September 26, 2017 / 8:54 AM / 10 months ago

UK consumer lending growth slows in August, industry data shows

LONDON (Reuters) - British banks increased their lending to consumers in August at the slowest pace in at least five months, industry figures showed on Tuesday, a day after the Bank of England said banks had to bolster their defences against consumer loan losses.

FILE PHOTO: A city worker walks through the City of London with St. Andrew Undershaft church surrounded by business skyscrapers, December 16, 2014. REUTERS/Toby Melville/File Photo

Lending by major British banks to consumers rose by an annual 1.5 percent in August, slowing from 1.9 percent in July and the lowest increase since April, when UK Finance, a group representing lenders, introduced a new data series.

“Despite resilience in consumer spending, annual growth in consumer credit has been slowing over the last few months,” Mohammad Jamei, an economist with UK Finance, said.

“Across the UK some households have opted to save a little less, whilst others have not increased their borrowing.”

Bank of England data, which covers a wider range of lenders than the figures released on Tuesday, shows unsecured consumer lending growing at nearly 10 percent a year.

UK Finance also said lenders approved 41,807 mortgages for house purchases last month, up slightly from 41,644 in July and 11 percent higher than in August 2016, shortly after the vote to leave the European Union, UK Finance said.

Britain’s economy slowed sharply in the first half of this year as an increase in inflation - caused largely by the fall in the value of the pound after the Brexit vote - ate into the spending power of consumers.

Credit card lending rose by a net 83 million pounds in August, its weakest performance since December last year, UK Finance said.

The next release of the more comprehensive Bank of England lending data is due on Friday.

The BoE said on Monday that British banks have underestimated risks from their lending to consumers and need to hold an extra 10 billion pounds of capital to guard against the risk of future losses.

Reporting by Polina Ivanova and William Schomberg, editing by David Milliken

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