UK Consumer Credit 2010

Introduction
The UK consumer credit landscape remains unsettled with the government's proposed cuts package looming heavily over the market recovery. This has led to a flat performance in many lines of consumer credit, with counter-cyclical markets such as motor and retail finance the best performers. As the economy begins to improve, lenders will need to react quickly in order to take full advantage.

Features and benefits
Covers a variety of markets across the industry such as unsecured personal loans, motor finance, retail finance, peer to peer and non-standard lending
Provides three different scenario forecasts for the consumer credit market as a whole as well as forecasts for individual markets.
Includes market share data across some of the different consumer credit sectors.
Provides data from Datamonitor's proprietary Retail Banking Consumer Survey.
Highlights
The different consumer credit products all witnessed deteriorations in performance in 2009 in comparison with 2008. The alteration of conditions under the recessionary environment led to some lines performing quite robustly while others saw a significant contraction.

Although the level of competition remains low among unsecured personal loan providers, market experts did suggest that some players have made tentative steps to boost their aggression in terms of attracting new customers.

The recession has seen the popularity of product lines such as motor and retail finance gaining in popularity as consumers have found it difficult to access funding from banks and building societies.

Your key questions answered
Formulate market share objectives for your company and track progress using our market share and channel size data
Gain an in-depth knowledge of different consumer credit markets, from large established products to the more niche challengers.
Make informed market entry decisions through a greater understanding of the market and how it will perform over the next few years.

[Studien Infos ausblenden]

TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
The UK Consumer Credit Market in 2009 and Future Outlook 13
The consumer credit market performed better than anticipated in 2009 13
There are a number of key trends in the market which will continue to have an impact in 2010 22
New regulatory developments are set to have an important impact on the consumer credit market 27
Datamonitor forecasts the market to show a gradual improvement from the end of 2010 30
Competitive Dynamics in UK Unsecured Personal Loans 38
Lloyds Banking Group has the largest market share of new lending 38
Although competitive pressure is weak, elements of competition remain in the market 41
Advertising spend is increasing for the large lenders in the market 48
Renewed focus on face-to-face reflects lenders' focus on existing customers 51
Lenders face various hurdles such as regulation which are subduing competitive pressure 58
Talking Shop: Overview of the UK Retail Finance Market 64
For some consumers, retail finance products can make the unaffordable affordable 64
The relationship between retailers and finance houses favors the retailer 67
There was an improvement in the fortunes of some retail finance products in 2008 and 2009 69
Store card lending has continued to decline despite attempts to attract more business in 2008 72
The mail order finance market is dominated by a few players 80
Store installment credit has seen the strongest relative performance during the recession 82
Important trends have emerged in the retail finance market 82
With retail finance products continuing to decline, the future lies in co-branded cards 85
Dreaming of Life in the Fast Lane: Overview of the Motor Finance Market 90
The motor finance market is intricately linked to the overall motor market 90
The motor finance market was in decline prior to 2007 but performed robustly during the recession 94
Competition in the market is currently weak, with two players dominating the independent sector 105
Car dealerships have had to reassess their options during the economic downturn 108
Females, the young and those on low incomes are most likely to have motor finance 110
Regulation continues to have an intrusive impact on the motor finance market 116
The motor finance market is likely to witness slow growth over the next four years 121
Peer to Peer Lending 122
P2P lending is increasing its market share of gross advances as a result of the credit crisis 122
The P2P lending market has experienced exponential growth from 2007 126
Zopa is the main UK player, although others are entering the market 130
Consumers are unaware of how the different types of risk will impact on the rate of return of their investment 135
Product innovation and secondary markets could be the future for the P2P lending market 138
Non-Standard Lending: Market Overview 141
The non-standard population comprises many disparate groups 141
The number of non-standard consumers has been steadily growing 142
The industry has broadly welcomed the findings of recent regulatory investigations 145
Non-Standard Lending: Home Credit 150
The main home credit providers have weathered the downturn with varying degrees of success 150
Smaller lenders have managed to maintain market share 154
Some home credit providers have started to offer pre-paid cards 155
Pricing is consistent among the main national players 156
Growth in the home credit market has been slow 157
The outlook for the home credit market over the next few years looks subdued 158
Datamonitor predicts small increases in home credit lending over the next few years 159
Non-standard Lending: Payday Lending 162
Payday lending has grown rapidly over the last few years 162
The payday loans market is less fragmented than appears at first sight 163
High rates of growth in payday lending are attracting large numbers of new players 165
Large numbers of suppliers are likely to enter and exit the market over the next few years 166
Increased variability in income suggests encouraging prospects for future growth 166
Datamonitor expects to see marked growth in payday lending over the next few years 166
Non-standard Lending: other Non-standard Lending 166
The unsecured loans market has contracted for several years 166
Secured lending has collapsed since the onset of the banking crisis 166
There are now several credit cards specifically aimed at the non-standard market 166
APPENDIX 166
Supplementary data 166
Definitions 166
Methodology 166
Forecasting methodology 166
Further reading 166
Ask the analyst 166
Datamonitor consulting 166
Disclaimer 166


