Bank Liabilities Survey - 2018 Q2

This quarterly survey of banks and building societies is aimed at improving our understanding of the role of lenders’ liabilities and capital in driving credit and monetary conditions.
Published on 12 July 2018

The 2018 Q2 survey was conducted between 21 May and 8 June 2018.

Funding

  • UK banks and building societies reported that their total funding volumes increased significantly in the three months to mid-June 2018. Within the total, ‘other’ funding — which includes wholesale debt funding, wholesale deposits and funding via central bank operations — was reported to have increased, while retail deposit funding was reported to have been unchanged (Chart 1). Lenders expected total funding volumes to increase further in 2018 Q3, driven mainly by ‘other’ funding.
  • Spreads — relative to appropriate reference rates — on ‘other’ funding were reported to have increased in Q2, while spreads on retail deposits were reported to have fallen (Chart 2). Lenders expected spreads on retail deposit to fall and ‘other’ funding spreads to increase over the next quarter.
  • Lenders reported that the supply of deposits from households fell in Q2, and were expected to be unchanged over the next quarter. The supply of deposits from private non-financial corporates was reported to have increased in Q2 and was expected to increase slightly in Q3 (Chart 3).
  • Investor demand for banks’ wholesale debt was reported to have decreased significantly in Q2 (Chart 4). The largest falls in demand were from hedge funds and sovereign wealth funds. Lenders expected a marked fall in the demand for wholesale debt from all investors in Q3.

Capital

  • Lenders reported that their total capital levels increased in Q2. This was mainly due to changes in the size of their balance sheets, which were reported to have had a positive contribution to the demand for capital. The total level of capital was expected to increase slightly in Q3.
  • The average cost of capital was reported to have increased a little in Q2 and was expected to increase further in Q3.

Transfer pricing

  • Lenders reported that the internal price charged to business units to fund the flow of new loans (the ‘transfer’ price) had decreased in Q2 (Chart 5). This was reported to have been driven by a fall in retail deposit spreads and short-term wholesale funding spreads (Chart 6). Lenders expected no change in the transfer price in Q3.

PDFBank Liabilities Survey - 2018 Q2

PDFAnnex

 

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