Table of Contents
Executive Summary
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- Market size
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- Figure 1: UK MFIs’ net loans to non-financial businesses, Q3 2015 - Q3 2017, by size of business
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- Figure 2: UK total loan amounts outstanding to MFIs from non-financial businesses, July 2017, by industrial sector
- Market trends
- Market factors
- Brexit could lead to significant lending changes
- Business investment levels fall while profitability stagnates in the private sector
- Highest number of inward and domestic M&A deals since 2012 with the low value of the pound attracting investors
- Industry structure
- Forecast
- Gross lending expected to rise as businesses react to uncertainty and possible further interest rate rises
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- Figure 3: Forecast UK MFIs’ gross lending to non-financial businesses, 2018-22
- Alternative market growth to be driven by P2P
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- Figure 4: Forecast UK alternative lending market, by funding type, 2018-22
- Total value of outstanding debt set to rise alongside short-term market uncertainty
- What we think
Key Insights
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- Can technology help improve finance accessibility?
- How will ‘open banking’ change the current lending model?
Introduction
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- Definitions
- Methodology
- Abbreviations
- Market positioning
UK Economy
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- Key points
- Overview
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- Figure 5: Forecast GDP development 2017-21
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- Figure 6: UK GDP quarterly development, 2007-17
- Inflation
- Interest rates
- House prices
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- Figure 7: UK house price changes, 2006-17
- Consumer spending
- Manufacturing
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- Figure 8: UK manufacturing, 2014-17
- Business investment
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- Figure 9: UK GFCF, 2007-17
- Imports
- Exports
Market Factors
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- Key points
- Annual GDP growth rises in 2016, but challenges await
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- Figure 10: GDP growth rate, Q1 2013- Q2 2017
- Figure 11: GDP growth rate, Q1 2013 - Q2 2017
- Brexit could lead to significant lending changes
- Increase in company insolvencies highlights the current difficult business environment and a possible lack of suitable finance...
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- Figure 12: Company insolvencies in England and Wales, 2012-16
- ... although commercial property transactions continue to rise
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- Figure 13: Number of non-residential property transactions, 2012-16
- Figure 14: Number of non-residential property transactions, 2012-16
- Business investment levels fall while profitability stagnates in the private sector
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- Figure 15: UK PNFCs net rate of return, Q1 2012 - Q1 2017
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- Figure 16: UK PNFCs net rate of return, Q1 2012 - Q1 2017
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- Figure 17: UK total business investment, 2012-16
- Figure 18: UK total business investment, 2012-16
- Highest number of inward and domestic M&A deals since 2012, with the low value of the pound attracting investors
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- Figure 19: Mergers and acquisitions of UK companies, 2012-16
- Nearly half of SMEs have never checked their credit score
- Government schemes
- British Business Bank
- Business Finance Support Finder
- Enterprise Finance Guarantee
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- Figure 20: EFG Lending, by number and value of loans offered and by number and value of loans drawn, 2009-17*
- The National Loan Guarantee Scheme
- Funding for Lending Scheme
- BoE Stress Test
Market Size
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- Key points
- Net lending has remained positive in 2017 to date...
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- Figure 21: UK MFIs’ net loans to non-financial businesses, Q3 2015 - Q3 2017, by size of business
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- Figure 22: UK MFIs’ net loans to non-financial businesses, Q3 2015 - Q3 2017, by size of business
- ... with outstanding loan amounts remaining on an upwards course
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- Figure 23: UK total loan amounts outstanding to MFIs from non-financial businesses, October 2015 - September 2017, by size of business
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- Figure 24: M4 loan amounts outstanding from PNFCs, October 2015 - September 2017
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- Figure 25: M4 loan amounts outstanding from PNFCs, October 2015 - September 2017
- Market segmentation
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- Figure 26: UK total loan amounts outstanding to MFIs from non-financial businesses, July 2017, by industrial sector
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- Figure 27: UK total loan amounts outstanding to MFIs from non-financial businesses, July 2017, by industrial sector
- Further segmentation
- Alternative finance
- Peer-to-peer lending and crowdfunding
- Funding Circle accounts for most lending in the P2P business area
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- Figure 28: P2P business lending volume and market share, by lender, 2017*
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- Figure 29: P2P business lending volume, by lender, 2017*
- Crowdcube continues to lead crowdfunding market, albeit with only five major competitors
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- Figure 30: Crowdfunding volume and market share, by lender, 2017*
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- Figure 31: Crowdfunding lending volume, by lender, 2017*
- Accountants could help drive further growth in P2P lending
- Bridging finance
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- Figure 32: UK bridging loans market value, in aggregated loan balances, 2013-17
- Commercial property (real estate) finance
- Yields stabilise following weak end to 2016
- Debt falls again following first rise in seven years in 2015
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- Figure 33: Aggregated value of outstanding debt in loan books secured on UK commercial property, 2012-16
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- Figure 34: Aggregated volume of outstanding debt in loan book secured on UK commercial property, 2012-16
- Loan originations fall as uncertainties derail previous momentum
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- Figure 35: Gross value of annual loan originations, 2012-16
- UK banks and building societies’ share of new loan originations rises to four-year high
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- Figure 36: Gross value of loan originations, by allocation, 2012-16
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- Figure 37: Gross value of loan originations secured on UK commercial property, 2016, by allocation
- SME finance
- SME funding gap
