Personal Loans: Is the Irish appetite for borrowing still strong? - Ireland - April 2008

Table of Contents

• Issues in the Market
• Key themes of the report
• Definition
• Unsecured Loans
• Abbreviations
• Market in Brief
• Previous market growth is now slowing considerably
• Interest rates affecting payments
• US sub-prime market fallout effects still to be seen
• Competing forms of credit
• Use of technology
• Responsible lending
• Consumer confidence shaky
• Internal Market Environment
• Key points
• Underlying debt culture
• Are Irish consumers now more willing to get into debt?
• Are Irish consumers concerned about their debt? Don' t count on it!
• World economic situation uncertain for 2008
• Lenders becoming more risk averse
  • Figure 1: Loan acceptance rates, April-Oct 2007
• Responsible lending
• Egg credit move
• Unsecured lenders reducing risk
• Sub-prime personal loans
• Bad debt to blame
  • Figure 2: Sub-prime losses for from exposure to bad debt, global
• US sub-prime exposure in RoI
• What caused the credit crunch?
• How long will this last?
• Lending criteria tightening in RoI
• Competition -- Lack of competition in the NI banking market
• NI banking scandal
• RoI
• Legislation
• IVA alternative to bankruptcy
• Northern Rock rejects IVA
  • Figure 3: The number of UK population expected to go insolvent, 2007 and 2008
• Protecting the consumer
• Irish Financial Services Regulatory Authority (RoI)
• Financial Services Authority (NI)
• Getting feedback -- regulating the market
• Consolidating existing debts
• Payment breaks
• Personal loans market under fire from the media
• Loan APR at 2.6 million percent
• Unsuitable television ads
• Broader Market Environment
• Key points
• General economic performance
• Republic of Ireland
• Economic growth
• Employment
• Inflation
  • Figure 4: The economic outlook for the Republic of Ireland, 2006-08
  • Figure 5: The economic outlook for NI, 2006-08
• Northern Ireland
• Economic growth
• Employment
• Inflation
• Tough times ahead for 2008
• Interest rates affecting the personal loan market
• Falling interest rates
  • Figure 6: UK and EuroZone interest rates, March 2002-February 2008
• Borrowing becoming more expensive
• APR rates for personal loans
  • Figure 7: Unsecured personal loans APR for selected banks, NI, March 2008
  • Figure 8: Secured personal loans APR for selected banks, NI, March 2008
  • Figure 9: Comparison of variable APR, RoI, March 2008
  • Figure 10: Comparison of fixed APR, RoI, March 2008
• RoI banks enjoy generous margins on personal loan rates
• PPI under scrutiny FSA and IFSRA
• World cash injection
• ECB lends €348 billion to lower rates
• Credit crisis hitting the banks
• Influence of the downturn in the property market
• NI house prices ' hit brick wall'
• RoI house price fall
• Younger and older have less access to credit facilities
  • Figure 11: Number of credit facilities, 2006
• Aging population -- effects on the market
• NI
  • Figure 12: Population change by age group, NI, 2000-20
• RoI
  • Figure 13: Population change by age group, RoI, 2000-20
• Lending to the New Irish
• RoI -- over one tenth of the population non-nationals
  • Figure 14: Number of people coming to live in RoI, by country of last residence, 2006
• RoI banks seek to attract non-national customers
• Immigrants fuel NI population growth
  • Figure 15: Number of people coming to live in Northern Ireland, by country of last residence (mid-2004 to mid-2005)
• Market Value and Forecast
• Key points
• The RoI unsecured loan market continues to grow in 2007
  • Figure 19: Unsecured loans market value* all-Ireland, RoI and NI, 2003-07
  • Figure 20: Index growth estimates, all-Ireland, NI and RoI, 2003-07
• Future outlook
• Segmentation Performance
• Key points
• Unsecured loans segmentation
• Personal loans -- beginning of tough times
  • Figure 21: Personal loans market*, NI and RoI, 2003-07
• Falling demand for credit cards in NI
  • Figure 22: Credit cards market, NI and RoI, 2003-07
• Other types of unsecured lending detract from personal loans market
  • Figure 23: Other unsecured lending, NI and RoI, 2003-07
• Companies and Products
• Key points
• Personal loan lender profiles
  • Figure 24: Profiled personal loan lenders, 2008
• Abbey National
  • Figure 25: Abbey National' s fixed rate personal loans
• Alliance and Leicester
