UK banks wrote off a record £17.3bn of bad debts in 2010, an eight per cent increase on 2009’s figure of £16.1bn.
The increase was in part due to a 29 per cent rise in bad credit card debt to £5.32bn, up from £4.12bn last year, according to research by finance broker Syscap.
Syscap said that subsequently a rebound in levels of bank lending was unlikely in the near future.
Philip White, chief executive of Syscap, added that small and medium-sized enterprises (SMEs) should look towards leasing as a way to raise capital as it is less of a drain on banks’ balance sheets.
White said: “SMEs that are looking to expand, create jobs and invest are going to find getting a conventional loan from a bank a hard slog. Businesses will find it easier to raise capital investment by securing funds against that asset through leasing rather then by getting a normal loan.”
Figures from the Finance and Leasing Association show that total asset finance provided to businesses, in the three months to February, increased by 20 per cent on the same period last year.
White added: “We have banks lining up to provide our clients with funds through leasing, but those same customers would really struggle to get competitively priced conventional bank loans.
“Funding raised through leasing does not impact on a business’ credit lines. That will give the company more headroom to borrow additional funds when they need it in the future. Most leasing arrangements, unlike loans, do not have a negative impact on a balance sheet.”