Total savings balances grew 7% from March to September
Bristol Credit Union (BCU) members' savings have increased during the Covid-19 pandemic. Total savings balances grew 7% from March to September, having grown by 2.7% from December 2019 to March 2020. Balances now stand at a total of £7.7m compared with £7.2m at the end of March. During this same period, loan balances remained broadly flat.
The strong growth in deposits reflected the appetite by local savers and investors for their money to do good and support those who are struggling financially, and this comes despite the closure of the digital Bristol Pound scheme which saw withdrawals of c£200k of the £465k remaining £B balances during July/August.
Back in March, the Bank of England base rate was reduced from 0.25% to 0.1% in an emergency move to help the economy during the coronavirus pandemic. This led to reduced savings rates across the financial services sector, and a greater incentive to seek out positive social returns to maximise the value from savings.
At the same time as growing deposits, at BCU we have seen increased demand for loans, but with reduced amounts borrowed. The average new loan in October was £1,015, down from £1,331 last October and £1,317 in March, a 23% reduction within 6 months. Meanwhile, the number of loans has increased with 190 loans issued in March growing to 296 in October suggesting that while more loans are currently being requested, people are not looking to fund the big-ticket purchases such as home improvements or a new car that they might have done in 2019.
In the commercial sector, the September Bank of England report shows SMEs have continued to borrow from banks, drawing an extra £1.6bn on net loans, while large non-financial businesses made net repayments of £5.8bn to banks. Household consumer credit weakened in September when compared to August, with net repayments of £0.6bn of consumer credit compared with £0.3bn of net borrowing in August. September’s net repayment is relatively small when compared to the £3.9bn monthly average repayments seen between March and June, however we must remember that there was an average of £1.1bn of additional borrowing per month in the 18 months up to February 2020.
The trends suggest that certain areas had begun to show signs of recovery. Despite a fall during the first 2 months of the lockdown, mortgage approvals for house purchases increased sharply with 91,500 approvals in September, the highest since September 2007. However, with the introduction of the new lockdown restrictions in England, economists predict the UK economy to shrink by 5.7% in November. Recently, Rishi Sunak announced the UK economy is forecasted to contract by 11.3% this year, the biggest drop in 300 years.
James Berry, CEO of Bristol Credit Union, commented: “The impact of Covid-19 has seen a change in mindset during the pandemic. Our customers are investing and saving more with us, which in turn helps Bristol and the surrounding areas as we’ve seen demand for loans remain strong. We’re here to support those financially impacted in recent months, helping our local communities to continue and bounce back better. It’s been truly warming to witness how our members have rallied to support each other despite the national economic picture and fiscal measures."
We will continue to build on this through 2021 and call on anyone who is struggling to access fair borrowing, or want a safe home for their savings with a positive social return, to take a look at what we can do for them.
For more details on BCU loans and savings options, please email firstname.lastname@example.org, or call us on 0117 924 7309.