BOE says banks plan to cut back lending to consumers on worries about economy

[LONDON] British banks expect to cut back lending to consumers in the coming months as they turn more cautious about the economy, the Bank of England said on Thursday.

The central bank's quarterly Credit Conditions Survey also found that banks planned to tighten their credit standards further in the July-September period for credit cards and other unsecured borrowing.

"A changing appetite for risk was reported to be an important driver of this in Q2 and Q3, with a changing economic outlook also affecting expectations for Q3," the Bank said.

The BOE said last week it wanted banks and other lenders to show that they are not being too complacent about risks to their balance sheets in case Britain's economy slows, raising the risk of higher loan losses.

Britain's economy slowed sharply in early 2017 as consumers felt the inflationary pinch from the fall in value of the pound since last year's Brexit vote.

Thursday's survey also showed banks expected to provide fewer mortgages to highly indebted home-buyers in the third quarter.

The BOE survey was conducted between May 22 and June 9, mostly covering the period before Britain's inconclusive national election on June 8.

REUTERS