Table of Contents
- DATAMONITOR VIEW
- ANALYSIS
- The personal loan market is bracing itself for rising impairments
- Personal loan balances have grown partially due to higher default rates
- Arrears and delinquency rates will continue to rise during the
recession
- Impairment provisions will continue to grow as banks adapt to the
worsening economic climate
- Growing unemployment will result in a larger non-standard population
adversely affecting impairments
- Prevention of bad debts is better than the cure in the current climate
- Most banks have similar methods for debt recovery and collection
- Determining customer intentions is crucial for future loan portfolio
performance
- Stringent lending policies are often the best way to minimize
potential defaults
- Financial advice could be one way to prevent borrowers from falling
into delinquency
- A delinquency needs to be identified and resolved as soon as possible
- Quick identification of arrears and delinquency is the most important
aspect of debt management
- Customer segmentation is vitally important in order to maximize debt
recovery
- There are three main solutions for borrowers who fall into repayment
difficulties
- Third party debt collection agencies are used once all other options
are exhausted
- APPENDIX
- Supplementary data
- Definitions
- Arrearage
- Balances outstanding
- CCJs
- Delinquency
- Gross advances
- Impairment charge
- Impairment provision
- Non-standard
- Secured personal loan
- Unsecured personal loan
- Methodology
- Sizing methodology for the UK non-standard population
- Step 1: The number of people in the UK of working age
- Step 2: Absence of a bank account
- Step 3: Unemployment
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- TABLES
- Table: Loan impairment provisions for the main high street banks,
2005--07
- Table: Personal loan gross advances and balances outstanding, January
2007--September 2008
- Table: Loan provisions as a percentage of total lending, 2005--07
- Table: The non-standard population, 2004--08
- Table: UK non-standard population forecast under the Datamonitor view,
2008--13f
- FIGURES
- Figure: Unsecured personal loan advances have been falling while
balances outstanding have grown, January 2007--September 2008
- Figure: Only a few lenders increased their proportion of total loan
provisions for impairments, 2005--07
- Figure: 2008 witnessed a massive growth in the number of non-standard
individuals, 2004--08
- Figure: Under the Datamonitor view the non-standard population will
increase significantly over the next five years, 2008--13f
- Figure: Every bank aims to resolve a bad debt as quickly and effectively
as possible, 2009
- Figure: Lloyds TSB' s budget calculator aggregates all outgoings thus
providing a realistic budget representation for any consumer, 2009
- Figure: Datamonitor' s definition of non-standard
- Figure: A certain degree of subjectivity is needed in a definition of
the non-standard population because some lenders are inevitably willing to
accept greater risk than others
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