  • Figure 26: Alliance and Leicester fixed rate personal loansFigure 27: Alliance and Leicester information on loans of value £7,500
• Allied Irish Bank Plc Ireland
  • Figure 28: Personal loan rates, March 2008
• Bank of Ireland
  • Figure 29: Personal and holiday loans fixed rates, Bank of Ireland RoI, March 2008
  • Figure 30: Personal/motor/holiday loan variable APR' s, Bank of Ireland RoI, March 2008
  • Figure 31: Personal and holiday loans fixed rates, Bank of Ireland NI, March 2008
• The Co-operative Bank
• Unsecured personal loan
  • Figure 32: Fixed rate unsecured personal loan rates, Feb 2008
• Egg Banking PLC
  • Figure 33: Egg unsecured loan details
• First Active
  • Figure 34: Fixed monthly repayments
• First Trust
  • Figure 35: Features of the First Trust Bank (NI) fixed personal loan
• Halifax (RoI)
  • Figure 36: Halifax personal loans APR
• National Irish Bank (NIB) and Northern Bank
• NIB
  • Figure 37: Fixed rate personal loans APR, NIB
  • Figure 38: Variable rate personal loans APR
• Northern Bank
• Fixed rate personal loan
  • Figure 39: Northern Bank fixed rate personal loan APR rates
• Permanent TSB
  • Figure 40: Permanent TSB fixed rate loans
• Ulster Bank
  • Figure 41: Ulster bank fixed rate unsecured personal loan characteristics, Feb 2008
• Supermarket finance
  • Figure 42: Tesco Personal Finance, fixed rate loan, RoI
  • Figure 43: Marks & Spencer Money, NI
  • Figure 44: Tesco Personal Finance, fixed rate loan, NI
• Credit unions
• Personal loan comparison websites
• NI
  • Figure 45: UK financial price comparison sites market share, 2007
• Moneysupermarket.com
• Click Compare
• U Switch
• RoI
• Itsyourmoney.ie
• Moneyfish.ie
• Channels to Market
• Key points
• Face-to-face contact still important at branches
• Telephone and Internet banking usage increasing steadily
  • Figure 46: Internet usage, NI and RoI, 2001-07
  • Figure 47: Internet banking activities in the last three months RoI, 2005 and 2006
• Personal loan comparison sites usage up
  • Figure 48: The number of visitors to comparison site moneysupermarket, NI, 2006-07
• NI banks behind when it comes to marketing to ' new Irish'
• Consumer Spending Priorities
• Key points
• Credit priorities
  • Figure 49: What credit has been spent on in the past 12 months, NI and RoI, 2005-07
• NI consumers focused on the home, while RoI gets mobile
  • Figure 50: What credit has been spent on in the past 12 months, by gender, NI and RoI, 2007
  • Figure 51: What credit has been spent on in past 12 months, NI, 2007
  • Figure 52: What credit has been spent on in past 12 months, RoI, 2007
• Consumer Preferences among Credit Facilities
• Key points
• Types of credit facility
  • Figure 53: Credit facilities used in last 12 months, NI and RoI, 2002-07
• Overdrafts and credit cards are the key competitors
• Catalogue purchasing has halved
• Credit Union more than double penetration in RoI
  • Figure 54: Credit union usage, NI and RoI, 2002-07
• Food and finance: an unlikely combination
  • Figure 55: Agree with statement, supermarkets and retailers should not get involved in personal finance, NI and RoI, 2002-07
• Resistance to supermarkets and retailers dealing in personal finance
• Appendix
  • Figure 58: Credit facilities, NI and RoI, 2007
• Attitudes to finance
  • Figure 59: Attitudes to finance, NI, 2002-07
  • Figure 60: Attitudes to finance, RoI, 2002-07
• NI demographics
  • Figure 61: Attitudes to finance, by demographic split, NI, 2007
  • Figure 62: Attitudes to finance, by demographic split, NI, 2007
  • Figure 63: Attitudes to finance, by demographic split, NI, 2007
• RoI demographics
  • Figure 64: Attitudes to finance, by demographic split, RoI, 2007
  • Figure 65: Attitudes to finance, by demographic split, RoI, 2007
  • Figure 66: Attitudes to finance, by demographic split, RoI, 2007
  • Figure 67: Attitudes to finance, by demographic split, RoI, 2007
• Consumer typologies
  • Figure 68: Consumer typologies, by demographic split, RoI, 2007
  • Figure 69: Consumer typologies, by demographic split, NI, 2007
• Broader Market Environment
  • Figure 70: Annual increase by property type, NI, 2007
  • Figure 71: Value of mortgages, RoI
  • Figure 72: Market segmentation by personal loan amount NI, 2006
  • Figure 73: Alliance and Leicester financial performance, 2006
  • Figure 74: Co-operative bank profit before tax, 28 weeks to July 2006/07