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COMMERCIAL BANKING AND FINANCE-UK-MARCH 2018

Published By :

Mintel

Published Date : Mar 2018

Category :

Banking

No. of Pages : N/A

Banks must confront the challenges of digital structural change and redesign their operating models. By strategically connecting their businesses with the vast amount of data available to them, such as through the cloud, they can build intelligence on customers’ evolving needs, which can drive value.

Table of contents
EXECUTIVE SUMMARY
Market Size
Figure 1: UK MFIs Sterling Deposits from UK Resident Businesses, by Quarter End, 2016-17, (£ Million Outstanding of Deposit Liabilities, Excluding Under Repo, Not Seasonally Adjusted)
Figure 2: MFI Sterling Deposits of UK Resident Non-Financial Businesses, by Industry Type, Top Eight, December 2017, (% Share of Total)
Figure 3: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2015 - Q4 2017, by Size of Business, (£ Million, Not Seasonally Adjusted)
Market Trends
‘Fintech’ collaboration driving operational model change
Business confidence influences borrowing demand and continues to cast shadow on prospects
Commercial lending rates rise in 2017 after 2016 dip
Figure 4: Average Interest Rate for UK MFI New Advances to PNFCs, at December 2013-17, (% Not Seasonally Adjusted)
Demand and availability of credit remained low in 2017
Figure 5: Demand for Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
Market Factors
Brexit could lead to greater capital requirements and costs whilst the BoE attempts to promote stability
Business investment levels continue to rise while profitability remains stable in the private sector
Highest number of inward and domestic M&A deals since 2012 with the low value of the pound attracting investors
Companies
Figure 6: Profiled Companies’ Combined Income, 2012-2016, (£ Million)
Forecast
Stable growth expected in deposit levels despite ongoing uncertainty
Figure 7: Forecast UK MFIs Sterling Deposits from UK Resident Non-Financial Corporations, 2018-2022, (£ Billion at 2017 prices)
Growth expected in SME account balances despite gaps in service provision
What We Think
KEY INSIGHTS
How can banks meet the threat posed by the new wave of technology-led providers?
Can open banking provide opportunities to the larger banks or will it pose a threat to their dominance?
INTRODUCTION
Definitions
Methodology
Abbreviations
MARKET POSITIONING
The supplier
The customer
UK ECONOMY
Key Points
Overview
Figure 8: Forecast GDP development 2017-21, (% Annual Growth)
Figure 9: UK GDP Quarterly Development, 2007-17, (% Quarterly Growth and GDP in £ Billion)
Inflation
Interest rates
House prices
Figure 10: UK House Price changes, 2006-2017, (12 month % change)
Consumer spending
Manufacturing
Figure 11: UK Manufacturing, 2014-17, (Index, 2013 = 100)
Business investment
Figure 12: UK GFCF, 2007-17, (£ Million, Chained Volume Measures, Seasonally Adjusted)
Imports
Exports
MARKET FACTORS
Key Points
Brexit could lead to greater capital requirements and costs whilst the BoE attempts to promote stability
Annual GDP growth likely to have slowed in 2017, with further challenges ahead
Figure 13: GDP Growth Rate, 2013 - Q3 2017, (% Change on Previous Quarter)
Figure 14: GDP Growth Rate, 2013 - Q3 2017, (% Change on Previous Quarter)
Large corporates account for majority of private sector turnover
Figure 15: Business Population in the UK, Private Sector, by Company Size, 2013-17, (Number, £ Billion and Millions Employed)
Business investment levels continue to rise while profitability remains stable in the private sector
Figure 16: UK PNFCs Net Rate of Return, Q3 2012 - Q3 2017, (% Return)
Figure 17: UK PNFCs Net Rate of Return, Q3 2012 - Q3 2017, (% Return)
Figure 18: UK Total Business Investment, 2012 -16, (Chained Volume Measures and Not Seasonally-Adjusted, £ Billion and % Annual Change)
Figure 19: UK Total Business Investment, 2012-16, (Chained Volume Measures and Not Seasonally-Adjusted, £ Billion)
Rise in company insolvencies reduces opportunities for banking services
Figure 20: Company Insolvencies in England and Wales, 2013-17, (Number and % Annual Change)
Figure 21: Company Insolvencies in England and Wales, 2013-17, (Number)
Highest number of inward and domestic M&A deals since 2012, with the low value of the pound attracting investors
Figure 22: Mergers and Acquisitions of UK Companies, 2012 -2016, (Units)
Figure 23: Mergers and Acquisitions of UK Companies, 2012-2016, (Units)
Regulation has altered the way banks operate and added barriers to recording strong profitability
COMMERCIAL BANKING MARKET
Key Points
Latest annual bank stress test reveals industry robustness
Commercial deposits rise over 2017
Figure 24: UK MFIs Sterling Deposits from UK Resident Businesses, December 2015-17, (£ Million Outstanding of Deposit Liabilities, Excluding Under Repo, Not Seasonally Adjusted)
Figure 25: UK MFIs Sterling Deposits from UK Resident Businesses, by Quarter End, 2016-17, (£ Million Outstanding of Deposit Liabilities, Excluding Under Repo, Not Seasonally Adjusted)
Professional, scientific and technical activities account for largest share of total NFB deposits
Figure 26: MFI Sterling Deposits of UK Resident Non-Financial Businesses, by Industry Type, December 2017, (% Share of Total)
Figure 27: MFI Sterling Deposits of UK Resident Non-Financial Businesses, by Industry Type, Top Eight, December 2017, (% Share of Total)
Small businesses continue to perform strongly
