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Perhaps unsurprisingly, the lender said its customers were being cautious, avoiding taking out personal loans and instead turning to depositing their cash.
It said it had seen higher customer spending prior to stricter Covid-19 restrictions introduced in November and December, but this fell back as tiering and lockdowns were introduced.
Customer deposits rose 0.9 per cent to £68.1billion in the quarter, as customers spent less and businesses maintained healthy balance sheets to get through the pandemic.
Personal lending fell 2 per cent to £5.1billion as lockdown restrictions reduced credit card and other spending, while mortgages reduced by a smaller 0.2 per cent to £58.2billion compared to the previous quarter.
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At the start of September, buried in an otherwise nondescript update about changing terms and conditions, the digital bank Starling made an unusual announcement.
From 4 November, the bank would introduce an interest rate of -0.5 per cent on deposits over €50,000 held in its euro account.
Starling had become the first British bank to set negative interest rates and charge customers for the privilege of holding their money.
The news became This is Money s most-read banking story in the whole of September.
Starling became the first British bank to introduce negative interest rates earlier this year
At the time, the bank s chief strategy officer, Declan Ferguson, told us it was slightly niche and the move hit a relatively small subset of customers , with no discernible impact of their behaviour .
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