Bank of England Deputy Governor Sam Woods said on Tuesday that impairments were rising among banks after being held down by government measures during the coronavirus pandemic.
"As we look at it now, we are actually seeing a pick-up in impairments across the banking sector," Woods told CNBC television. "It's not one that people should be alarmed about... It's going up but from a very low base and we have got a close eye on it."
British households and businesses have been hit by the surge in inflation last year and a subsequent climb in interest rates by the BoE.
Woods also said the BoE was monitoring British banks' exposure to China's weakening property sector.
(Reporting by Huw Jones Writing by William Schomberg)