COMMERCIAL BORROWING - UK - NOVEMBER 2017

COMMERCIAL BORROWING - UK - NOVEMBER 2017

Dec 2017 Mintel ManufacturingN/A Price :
$ 1322

Growth is essential for firms that want to respond to a changing marketplace and maintain their competitive edge, with external funding helping enable this expansion of operations. However, lenders can find it difficult to prove affordability for credit without a significant trading history, driving a trend for new businesses to shun mainstream lending and seek finance from alternative lenders.

Table of contents
EXECUTIVE SUMMARY
Market size
Figure 1: UK MFIs net loans to non-financial businesses, Q3 2015 - Q3 2017, by size of business
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
Figure 3: Forecast UK MFIs gross lending to non-financial businesses, 2018-22
Alternative market growth to be driven by P2P
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
Can technology help improve finance accessibility?
How will open banking change the current lending model?
INTRODUCTION
Definitions
Methodology
Abbreviations
Market positioning
UK ECONOMY
Key points
Overview
Figure 5: Forecast GDP development 2017-21
Figure 6: UK GDP quarterly development, 2007-17
Inflation
Interest rates
House prices
Figure 7: UK house price changes, 2006-17
Consumer spending
Manufacturing
Figure 8: UK manufacturing, 2014-17
Business investment
Figure 9: UK GFCF, 2007-17
Imports
Exports
MARKET FACTORS
Key points
Annual GDP growth rises in 2016, but challenges await
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...
Figure 12: Company insolvencies in England and Wales, 2012-16
... although commercial property transactions continue to rise
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
Figure 15: UK PNFCs net rate of return, Q1 2012 - Q1 2017
Figure 16: UK PNFCs net rate of return, Q1 2012 - Q1 2017
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
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
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
Key points
Net lending has remained positive in 2017 to date...
Figure 21: UK MFIs net loans to non-financial businesses, Q3 2015 - Q3 2017, by size of business
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
Figure 23: UK total loan amounts outstanding to MFIs from non-financial businesses, October 2015 - September 2017, by size of business
Figure 24: M4 loan amounts outstanding from PNFCs, October 2015 - September 2017
Figure 25: M4 loan amounts outstanding from PNFCs, October 2015 - September 2017
Market segmentation
Figure 26: UK total loan amounts outstanding to MFIs from non-financial businesses, July 2017, by industrial sector
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
Figure 28: P2P business lending volume and market share, by lender, 2017*
Figure 29: P2P business lending volume, by lender, 2017*
Crowdcube continues to lead crowdfunding market, albeit with only five major competitors
Figure 30: Crowdfunding volume and market share, by lender, 2017*
Figure 31: Crowdfunding lending volume, by lender, 2017*
Accountants could help drive further growth in P2P lending
Bridging finance
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
Figure 33: Aggregated value of outstanding debt in loan books secured on UK commercial property, 2012-16
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
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
Figure 36: Gross value of loan originations, by allocation, 2012-16
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
Figure 38: SME turnover and lending, by region, at Q2 2017
Figure 39: SME lending, by region, at Q2 2017
SMEs most in need of finance for working capital and cash flow
Figure 40: SME lending, by reason, 2016
Value of SME loan balances has declined since 2013
Figure 41: Value of SME loan balances, by region, 2013-17*
Figure 42: Value of SME loan balances, by region, 2014-16
Loan comparison tool launched to help SMEs obtain the best deal
MARKET TRENDS
Key points
Business confidence influences borrowing demand, but latest index figures continue to cast doubt
Figure 43: Business confidence index, per half-year, 2007-17
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
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
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
Figure 48: Demand for corporate credit by PNFCs in the last three months, Q4 2011 - Q3 2017, by business size
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
Figure 50: Average interest rate for UK MFI new advances to PNFCs, at September in 2013-17
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
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
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
Figure 54: Financial analysis of Aldermore Bank plc, 2012-16
Company strategy
BARCLAYS PLC
Figure 55: Financial analysis of Barclays plc, 2012-16
Company strategy
CLYDESDALE BANK PLC
Figure 56: Financial analysis of Clydesdale Bank plc, 2013-17
Company strategy
FUNDING CIRCLE
Figure 57: Financial analysis of Funding Circle, 2012-16
Company strategy
HSBC BANK PLC
Figure 58: Financial analysis of HSBC Bank, 2012-16
Company strategy
LLOYDS BANKING GROUP
Figure 59: Financial analysis of Lloyds Banking Group, 2012-16
Company strategy
RBS GROUP
Figure 60: Financial analysis of RBS Group, 2012-16
Company strategy
SANTANDER UK
Figure 61: Financial analysis of Santander UK plc, 2012-16
Company strategy
SHAWBROOK BANK
Figure 62: Financial analysis of Shawbrook, 2012-16
Company strategy
Figure 63: Profiled companies combined turnover, 2012-16
FORECAST
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
Figure 64: Forecast UK MFIs net loans to non-financial businesses, 2018-22
Figure 65: Forecast UK MFIs net loans to non-financial businesses, 2018-22
Loan write-offs anticipated to rise from 2020
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
Figure 67: Forecast UK alternative lending market, by funding type, 2018-22
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
Figure 69: Forecast gross value of annual loan originations, 2017-21
Figure 70: Forecast gross value of annual loan originations, 2017-21
Total value of outstanding debt set to rise alongside short-term market uncertainty
Figure 71: Forecast value of outstanding debt in loan books secured on UK commercial property, 2017-21
Figure 72: Forecast value of outstanding debt in loan books secured on UK commercial property, 2017-21
FURTHER SOURCES AND CONTACTS
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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