TABLE OF FIGURES
Figure 1: Gross lending has declined since 2004 but balances outstanding only started to decline in 2009 13
Figure 2: Credit cards lending has built up a much larger share of the overall consumer credit market 16
Figure 3: Building society lending dropped significantly in Q1 2008 18
Figure 4: Unsecured personal loans have seen the largest increase in APRs since March 2008 19
Figure 5: Household demand for unsecured lending products has fallen away Error! Bookmark not defined.
Figure 6: Consumers were more concerned about credit card debt than loan repayments 21
Figure 7: Credit card write-offs have been an area of concern and will need to be monitored carefully 22
Figure 8: Default rates on credit cards have lagged behind other unsecured lending defaults 23
Figure 9: Cash withdrawals have declined as a percentage of credit card activity 24
Figure 10: The gap between credit and debit is growing as credit declines while debit continues to grow 25
Figure 11: Following a period of growth, overdraft balances are in decline 26
Figure 12: The FLA’s car finance website gives consumers a better idea of what they should expect to pay 30
Figure 13: Unsecured personal loans will experience the fastest compound annual growth rate 35
Figure 14: Lloyds Banking Group originated almost one third of unsecured personal loans in 2009 39
Figure 15: The average size of an unsecured personal loan has dropped consistently since 2005 40
Figure 16: Lloyds Banking Group has the largest individual share of outstanding balances for the top 10 lenders 41
Figure 17: There remains a disconnect between the average rate on a loan compared with the base rate 43
Figure 18: The best rates are generally available to existing customers 44
Figure 19: There are some signs of competition on lender websites 47
Figure 20: Advertising expenditure went up in 2009 despite consolidation in the industry 49
Figure 21: Direct mail remains the most important advertising channel 50
Figure 22: Credit scoring conditions for total unsecured loan applications have improved in Q2 2010 51
Figure 23: The branch remains a key channel of arrangement, with aggregators claiming only a small share 52
Figure 24: RBS has the largest proportion of loans taken out for a five-year period 55
Figure 25: Borrowers are more likely to take out smaller loans with NatWest 56
Figure 26: Almost half of Santander/Abbey customers are social grade C1 57
Figure 27: NatWest and RBS have a larger proportion of the 18–24 age group 58
Figure 28: The level of write-offs has fallen at the overall level, with unsecured lending seeing the biggest drop in Q1 2010 60
Figure 29: The different retail finance products each offer something different to consumers 67
Figure 30: The recession either sparked an upturn or slowed the rate of decline for the three main retail finance products 70
Figure 31: Store installment credit has witnessed a recent upsurge in balances outstanding which is consistent with the increase in gross advances 72
Figure 32: The average rate on store cards bucked its long-term trend in 2008 73
Figure 33: Santander had more than 50% of the store card market in terms of cards in issue in 2008 74
Figure 34: Advertising data dropped between 2005 and 2007 but picked up during the early part of the recession 76
Figure 35: Females and those within the 25–34 age range are most likely to carry a store card 77
Figure 36: Those in the higher income groups are more likely to have a store card 78
Figure 37: Shop Direct Group has maintained a one-third share of the mail order market 80
Figure 38: The number of co-branded cards has shown some growth over the last five years 83
Figure 39: Vehicle funding can come from a variety of different sources 91
Figure 40: Motor finance gross lending has expanded its share of the overall consumer credit market 95