- Improvements still needed to improve alternative finance accessibility
- London and the South East account for a third of SME lending in Britain
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- Figure 38: SME turnover and lending, by region, at Q2 2017
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- Figure 39: SME lending, by region, at Q2 2017
- SMEs most in need of finance for working capital and cash flow
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- Figure 40: SME lending, by reason, 2016
- Value of SME loan balances has declined since 2013
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- Figure 41: Value of SME loan balances, by region, 2013-17*
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- Figure 42: Value of SME loan balances, by region, 2014-16
- Loan comparison tool launched to help SMEs obtain the best deal
Market Trends
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- Key points
- Business confidence influences borrowing demand, but latest index figures continue to cast doubt
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- Figure 43: Business confidence index, per half-year, 2007-17
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- Figure 44: Business confidence index, per half-year, 2007-17
- Write offs on loans to non-financial companies fall to seven-year low in 2016, with 2017 set to further decline
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- Figure 45: Write offs of loans to PNFCs from banks and building societies, 2012-17*
- Credit demand and availability fell in 2016, with similar signs shown in 2017
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- Figure 46: Availability of corporate credit to PNFCs in the last three months, Q4 2011 - Q3 2017, by business size
- Figure 47: Availability of corporate credit to PNFCs in the last three months, Q4 2011 - Q3 2017, by business size
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- Figure 48: Demand for corporate credit by PNFCs in the last three months, Q4 2011 - Q3 2017, by business size
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- Figure 49: Demand for corporate credit to PNFCs in the last three months, Q4 2011 - Q3 2017, by business size
- Commercial lending rates continue recent downward trend
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- Figure 50: Average interest rate for UK MFI new advances to PNFCs, at September in 2013-17
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- Figure 51: Average interest rate for UK MFI new advances to PNFCs, at September 2013-17
- Funding for Lending scheme expected to end in January 2018
Industry Structure
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- Key points
- Industry development
- Higher number of challenger banks enter the market, but still yet to offer significant threat to the dominant banking groups
- The number of banks and building societies has remained fairly constant since 2013
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- Figure 52: Number of banks and building societies operating in the UK, 2013-17
- Figure 53: Number of banks and building societies operating in the UK, 2013-17
- Banks pushing towards more mobile business banking as branch closures continue
Company Profiles
Aldermore Bank
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- Figure 54: Financial analysis of Aldermore Bank plc, 2012-16
- Company strategy
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Barclays Plc
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- Figure 55: Financial analysis of Barclays plc, 2012-16
- Company strategy
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Clydesdale Bank plc
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- Figure 56: Financial analysis of Clydesdale Bank plc, 2013-17
- Company strategy
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Funding Circle
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- Figure 57: Financial analysis of Funding Circle, 2012-16
- Company strategy
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HSBC Bank plc
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- Figure 58: Financial analysis of HSBC Bank, 2012-16
- Company strategy
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Lloyds Banking Group
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- Figure 59: Financial analysis of Lloyds Banking Group, 2012-16
- Company strategy
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RBS Group
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- Figure 60: Financial analysis of RBS Group, 2012-16
- Company strategy
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Santander UK
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- Figure 61: Financial analysis of Santander UK plc, 2012-16
- Company strategy
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Shawbrook Bank
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- Figure 62: Financial analysis of Shawbrook, 2012-16
- Company strategy
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- Figure 63: Profiled companies’ combined turnover, 2012-16
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Forecast
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- Key points
- Ongoing developments in Brexit negotiations will impact market development
- Traditional (mainstream) lenders
- Gross lending is expected to rise as businesses react to uncertainty and possible further interest rate rises
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- Figure 64: Forecast UK MFIs’ net loans to non-financial businesses, 2018-22
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- Figure 65: Forecast UK MFIs’ net loans to non-financial businesses, 2018-22
- Loan write-offs anticipated to rise from 2020
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- Figure 66: Write offs of loans to PNFCs from banks and building societies, 2018-22
- SME finance
- Alternative finance
- Alternative market growth to be driven by P2P
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- Figure 67: Forecast UK alternative lending market, by funding type, 2018-22
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- Figure 68: Forecast UK alternative lending market, by funding type, 2018-22
- Commercial property (real estate) finance
- Slow growth expected in the commercial mortgage lending sector
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- Figure 69: Forecast gross value of annual loan originations, 2017-21
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- Figure 70: Forecast gross value of annual loan originations, 2017-21
- Total value of outstanding debt set to rise alongside short-term market uncertainty
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- Figure 71: Forecast value of outstanding debt in loan books secured on UK commercial property, 2017-21
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- Figure 72: Forecast value of outstanding debt in loan books secured on UK commercial property, 2017-21
Further Sources and Contacts
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- Trade associations
- British Private Equity & Venture Capital Association
- Loan Market Association
- National Association of Commercial Finance Brokers
- UK Finance
- Trade magazines
- Bridging & Commercial
- Commercial Property Monthly
- Credit Strategy
- The Banker
- Trade exhibitions
- Business Funding Show
- NACFB Commercial Finance Expo 2018
- Credit Summit 2018
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