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

Table of Contents

• 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