Consumer Credit in the UK – Key Trends and Opportunities to 2019

Demand for consumer lending rocketed during the fourth quarter of 2014, as payday lenders pulled away from the market due to increased regulation, and mainstream banks loosened their lending criteria to compete. Demand in the final quarter of 2014 marked the highest level since before the financial crash, according to the Bank of England’s Credit Conditions Survey

Consumer credit has shown consistent signs of growth since 2014 – the stock of lending decreased only once in the year and a half from then to June 2015 – for the first time since before the financial crisis. This is a result of a recovery in consumer confidence, with the consumer confidence index recording its first positive number since the financial crisis in August 2014, and has been positive for every month since, up to June 2015. The demand for, and availability of, credit increased since the second quarter of 2014, and has also been a key factor.

Improving economic conditions combined with record-low interest rates encouraged banks and consumers to lend and borrow more since the start of 2014. Borrowing is now cheaper than it has ever been in the UK, which is starting to trigger an increase in lending, a situation that has played out so far in 2015.

Scope

• The competitive landscape of the UK consumer credit industry.

• The market size, including detail on the total stock of lending, total gross lending and total net lending.

• Insight into lending by type of credit.

• Information on other loans and advances in the UK consumer credit market.

• An investigation of consumer confidence, in addition to analysis of demand for, and availability of, credit.

• Detail on lending to underbanked, unbanked and sub-prime customers.

• A breakdown of the types of unsecured loan offered in the UK.

• An analysis of the key drivers and outlook for the market.

• Information on the main banks in the UK.

• Key news and regulatory developments in the UK consumer credit industry.

• Forecasts on the future of the consumer credit industry in the UK over the next five years.

Key Highlights

Which bank became the first lender to break the 5% interest rate barrier for its personal loan in September 2014? What has been the effect of this on the competitive landscape? Who has been offering rates as low as 3.5% in August 2015?

How far has the stock of personal loans remained below its January 2008 total?

What is the anticipated effect of a rise in the Central bank rate on the UK consumer credit industry? When is this rise expected to occur?

What is the only typical form of UK consumer credit that has recorded substantial growth for a prolonged period? How has this growth been reflected since June 2011? How does it compare to the other categories of the UK consumer credit market?

Reasons to buy

• Gain an in-depth understanding of the UK consumer credit industry and its competitive landscape.

• Analyze monthly and annual statistics on every aspect of the UK consumer credit market to validate market positioning and inform sales and marketing strategies.

• Investigate forecasts for the UK consumer credit industry, and align propositions to gain a competitive advantage.

• Identify economic factors impacting the UK consumer credit market, and ensure awareness of the risks in launching a new product into the market.

• Evaluate the impact of individual banks and building societies in the UK consumer credit market. Assess the market shares of competitors and emulate innovations.