Figure 41: Motor finance for new cars was higher than for used cars in 2009 96
Figure 42: PCPs have increased in popularity at a CAGR of 11.4% since 2004 98
Figure 43: New and used car sales have decreased but motor finance gross advances have increased their share of the consumer credit market 99
Figure 44: Motor finance has taken a larger share of new car purchases than unsecured personal loans 100
Figure 45: Consumer expenditure on new cars made up 66.4% of the overall new car market in 2009 101
Figure 46: The most popular mode of purchase for new cars was outright purchase/other in 2009 102
Figure 47: Unsecured personal loans remain more popular than motor finance in the used car market 103
Figure 48: More than three-quarters of cars are not purchased using traditional motor finance 104
Figure 49: Black Horse has close to half of the independent finance house market in terms of lending, 2009 106
Figure 50: Females and the younger age bands are more likely to have motor finance 111
Figure 51: Females and those in the age group 18–24 are most likely to have at least one motor finance product 112
Figure 52: Motor finance is most popular in the £30,000 to £49,999 household income band 113
Figure 53: Consumers in the highest social grade are most likely to have motor finance 114
Figure 54: Almost 85% of consumers are up-to-date on their motor finance repayments 115
Figure 55: Two thirds of motor finance is applied for at the POS 116
Figure 56: The FLA’s car finance website gives consumers a better idea of what they should expect to pay 120
Figure 57: Gross lending in the P2P market has grown exponentially since 2007 127
Figure 58: The total UK lending market has experienced a year-on-year decline since 2005 128
Figure 59: P2P lending will see a strong rise in business in 2010, but will flatten out over the forecast period 129
Figure 60: Zopa listings show lenders battle to win investments 137
Figure 61: A certain degree of subjectivity is required in a definition of the non-standard population because, inevitably, some lenders are willing to accept greater risk than others 142
Figure 62: The non-standard population grew to just under seven million by 2009 143
Figure 63: Datamonitor predicts that the non-standard population will rise to just over eight million by 2014 144
Figure 64: Provident Financial dominates the market with 62% of outstanding home credit balances 151
Figure 65: The LendersCompared site is viewed by more than 100,000 unique visitors every year 155
Figure 66: Rates among the four largest providers are very similar 157
Figure 67: Home credit outstanding balances have risen slowly over the last five years 158
Figure 68: Home credit gross advances will remain relatively flat over the next few years 160
Figure 69: Payday advances are growing at a fast rate 163
Figure 70: Many lenders operate under several different trading names 164
Figure 71: Online payday loans are considerably more expensive than their high street counterparts 166
Figure 72: TxtLoan is rapidly gaining popularity as a means of obtaining instant cash 166
Figure 73: Payday lending gross advances will continue to rise, albeit at a lower rate than in the past 166
Figure 74: Non-standard unsecured lending has declined considerably since 2005 166
Figure 75: Total non-standard outstanding balances have risen every year since 2006 166
Figure 76: Unsecured gross advances will grow at a conservative rate over the next five years 166
Figure 77: Gross advances on secured lending have collapsed since 2006 166
Figure 78: Secured lending gross advances will reach £515m by 2014 166
Figure 79: The number of non-standard credit cards in circulation has been falling since 2007–08 166
Figure 80: Outstanding balances on non-standard credit cards are predicted to fall in 2010 166


