Table of Contents
Overview
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- What you need to know
- Covered in this Report
Executive Summary
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- The market
- Net lending remained positive in 2017 and is likely to be positive in 2018
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- Figure 1: UK MFIs’ Net Loans to Non-Financial Businesses, Q3 2016 - Q3 2018, (£ Million, NSA)
- Outstanding loan amounts remain on an upward trajectory
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- Figure 2: UK total loan amounts outstanding to mfis from non-financial businesses, October 2016 - September 2018, (£ million, not seasonally adjusted)
- Write-offs on loans to non-financial companies fall to eight-year low in 2017 but are expected to rebound in 2018
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- Figure 3: Write offs of loans to PNFCs from banks and building societies, 2013-18*, (£ million, not seasonally adjusted)
- Gross lending expected to rise by an average of 3% per year to 2023
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- Figure 4: Forecast UK MFIs’ gross lending to non-financial businesses, 2019-23, (£ million, not seasonally adjusted)
- Companies and brands
- What we think
Issues and Insights
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- Lack of knowledge and understanding of the variety of external finance options available still exists, especially among small business community
- The facts
- The implications
- Greater protection for borrowers in light of growing uncertainty
- The facts
- The implications
The Market – What You Need to Know
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- Net lending remained positive in 2017 and is likely to be positive in 2018
- Gross lending expected to rise by an average of 3% per year to 2023
- Write-offs on loans to non-financial companies fall to eight-year low in 2017 but are expected to rebound in 2018
Market Size
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- Net lending remained positive in 2017 and is likely to be positive in 2018
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- Figure 5: UK MFIs’ net loans to non-financial businesses, Q3 2016-Q3 2018, by size of business, (£ million, not seasonally adjusted)
- …whilst outstanding loan amounts remain on an upward trajectory
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- Figure 6: UK total loan amounts outstanding to MFIs from non-financial businesses, October 2016-September 2018, by size of business, (£ million, not seasonally adjusted)
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- Figure 7: M4 loan amounts outstanding from PNFCs, October 2016-September 2018, (£ million, not seasonally adjusted)
Market Segmentation
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- Figure 8: UK total loan amounts outstanding to SMEs, September 2018, by industrial sector, (£ billion, not seasonally adjusted)
- Figure 9: UK total loan amounts outstanding to large businesses, September 2018, by industrial sector, (£ billion, not seasonally adjusted)
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Further Segmentation
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- Alternative finance
- Peer-to-peer business lending
- Assetz Capital accounts for most reported lending in the P2P business area
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- Figure 10: P2P business senders, cumulative lending and market share, (in £ million and %)
- Bridging Finance
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- Figure 11: UK bridging loans market value, in aggregated loan balances, 2014-18, (£ billion and % annual change)
- Commercial Property (Real Estate) Finance
- Yields fall in 2017 and remain below the long-term average in 2018 to date
- Debt marginally falls in 2017
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- Figure 12: Aggregated value of outstanding debt in loan books secured on UK commercial property, 2013-17, (£ billion)
- Loans originations remain stable despite uncertainties applying downward pressure
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- Figure 13: Gross value of annual loan originations, 2013-17, (£ Billion)
- UK banks and building societies’ share of gross value of loan originations rises to five-year high
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- Figure 14: Gross value of loan originations, by allocation, 2016-17, (% of total)
- SME funding gap
- Bank referral scheme helps secure more funding for SMEs but more needs to be done
- SMEs still using most finance for working capital and cash flow needs
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- Figure 15: SME Lending, by reason, 2017, (%)
- Value of SME loan balances reaches five-year low in 2017
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- Figure 16: Value of SME loan balances, by region, 2014-18*, (£ Million)
Market Forecast
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- Gross lending expected to rise by an average of 3% per year to 2023
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- Figure 17: Forecast UK MFIs’ gross lending to non-financial businesses, 2019-23, (£ million, not seasonally adjusted)
- Loan write-offs anticipated to peak in 2021
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- Figure 18: Write offs of loans to PNFCs from banks and building societies, 2019-23, (£ million, not seasonally adjusted)
