Royal Bank of Scotland added to continuing concerns about levels of consumer debt today after it reported rises in credit card arrears.
The Edinburgh-based group followed rivals, including Barclays, in stating that provisions to cover bad debts were currently higher than levels in 2004.
However, the owners of Ulster Bank and First Active insisted there was no cause for alarm and pointed out that the figures were “within normal parameters”, adding that the level of arrears in recent years had been at “historically low levels”.
The guidance came as the Bank of England’s monetary policy committee (MPC) began two days of deliberations on UK interest rates.
The nine-strong committee, which announces its decision at noon tomorrow, is facing calls for a cut in rates as concerns grow over a major deterioration in consumer confidence.
RBS chief executive Sir Fred Goodwin said a no-change decision was still the most likely outcome, adding that he believed the MPC had succeeded in its objective of tempering the growth in consumer credit.
In terms of the arrears, he said: “What we have been seeing at this point would be closer to more normal levels. There’s nothing to make us wish we had not done the business in the first place.”
RBS said the slowdown in consumer growth had also brought about a lower level of income growth in the company’s UK retail market, mainly through a reduction in levels of unsecured lending.
Across the group, RBS said it had continued to perform well in the first half of 2005, with underlying growth in profits expected to be broadly consistent with the level reported a year earlier.