TABLE OF TABLES
Table 1: Gross lending and balances outstanding, £m, 2003–09 14
Table 2: Datamonitor’s updated macroeconomic variables for 2009–14: Datamonitor view 33
Table 3: Updated Datamonitor view: consumer credit forecast, by product line, 2009–14 (£ billion) 34
Table 4: Datamonitor’s updated optimistic consumer credit forecast, by product line, 2009–14 (£ billion) 36
Table 5: Datamonitor’s updated pessimistic consumer credit forecast, by product line, 2009–14 (£ billion) 37
Table 6: UK unsecured personal loan providers, June 2010 46
Table 7: Summary of advantages and disadvantages associated with installment credit 65
Table 8: Average balance per store card by brand, 2008 75
Table 9: Demographic breakdown for number of active cards by age and gender 79
Table 10: Breakdown for number of active cards by household 79
Table 11: Mail order agency sales by company (£m), 2007–09 81
Table 12: Competitor shares of total motor finance market, 2010 107
Table 13: Zopa’s average clientele 2010 132
Table 14: Average statistics on amounts borrowed using Zopa over the 30-day period starting July 10, 2010 132
Table 15: Average lending rates on unsecured lending of £5,000 offered by institutions with lowest rates 133
Table 16: Breakdown of non-standard population 145
Table 17: Forecast gross advances for home credit (£m), 2010f–14f 161
Table 18: Forecast gross advances for payday loans (£m), 2010f–14f 166
Table 19: Datamonitor forecast for gross advances on mainstream and non-standard lending (£m), 2010f–14f 166
Table 20: The top nine lenders accounted for nearly 90% of secured gross lending in 2008 166
Table 21: Forecast gross advances for secured lending (£m), 2010f–14f 166
Table 22: Share of total consumer credit market for different credit products, 2003–09 166
Table 23: Gross lending levels among consumer credit providers (£m), Q1 2005–Q4 2009 166
Table 24: Average APR on different consumer credit products, March 2008–February 2010 166
Table 25: Net balances of household demand for consumer credit products, Q2 2008–Q1 2010 166
Table 26: Level of concern regarding different financial services products 166
Table 27: Year-on-year growth in insolvencies, write-offs and unemployment, Q1 2005–Q4 2009 166
Table 28: Net balances of household default levels on consumer credit products, Q2 2008–Q1 2010 166
Table 29: Credit card activity, split by type, 2005–09 166
Table 30: Value of credit and debit transactions and change over previous year, Q1 2006–Q4 2009 166
Table 31: Change in overdraft lending, March 2008–February 2010 166
Table 32: Comparison of compound annual growth rates for different credit products, 2005–09 & 2010f–14f 166
Table 33: Datamonitor’s updated macroeconomic variables for 2009–14: optimistic scenario 166
Table 34: Datamonitor’s updated macroeconomic variables for 2009–14: pessimistic scenario 166
Table 35: Market share of gross lending (%), 2009 166
Table 36: Average gross advances per person, 2005–09 166
Table 37: Market share of balances outstanding for top ten (%), 2009 166
Table 38: Average APR, Bank of England base rate and three-month Libor, December 2006–June 2010 166
Table 39: Group advertising expenditure, 2008–09 166
Table 40: Channel of advertising, 2007–09 166
Table 41: Net percentage balances for the last quarter, Q3 2007–Q2 2010 166
Table 42: Channel of arrangement of unsecured personal loan 166
Table 43: Profile of lender by term of loan 166
Table 44: Profile of lender by size of loan 166
Table 45: Profile of lender by social grade 166
Table 46: Profile of lender by age group 166
Table 47: Write-offs for different credit products, Q1 2008–Q1 2010 166
Table 48: Retail finance gross lending (£m), 2003–09 166
Table 49: Retail finance balances outstanding (£m), 2003–09 166
Table 50: Number of store cards in issue (000s) 166
Table 51: Store card advertising expenditure (£), 2003–09 166
Table 52: Motor finance gross lending and balances outstanding in relation to consumer credit market, 2004–09 166
Table 53: Gross lending in new and used car finance (£m), 2004–09 166
Table 54: Total motor finance by type of finance, 2004–09 166
Table 55: New car registrations, used car sales and motor finance as a percentage of the overall consumer credit market, 2004–09 166
Table 56: New car finance as a percentage of total new car expenditure, 2004–09 166
Table 57: New car expenditure for businesses and consumers (£m), 2004–09 166
Table 58: Total car purchases split by consumers and business (£m), 2004–09 166
Table 59: Used car market comparison of motor finance and unsecured personal loans (£m), 2004–09 166
Table 60: Percentage of cars with motor finance 166
Table 61: Motor finance penetration by age and gender 166
Table 62: Number of motor finance deals by age and gender 166
Table 63: Motor finance penetration by income band 166
Table 64: Motor finance penetration by social grade 166
Table 65: Repayment history by type of loan 166
Table 66: Motor finance penetration by channel of arrangement 166
Table 67: UK P2P gross lending, £, 2005–09 166
Table 68: Gross lending in the total unsecured personal loan and P2P market, £m, 2005–09 166
Table 69: Total gross advances and P2P gross advances forecast, £m, 2010–14 166
Table 70: Size of non-standard population, 2005–09 166
Table 71: Home credit outstanding balances (£m), 2005–09 166
Table 72: Market share of home credit providers, 2005–09 166
Table 73: Payday gross advances (£m), 2005–10f 166
Table 74: Gross advances on mainstream and non-standard unsecured lending (£m), 2005–09 166
Table 75: Balances outstanding on non-standard unsecured lending, 2005–09 166
Table 76: Gross advances for secured lending (£m), 2005–09 166
Table 77: Number of non-standard credit cards in circulation, 2005–10f 166
Table 78: Outstanding balances on non-standard credit cards (£ billion), 2005–10f 166


[Inhaltsverzeichnis ausblenden]