There are so many numbers and ratios for investors to consider when evaluating the UK banks. Tier 1 capital, price-to-book, net interest margin — there’s no shortage of important metrics we can pore over.
But last week I saw a particularly interesting statistic about the UK lenders’ performance in the second quarter. And on the basis of this metric, out of all the major listed UK banks, Lloyds (LSE: LLOY) (NYSE: LYG.US) was at the top of the pile.
In the second quarter of 2013, net lending at Lloyds improved by £1.2bn. That’s almost double the £668m jump in net lending at Barclays (LSE: BARC) (NYSE: BCS.US) over the same time period.
Now this is arguably too short a period of time to judge shifts in lending patterns, but I do think it’s indicative of the momentum behind the turnaround story at Lloyds. Its net lending for the year is still down by £5.3bn, as it reorganises and refocuses its business. But in the second quarter at least, no other major UK bank was extending its net lending by nearly as much as Lloyds. It may not be coming from a position of strength, but the rate at which things are changing at Lloyds is striking.
For Barclays, its increase in net lending was still impressive, and it’s a sign that the majority of UK lenders are seeing more opportunities to extend their loan books. On a whole, UK net lending improved by more than £1.6bn in the second quarter, across the 41 lenders signed up to the ‘Funding For Lending’ scheme. Whether that’s being driven by demand or more accommodative bank lending, it reflects the improving confidence of the UK economy since the start of the year.
At the bottom of the table lies Royal Bank of Scotland (LSE: RBS)(NYSE: RBS.US), which actually shrank its net lending by almost £2.8bn. It perhaps shows the stage RBS is at compared to Lloyds in its path back to privatisation. RBS continues to cut back swathes of its risky loan exposure — although it is still increasing its lending in certain areas.
As a final aside, I’ll leave you with another statistic included in the results. None of the three banks — Lloyds, Barclays or RBS — drew any further credit from the ‘Funding For Lending’ scheme in the second quarter.
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> Mark does not own any shares in this article.
