Report: Credit Cards: A Nation in Debt? - Ireland

Issues in the Market
Key themes in the report
Abbreviations
Definitions
Terminology
Market In Brief
34% growth in Ireland
NI & RoI distinct markets
Debit gaining ground in NI
Strong future macros
Ireland outperforming UK
Channels to market
Who' s innovating? Who isn' t...
Ownership of credit
Growing conservatism among consumers
Population & technology the key
Internal Market Environment
Key points
Developments on the competitive global scene
Global giants going public in the face of mounting scrutiny
Pan-European attitude converging
Plastic cards ' pushing up' EU prices
SEPA-compliance a major driving force
Low-level of card fees paid in Ireland directly linked to SEPA project
EU likely to put pressure on Irish government
UK market experiencing different dynamic
Stagnant performance of UK credit card market
Combination of bad debt and increased scrutiny
UK card providers forced to bite back
Credit card analysis
- Figure 1: Penetration of credit and alternative (non-credit) plastic cards, RoI and NI, 2004 and 2006
Chip & Pin now operational in both markets
Teething problems in RoI
Premium accounts
Multiple account management
Irish consumers more concerned about their weight than their debt
- Figure 2: Current worries, NI and RoI, 2006
25-44 years of age the most stressful time
ABC1s are debt conscious
Broader Market Environment
Key points
The economy
Interest rates rise
- Figure 3: UK and eurozone interest rates, 2001-07
Bad news for borrowers in both NI and RoI
Mortgage repayments to increase
Need to appeal to ' card-chargers' ' sense of a bargain
Use as a long-term cashflow tool under threat by rates rise
Under 40s hardest hit by rate rise
Strong GDP growth both north and south
- Figure 4: Health of the economy, NI and RoI, 2002-07
Consumer spending a major engine for growth in RoI
NI consumers happy to keep spending
Inflationary pressure in the UK affecting NI consumers
Inflation slows down in RoI
Rising incomes good news for RoI credit providers
Disposable incomes taking a battering in NI
Declining unemployment levels in both NI and RoI
Consumer sentiment a key indicator for the economy
Long-term responsibilities start later
- Figure 5: Average age at marriage, men and women, NI and RoI, 2000-05
- Figure 6: Average age of women at birth of first child, NI and RoI, 1991-2005
Time better spent elsewhere
Changing norms in Irish and UK society
Promotion of a cashless society
Financial matters being settled online
Debt mentality on the rise
Addiction to celebrity chic
Market Value and Forecast
Key points
A more mature and competitive NI market
Figure 10: Estimated number of credit cards in issue, RoI and NI, 2001-12
Market forecast explanation
Value of transactions still rising in RoI
- Figure 11: Estimated transaction volumes, RoI and NI, 2001-06
- Figure 12: Estimated value of transactions, RoI and NI, 2001-06
The future
A cashless society by 2012?
Internet offers considerable potential
Changing Demographics
- Figure 13: Population change by age group, NI, 2000-20
In NI:
- Figure 14: Population change by age group, RoI, 2000-20
In RoI:
Supply Performance
Key Points
RoI
- Figure 15: Market share of various credit card schemes, RoI, 2006
Monopoly of the big four
- Figure 16: Volumes & values of credit card transactions, RoI and NI, 2006
RoI consumers happy to use their card on themselves
- Figure 17: Volumes & values of credit card transactions, RoI and NI, 2006
NI
- Figure 18: Volumes & values of credit card transactions, RoI and NI, 2006
Healthier distribution network in NI
- Figure 19: Volumes & values of credit card transactions, RoI and NI, 2006
NI consumers even less likely to splash out on business
- Figure 20: Volumes & values of credit card transactions, RoI and NI, 2001-06
Companies and Products
Visa
MasterCard
American Express
Diners Club
Channels to Market
Key points
Banks -- branch network
Abbey
Company background
Product portfolio
Alliance & Leicester
Company background
Product portfolio
AIB/First Trust Bank
Company background
Product portfolio
Bank of Ireland