Companies mentioned

Santander UK Plc

Royal Bank of Scotland Group Plc

HSBC Bank Plc

Barclays Plc

Lloyds Banking Group Plc

HSBC

Nationwide

Table of Contents

1 Executive Summary

2 Introduction

2.1 What is this Report About?

2.2 Definitions

2.3 Methodology

3 Market Analysis

3.1 Market Size

3.1.1 Total Stock of Lending

3.1.2 Total Gross Lending

3.1.3 Total Net Lending

3.2 Lending by Institution

3.2.1 Lending from MFIs

3.2.1.1 Stock of Lending from MFIs

3.2.1.2 Gross Lending from MFIs

3.2.1.3 Net Lending from MFIs

3.2.2 Lending from Other Sources

3.2.2.1 Stock of Lending from Other Sources

3.2.2.2 Regulatory Changes

3.2.2.3 Net Lending from other consumer credit lenders

3.3 Lending by Type of Credit

3.3.1 Credit Cards

3.3.1.1 Stock of Lending

3.3.1.2 Credit Card Gross Lending

3.3.1.3 Net Lending on Credit Cards

3.3.1.4 Credit Card Activity

3.3.1.5 UK Bank Write offs

3.3.1.6 Interest Rates on Credit Cards

3.3.2 Other Loans and Advances

3.3.2.1 Stock of Lending

3.3.2.2 Gross Lending

3.3.2.3 Net Lending on other forms of consumer credit

3.3.2.4 Other loans and advances

3.3.2.5 Overdrafts

4 Consumers

4.1 Consumer Confidence

4.2 Demand for and Availability of Credit

4.2.1 Demand

4.2.2 Availability

4.3 Economic Climate

4.3.1 Interest Rates

4.3.2 Energy Bills

4.3.3 Source of debt

4.4 Retail Sales

4.5 Lending to Underbanked, Unbanked and Sub-Prime Customers

4.5.1 Unbanked Customers

5 Market Outlook

6 Competitive Landscape

7 Regulation and Policy

7.1 Regulators

7.1.1 Financial Conduct Authority (FCA)

7.1.2 Prudential Regulation Authority (PRA)

7.1.3 Monetary Policy Committee (MPC)

7.1.4 Treasury Committee

7.1.5 Competitions and Markets Authority (CMA)

8 UK Bank Profiles

8.1 Santander UK Plc

8.2 Lloyds Banking Group

8.3 Barclays Plc

8.4 Royal Bank of Scotland Group Plc

8.5 HSBC Bank Plc

9 Personal Loans Offered

9.1 Santander UK Plc

9.2 Royal Bank of Scotland Group Plc

9.3 HSBC Bank Plc

9.4 Barclays Plc

9.5 Lloyds Banking Group

9.6 Nationwide Building Society

10 Statistics

10.1 Review Period

10.2 Forecast Period

11 News

12 Appendix

12.1 Methodology

12.2 Contact GlobalData

12.3 About GlobalData

12.4 GlobalData’s Services

12.5 Disclaimer

List of Tables

Table 1: The UK – Consumer Credit Market (GBP Billion), 2009–2014

Table 2: The UK – Consumer Credit Lending (GBP Million), 2015–2019

List of Figures

Figure 1: UK – Outstanding Consumer Credit, 2010–2015

Figure 2: UK – Consumer Credit Gross Lending, (GBP Million) 2010–2015

Figure 3: UK – Annual Consumer Credit Gross Lending (GBP Million), 2009-2014

Figure 4: UK – Total Gross Lending and Repayments, GBP Million: 2013–2015

Figure 5: UK – Total Net Consumer Credit Lending, GBP Million: 2013–2015

Figure 6: UK – Outstanding Consumer Credit from MFIs (GBP Million), 2010–2015

Figure 7: UK – Consumer Credit Gross Lending from MFIs (GBP Million), 2010–2015

Figure 8: UK – MFI – Gross Lending and Repayments: 2013–2015

Figure 9: UK – MFI Net Consumer Credit Lending: 2013–2015

Figure 10: UK – Outstanding Consumer Credit from Other Sources (GBP Million), 2010–2015

Figure 11: UK – Annual Consumer Credit Gross Lending from Other Sources (GBP Million), 2010–2015

Figure 12: UK – Other Consumer Credit Lenders – Gross Lending and Repayments: 2013–2015

Figure 13: UK – Other Consumer Credit Lenders – Net Consumer Credit Lending: 2013–2015

Figure 14: UK – Outstanding Consumer Credit, Credit Card Loans (GBP Million), 2010–2015

Figure 15: UK – Annual Outstanding Consumer Credit, Credit Card Loans (GBP Million), 2010–2015

Figure 16: UK – Credit Card Gross Lending (GBP Million), 2010–2015

Figure 17: UK – Annual Credit Card Gross Lending (GBP Million), 2009–2014

Figure 18: UK – Credit Cards – Gross Lending and Repayments: 2013–2015

Figure 19: UK – Net Credit Card Lending: 2013–2015

Figure 20: UK – Value of Credit Card Purchases (GBP Million), 2009–2014

Figure 21: UK – Number of Credit Card Purchases (Million), 2009–2014

Figure 22: UK – Number and Value of Credit Card Purchases (GBP Million), 2010–2015