The Impact of the Economy
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- GDP growth rebounds in Q2 but challenges remain
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- Figure 19: GDP growth rate, Q2 2014-Q2 2018, (% change on previous quarter)
Market Trends
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- Business confidence turns negative in H2 2018 with uncertainty affecting demand for finance
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- Figure 20: Business confidence index, per half-year, Q2 2008-Q4 2018, (index figure)
- Write-offs on loans to non-financial companies fall to eight-year low in 2017 but are expected to rebound in 2018
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- Figure 21: Write offs of loans to PNFCs from banks and building societies, 2013-18*, (£ million, not seasonally adjusted)
- Credit availability stagnates and demand falls in 2018
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- Figure 22: Availability of corporate credit to PNFCs in the last three months, Q4 2012-Q3 2018, by business size, (net percentage balance)
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- Figure 23: Demand for corporate credit by PNFCs in the last three months, Q4 2012-Q3 2018, by business size, (net percentage balance)
- Commercial lending rates rise in 2018 to reverse recent downward trend
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- Figure 24: Average interest rate for UK MFI new advances to PNFCs, at September in 2014-18, (% not seasonally adjusted)
Market Drivers
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- The threat of a no-deal Brexit drives borrowing uncertainty
- Company insolvencies rise again, highlighting the tough business market…
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- Figure 25: Company insolvencies in England and Wales, 2013-17, (number)
- …although commercial property transactions continue to rise
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- Figure 26: Number of non-residential property transactions, 2013-17, (number, seasonally adjusted)
- Business investment levels rise while profitability continues to stagnate in the private sector
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- Figure 27: UK PNFCs net rate of return, Q2 2013-Q2 2018, (% return)
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- Figure 28: UK total business investment, 2013-17, (chained volume measures and not seasonally-adjusted, £ billion)
- Number of inward and domestic M&A deals fall in 2017 but the relatively low value of the pound continues to attract investors
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- Figure 29: Mergers and acquisitions of UK companies, 2013-17, (number of companies)
- Government schemes
- British Business Bank
- Business Finance Support Finder
- Enterprise Finance Guarantee
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- Figure 30: EFG lending, by number and value of loans offered and by number and value of loans drawn, 2009-18*, (units and £ million)
- BoE Stress Test
Companies and Brands – What You Need to Know
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- Open banking will lead to commercial banking changes
- Lenders begin boosting SME funding options
Industry Structure
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- Industry development
- Open banking will lead to commercial banking changes
- The number of banks and building societies has remained fairly constant since 2014
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- Figure 31: Number of banks and building societies operating in the UK, 2014-18
Competitive Strategies
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- Lenders begin boosting SME funding options
- New platform launched to help businesses navigate funding market
Company Profiles
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- Barclays PLC
- Recent company activity
- Financial information
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- Figure 32: Financial analysis of barclays plc, 2013-17, (£ million)
- Funding Circle
- Recent company activity
- Financial information
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- Figure 33: Financial analysis of funding circle, 2013-17, (£ 000)
- HSBC Bank plc
- Recent company activity
- Financial information
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- Figure 34: Financial analysis of HSBC bank, 2013-17, (£ million)
- Lloyds Banking Group
- Recent company activity
- Financial information
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- Figure 35: Financial analysis of Lloyds Banking Group, 2013-17, (£ million)
- RBS Group
- Recent company activity
- Financial information
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- Figure 36: Financial analysis of RBS Group, 2013-17, (£ million)
- Santander UK plc
- Recent company activity
- Financial information
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- Figure 37: Financial analysis of Santander UK plc, 2013-17, (£ million)
- Shawbrook Bank
- Recent company activity
- Financial Information
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- Figure 38: Financial analysis of Shawbrook Bank, 2013-17, (£ million)
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Methodology
Further Sources and Contacts
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- Trade Associations
- Trade Magazines
- Trade Exhibitions
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