BoE Survey Examines Trends in Credit Conditions of Banks
BoE published results of the credit conditions survey for the second quarter of 2020. The survey was conducted among bank and building society lenders and it covered secured and unsecured lending to households and lending to non-financial corporations, small businesses, and non-bank financial firms. The results are based on lenders’ responses to the survey and are reported as net percentage balances. The results show that the availability of secured and unsecured credit to households decreased in the second quarter while the availability of credit to the corporate sector decreased during this time period.
The lenders expect the availability of secured and unsecured credit to decrease further in the third quarter. The results also highlight that demand for secured lending for both house purchase and remortgaging decreased in the second quarter, but it is expected to increase in the third quarter. Lenders reported that the overall demand for unsecured lending decreased in the second quarter, comprising a decrease in both demand for credit card and other unsecured lending. However, the lenders expect the overall demand for unsecured lending to increase in the third quarter. The net percentage balance for changes in losses given default on secured loans decreased in the second quarter, but is expected to increase in the third quarter. The net percentage balance for changes in default rates for total unsecured lending increased in the second quarter and is expected to increase further in the third quarter.
Lenders reported that the availability of credit to the corporate sector increased for all business sizes in the second quarter. Total corporate credit availability was expected to increase only slightly in the third quarter. Several lenders noted that the schemes recently launched by the government to support lending to businesses underpinned the reported increase in availability in the second quarter. Lenders reported that demand for corporate lending from businesses of all sizes increased in the second quarter, but expected to decrease in the third quarter. Furthermore, the length of interest-free periods on credit cards for balance transfers, and on purchases, decreased in the second quarter and lenders expected both to decrease in the third quarter.
The credit conditions survey, which is aimed at improving the understanding of trends and developments in credit conditions, was conducted between June 01, 2020 and June 19, 2020. Lenders were asked to report changes in three months till the end of May 2020 (second quarter), relative to the period between December and February, and expected changes in the three months till end of August 2020 (third quarter), relative to the period between March and May. The credit conditions survey for the third quarter of 2020 will be published on October 15, 2020.
Related Link: Survey Results and Related Documents
Keywords: Europe, UK, Banking, Credit Risk, Credit Conditions Survey, Default Risk, Mortgage Lending, BoE
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