Figure 23: UK – Write-Off Growth Rates on Credit Card lending from Banks: 2009–2015

Figure 24: UK – Interest Rates on Credit Card Loans: 2009–2015

Figure 25: UK – Stock of Consumer Credit from Other Loans and Advances, Monthly: 2010–2015

Figure 26: UK – Annual Stock of Other Loans and Advances: 2010–2015

Figure 27: UK – Other Loans and Advances, Gross Lending, Monthly: 2010–2015

Figure 28: UK – Annual Other Loans and Advances, Gross Lending, 2009–2014

Figure 29: UK – Other Loans and Advances – Gross Lending and Repayments (GBP million): 2013–2015

Figure 30: UK – Other Loans and Advances – Net Consumer Credit Lending (GBP Million): 2013–2015

Figure 31: UK – Overdraft Lending, Monthly Amounts Outstanding (GBP Million), 2009–2015

Figure 32: UK – Overdraft Lending, Annual Amounts Outstanding (GBP Million), 2009–2015

Figure 33: UK – Interest Rates On UK Overdrafts (%), 2009–2015

Figure 34: UK – Revenue From Arranged and Unarranged Overdraft Charges (GBP Million), 2011–2013

Figure 35: UK – Personal Loans, Outstanding Amount (GBP Million), 2011–2015

Figure 36: UK – Personal Loans, Gross Lending (GBP Million), 2009–2015

Figure 37: UK – Interest Rates on Personal Loans 2009–2015

Figure 38: UK – Motor Finance Dealership Lending, New Cars – Value of Advances and Percentage Change on Previous Year: 2011–2015

Figure 39: UK – Motor Finance Dealership Lending, New Cars – Number of Cars bought and Percentage Change on Previous Year: 2011–2015

Figure 40: UK – Motor Finance Dealership Lending, Used Cars – Value of Advances and Percentage Change on Previous Year: 2011–2015

Figure 41: UK – Motor Finance Dealership Lending, Used Cars – Number of Cars bought and Percentage Change on Previous Year: 2011–2015

Figure 42: UK – Student Loans, Overall Amount Awarded (GBP Million), 2010–2014

Figure 43: UK – Paydays Loans, Percentage of Revenue of Loans Rolled Over or Refinanced, 2012

Figure 44: UK – Payday Loans, Percentage of Loans Rolled Over or Refinanced, 2012

Figure 45: UK – GfK Consumer Confidence Index, 2012–2015

Figure 46: UK – How has Demand for Total Unsecured Credit from Households Changed: 2007–2015

Figure 47: UK – How has Availability for Total Unsecured Credit for Households Changed: 2007–2015

Figure 48: UK – Lending, Salaries, Inflation and Annual Increases (%), 2011–2015

Figure 49: UK – CPI Monthly Inflation Rate (%), 2009–2014

Figure 50: UK BoE Official Bank Rate (%), 2004–2015

Figure 51: UK Annual Gas and Electricity Bills: 2004–2014

Figure 52: UK Source of Debt: 2013

Figure 53: UK – Total Retail Sales, Monthly (GBP Billion), 2010–2015

Figure 54: UK – Spending on Higher-Value Items, Monthly (GBP Billion), 2010–2015

Figure 55: UK – Spending on Higher-Value Items, Annually (GBP Billion), 2010–2015

Figure 56: Total Consumer Credit: Outstanding Balances Forecast: 2015–2019

Figure 57: Total Gross Consumer Credit Lending: Forecast: 2015–2019

Figure 58: Credit Card Lending: Outstanding Balances Forecast: 2015–2019

Figure 59: Other Loans and Advancements Lending: Outstanding Balances Forecast: 2015–2019

Figure 60: UK Credit Card Market Shares: 2014

Figure 61: UK Personal Loan Outstanding Balances: Market Shares: 2013

Figure 62: UK Banking Regulatory Framework, 2014

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