Company background
Product portfolio
Barclays
Company background
Product portfolio
Halifax -- formerly Bank of Scotland (Ireland)
Company background
Product portfolio
National Irish Bank/Northern Bank
Company background
Product portfolio
Permanent TSB
Company background
Product portfolio
Ulster Bank
Company background
Product portfolio
Internet -- Pureplays
Capital One
Company background
Product portfolio
Egg
Company background
Product portfolio
Direct mail
MBNA Europe Bank Limited
Company background
Product portfolio
Supermarket retailers
Tesco
Company background
Product portfolio
Other supermarket retailers
Consumer: Ownership of Credit Cards
Key points
Card ownership
RoI experiencing growth as NI market matures
- Figure 21: Penetration of credit cards, NI and RoI, 2002-06
Irish preoccupation with the property market
NI stagnates
Has NI lost its appetite for plastic?
Ipod generation not turned on to plastic -- yet!
Affluence and influence
End of the elite
Consumer-advice culture dampening demand from less well-off
A baby boom for card companies
Boom in credit card acceptance in RoI
Golden oldies throwing off the shackles of generational debt suspicion
ABs losing their enthusiasm but not their foresight
Keeping up with the O' Jones' s a priority
Individuals looking out for No. 1
Number of cards held
- Figure 22: Number of credit cards, NI and RoI, 2006
Multiple card holding more popular in NI
RoI consumers more cautious about juggling too many cards
Settling the balance
Accruing interest more acceptable in NI
- Figure 23: How credit card balance was paid, NI and RoI, 2006
Are the majority of NI consumers interest-savvy?
More conscientious balance settlement in RoI
Age and social standing key indicators of settlement capacity
ABC1s above average in clearing balances
The debt demographic
Reasons for choosing a credit card
- Figure 24: Reasons for choosing a credit card, NI, 2002-06
Interest rates in NI decreasing in importance as main driver of demand
Smarter positioning the key for card providers
Other factors at work besides interest rates
Future strategy may lie further down the list
- Figure 25: Reasons for choosing a credit card, RoI, 2002-06
Irish consumers appear unaffected by ethical credit card
Appendix
Regional definitions
Conversion factors
Exchange rate
Population 2006
BMRB Target Group Index (TGI) sample sizes
Sample sizes for Millward Brown data
Adults who have used the Internet
- Figure 32: Adult population who have used the Internet in the last 12 months, by demographic sub-groups, NI and RoI, 2006
- Figure 33: Forecast population change, by age, NI, 2000-20
- Figure 34: Forecast population change, by age, RoI, 2000-20
Employment statistics
- Figure 35: Percentage in employment, by age group, NI and RoI, 2000-05
Household composition
- Figure 36: Number of households, by size, NI and RoI, 2000-05
Consumer: Ownership of credit cards
- Figure 37: Penetration of credit cards, by demographic groups, NI, 2004-06
- Figure 38: Penetration of credit cards, by demographic groups, RoI, 2004-06
- Figure 39: How credit card balance was paid, by demographic groups, NI and RoI, 2006
- Figure 40: Consumers who choose ' The amount of debt that I have' as a concern, by demographic groups, NI and RoI, 2006
- Figure 41: Responses to financial attitude statements, NI, 2006
- Figure 42: Responses to financial attitude statements, RoI, 2006
TGI typologies
Attitude statements used
- Figure 43: Financial attitudes by credit card cluster groups, NI, 2006
- Figure 44: Financial attitudes by credit card cluster groups, RoI, 2006
- Figure 45: Frequency of credit card use, by cluster groups NI, 2006
- Figure 46: Frequency of credit card use, by cluster groups RoI, 2006
- Figure 47: How credit card bills were settled, by cluster groups, NI 2006
- Figure 48: How credit card bills were settled, by cluster groups, RoI 2006
- Figure 49: Number of credit cards held, by cluster groups NI, 2006
- Figure 50: Number of credit cards held, by cluster groups RoI, 2006

Credit Cards: A Nation in Debt? - Ireland - August 2007

Table of Contents