Figure 28: MBBG Deposits of Small and Medium-Sized Businesses, September, 2013-17, (£ Billion)
Figure 29: MBBG Deposits of Small and Medium-Sized Businesses, September, 2013-17, (£ Billion)
COMMERCIAL BORROWING
Key Points
Net lending remained positive in 2017
Figure 30: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2015 - Q4 2017, by Size of Business, (£ Million, Not Seasonally Adjusted)
Figure 31: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2015 - Q4 2017, by Size of Business, (£ Million, Not Seasonally Adjusted)
Commercial lending rates rise in 2017 after 2016 dip
Figure 32: Average Interest Rate for UK MFI New Advances to PNFCs, at December in 2013-2017, (% Not Seasonally Adjusted)
Figure 33: Average Interest Rate for UK MFI New Advances to PNFCs, at December 2013-17, (% Not Seasonally Adjusted)
Demand for and availability of credit remained low in 2017
Figure 34: Availability of Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
Figure 35: Availability of Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
Figure 36: Demand for Corporate Credit by PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
Figure 37: Demand for Corporate Credit to PNFCs in the Last Three Months, Q1 2012 - Q4 2017, by Business Size, (Net Percentage Balance)
MARKET TRENDS
Key Points
‘Fintech’ collaboration driving operational model change
Online business banking remains most used banking service feature...
Figure 38: Use of Business Banking Features in the Last Three Months, June 2017
... as market seeks to improve the payments process
Business confidence influences borrowing demand and latest index figures continue to cast a shadow on prospects
Figure 39: Business Confidence Index, per Half-Year, 2007-2017, (Index Figure)
Figure 40: Business Confidence Index, per Half-Year, 2007-2017, (Index Figure)
Write offs on loans to non-financial companies fell to a seven-year low in 2016 with 2017 set to decline further
Figure 41: Write Offs of Loans to PNFCs from Banks and Building Societies, 2012-17*, (£ Million, Not Seasonally Adjusted)
Figure 42: Write Offs of Loans to PNFCs from Banks and Building Societies, 2012-17*, (£ Million, Not Seasonally Adjusted)
BRAND COMMUNICATION AND PROMOTION
Key Points
Ad spend declines again in 2017
Figure 43: Advertising Expenditure on Business Banking Services, 2013-17, (£ 000)
Figure 44: Advertising Expenditure on Business Banking Services, 2013 and 2017, (% of Total Ad Spend)
Santander claims position as largest campaign spender
Figure 45: Advertising Expenditure on Business Banking Services, by Advertiser, 2013-2017, (£ 000)
Figure 46: Advertising Expenditure on Business Banking Services, by Advertiser, 2013 and 2017, (% of Total Ad Spend)
Outdoor advertising overtakes digital as main recipient of advertising expenditure
Figure 47: Advertising Expenditure on Business Banking Services, by Media Type, 2013-2017, (£ 000)
Figure 48: Advertising Expenditure on Business Banking Services, by Media Type, 2013 and 2017, (% Share)
INDUSTRY STRUCTURE
Key Points
Industry Development
Presence of challenger banks yet to offer meaningful threat to the dominant banking groups...
... but RBS funding plan could boost challenger ambitions
Open banking will also lead to commercial banking changes
The number of banks and building societies rose in 2017
Figure 49: Number of Banks and Building Societies Operating in the UK, 2013-2017, (Number)
Figure 50: Number of Banks and Building Societies Operating in the UK, 2013-17, (Number)
Government continues to scale back involvement in the banking sector
In total, £137 billion has been disbursed by the Treasury since the crisis. By the end
Figure 51: Cost to UK Government of Financial Interventions in Banking Sector, at 31 October 2017, (£ Billion)
RBS
Lloyds
COMPANY PROFILES
ALDERMORE BANK
Figure 52: Financial Analysis of Aldermore Bank plc, 2012-16, (£ Million)
Company Strategy
BARCLAYS PLC
Figure 53: Financial Analysis of Barclays plc, 2012-16, (£ Million)
Company Strategy
CLYDESDALE BANK PLC
Figure 54: Financial Analysis of Clydesdale Bank plc, 201317, (£ Million)
Company Strategy
CO-OPERATIVE BANK
Figure 55: Financial Analysis of Co-operative Bank plc, 2012-16, (£ Million)
Company Strategy
HSBC
Figure 56: Financial Analysis of HSBC Bank, 2012-16, (£ Million)
Company Strategy
LLOYDS BANKING GROUP
Figure 57: Financial Analysis of Lloyds Banking Group, 2012-16, (£ Million)
Company Strategy
ROYAL BANK OF SCOTLAND GROUP
Figure 58: Financial Analysis of RBS Group, 2012-16, (£ Million)
Company Strategy
SANTANDER UK PLC
Figure 59: Financial Analysis of Santander UK plc, 2013-17, (£ Million)
Company Strategy
Figure 60: Profiled Companies’ Combined Income, 2012-2016*, (£ Million)
COMMERCIAL BANKING FORECAST
Key Points
Uncertainties around the nature of the post-Brexit business environment will impact market development
Stable growth expected in deposit levels despite ongoing uncertainty
Figure 61: Forecast UK MFIs Sterling Deposits from UK Resident Non-Financial Corporations, 2018-2022, (£ Billion at 2017 prices, % Annual Change)
Figure 62: Forecast UK MFIs Sterling Deposits from UK Resident Non-Financial Corporations, 2018-2022, (£ Billion at 2017 prices)
New restrictions in the scope of the bank levy removes a disincentive for banks to remain headquartered in the UK
Growth expected in SME account balances despite gaps in service provision
FURTHER SOURCES AND CONTACTS
Trade Associations
Trade Magazines
Trade Exhibitions

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