UK banks following the Bank of England indicated that lenders have curbed the amount of unsecured credit made available to consumers in the third quarter of the year for a seven straight time this quarter. Lenders have been modest in the way they tightened their lending standards for granting unsecure credit to customers.
London big players in the banking industry are becoming a lot more cautious ahead of Brexit.
On Monday HSBC Holdings said that personal lending in the third quarter which ended on September 30 fell from US$1.8billion a year ago to US$1.6 billion.
Llyod Banking Group PLC revealed last week that loans and advances to customers experienced a rise from £442 billion at the end of June to £445 billion at the end of September and it has said that it was “prudent with its lending in targeted segments.”
Barclays PLC reported loans and advances to customers amounting to £186.7 billion for the quarter closing in September, noting a rise from £182.2 billion from a year earlier, including a 3.5% growth in personal banking.
Royal Bank of Scotland Group PLC on their own part revealed that loans and advances experienced a fall from US$323.2 billion at the end of December to US$319.6 billion at the end of September. A £100 million impairment was taken by the bank to deal with the uncertainty of the economic outlook.
Consumers, UK banks and banks across Europe alike are threading softly ahead of the UK’s exit from the European Union.
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