THE UK’s biggest five banks are on track to meet Government targets after ramping up lending to companies, new figures have shown.

New corporate loans in the three months to June were £53bn up from £47.3bn the previous quarter. Lending to small and medium-sized companies also rose, by 22% to £20.5bn.

In the first quarter the five banks - Barclays, HSBC, Lloyds Banking Group, RBS and Santander - collectively lent £16.8bn to small and medium-sized firms - more than £2bn shy of the £19bn target set under Project Merlin.

But the second quarter figures mean the banks are back on course to meet those targets.

At the end of June they had lent 49% of the £76bn promised to SME borrowers this year, and 53% of the overall annual target of £190bn.

Tony Sarginson of EEF in the North-east, said: “While meeting a Merlin target for lending shows positive intent, it is not a complete picture on access to finance.

“The cost of credit and terms and conditions attached to lending remain a major concern.

“With Teesside firms’ confidence to invest taking a battering from increasing global uncertainty, we need to see the costs of accessing credit start to ease, especially for Teesside-based SMEs.”

EEF’s quarterly Credit Conditions Survey has consistently shown the cost of finance - including extra costs outside the headline rate - have continued to worsen since the financial crisis first hit in 2008.

“This is a particular concern for Teesside SMEs who have the least available options for sourcing external finance,” Mr Sarginson said.