On an annualised basis, the stock of lending from financial institutions fell by 2.1 per cent, or £2.5bn.
The decline represents a slowing rate – lending was down 5.8 per cent in the three months to July and 3.2 per cent in the same period to June.
Lending to small and medium-sized enterprises (SMEs) fell by five per cent in the year to August.
“This is a damning indictment of the government’s flawed attempts to get banks lending to businesses,” said shadow treasury minister Chris Leslie. “These lending figures expose the weakness of Osborne’s negotiations.”
Consumer credit flows increased in the three months to August, but “remain subdued,” the report said.
Secured lending to individuals is up £1.2bn, or 0.4 per cent, in the period. However, the Council of Mortgage Lenders estimated September’s lending fell two per cent on August’s figure, from £13.1bn to £12.9bn.