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Personal Loans Market Assessment 2006 Product Image

Personal Loans Market Assessment 2006

  • Published: November 2006
  • Region: United Kingdom
  • Key Note Publications Ltd

The UK consumer credit market increased strongly in the early years of the 21st century, along with other forms of borrowing. However, the growth rate has fallen with the slowing of house-price inflation. While the total amount lent is still rising at historically high levels, personal loans are no longer as profitable as other forms of lending that carry higher interest rates or are secured against property.

Banks remain dominant as lenders, and their position is assured by their ability to command leading positions in all forms of lending. This diversifies their risk in a dynamic market and, if the market for personal loans diminishes, allows them to focus on credit cards or on secured lending. The banks' focus on student loans and their participation in the provision of basic accounts indicates that they are interested in generating customer loyalty among groups to whom they do not already lend.

Building societies have been weakened as a group by the conversion to banks by all but one of the largest societies. However, they have been able to use their customer-service skills to maintain their position and to improve it within both personal and secured lending. Building READ MORE >

1. Introduction

BACKGROUND

DEFINITION

2. Strategic Overview

ECONOMIC TRENDS

Inflation

Table 1: UK Rate of Inflation (%), 2001-2005

Unemployment

Table 2: Actual Number of Unemployed Persons in the UK (million), 2001-2005

Household Size

Table 3: Households in Great Britain by Size (%, million and number), 1971, 1981, 1991, 2001 and 2005

Population

Table 4: UK Resident Population Estimates by Sex (000), Mid-Years 2001-2005

Gross Domestic Product

Table 5: UK Gross Domestic Product at Current and Annual Prices (£m), 2001-2005

Household Disposable Income

Table 6: UK Household Disposable Income per Capita (£), 2001-2005

MARKET DYNAMICS AND SEGMENTATION

Introduction

Market Trends

Table 7: UK Consumer Credit by Gross Lending by Sector (£m), 2001-2006

Market Size

Table 8: UK Consumer Credit by Amount Outstanding by Sector (£m), Year End 2001-2006

DISTRIBUTION

COMPETITIVE STRUCTURE

Debt

THE CONSUMER

MARKET FORECASTS

Regulation

The Consumer Credit Act 1974

The Consumer Credit Act 2006

Advertising Regulation and the Financial Services Authority

3. Banks

BACKGROUND

MARKET TRENDS

Table 9: UK Consumer Credit by Gross Lending by Banks (£m and index 2001=100), 2001-2006

Market SIZE

Table 10: UK Consumer Credit by Amount Outstanding with Banks (£m and index 2001=100), Year End 2001-2006

MARKET SHARE

Table 11: UK Banks' Individual Group Balances by Loans and Advances to Customers (£m), 2005

CONSUMER DYNAMICS

Loan Repayment Fees

Overdrafts

Online Banking

Key Note's Consumer Research

4. Building Societies

BACKGROUND

MARKET TRENDS

Table 12: UK Consumer Credit by Gross Lending by Building Societies (£m and index 2001=100), 2001-2006

MARKET SIZE

Table 13: UK Consumer Credit by Amount Outstanding with Building Societies (£m and index 2001=100), Year End 2001-2006

MARKET SHARE

Table 14: The Top Ten Building Societies in the UK by Assets (£m), 2005

DISTRIBUTION

5. Other Specialist Lenders

BACKGROUND

MARKET TRENDS

Table 15: UK Consumer Credit by Gross Lending by Other Specialist Lenders (£m and index 2001=100), 2001-2006

MARKET SIZE

Table 16: UK Consumer Credit by Amount Outstanding with Other Specialist Lenders (£m and index 2001=100), Year End 2001-2006

DISTRIBUTION

CONSUMER DYNAMICS

Motor Finance

The Cost of Credit

Key Note's Consumer Research

ADVERTISING

Table 17: Main Media Advertising Expenditure on Motor Car Personal Loans (£000), Year Ending June 2006

6. Retailers

BACKGROUND

MARKET TRENDS

Table 18: UK Consumer Credit by Gross Lending by Retailers (£m and index 2001=100), 2001-2006

MARKET SIZE

Table 19: UK Consumer Credit by Amount Outstanding with Retailers (£m and index 2001=100), Year End 2001-2006

STORE CARDS

7. Insurance Companies and Other Lenders

INSURANCE COMPANIES

Background

Market Trends

Table 20: UK Consumer Credit by Gross Lending by Insurance Companies (£m and index 2001=100), 2001-2006

Market Size

Table 21: UK Consumer Credit by Amount Outstanding with Insurance Companies (£m and index 2001=100), Year End 2001-2006

OTHER LENDERS

Supermarkets

The Post Office

CONSUMER DYNAMICS

Key Note's Consumer Research

Borrowing from a Supermarket

Borrowing at the Post Office

Borrowing through a Club or Professional Association

Borrowing from a Credit Union

8. Personal Loans

CONSUMER CREDIT

Credit Scores

UNSECURED LENDING

Market Trends

Table 22: 12-Month Growth Rate for Unsecured Lending (%), 31st July 2001-2006

Advertising

Table 23: Main Media Advertising Expenditure on General Personal Loans (£000), Year Ending June 2006

Table 24: Main Media Advertising Expenditure on Unsecured Personal Loans (£000), Years Ending June 2006

Suppliers

Cattles Group PLC

Payment-Protection Insurance

ONLINE PERSONAL LOANS

Comparison Websites

Advertising

Consumer Dynamics

Key Note's Consumer Research

Comparing Lenders' Interest Rates Before Borrowing

Borrowing over the Internet

Taking Out Payment-Protection Insurance

Borrowing over the Telephone

HOME CREDIT

The Competition Commission's Investigation

Market Size

Market Share

Pricing — Annual Percentage Rate and Total Charge for Credit

Provident Financial

9. Secured Lending

BACKGROUND

MARKET TRENDS

MARKET SIZE

Table 25: Loans Secured on Dwellings by Amount Outstanding (£m and index 2001=100), Year End 2001-2006

ADVERTISING

Table 26: Main Media Advertising Expenditure on Secured Personal Loans (£000), Year Ending June 2006

SUPPLIERS

CONSUMER DYNAMICS

Key Note's Consumer Research

Taking Out Secured Loans

Difficulties Getting a Loan due to Self-Employment

Difficulties Getting a Loan due to Credit Record

10. Credit Cards

BACKGROUND

MARKET TRENDS

Table 27: UK Consumer Credit on Credit Cards by Gross Lending (£m and index 2001=100), 2001-2006

MARKET SIZE

Table 28: UK Consumer Credit on Credit Cards by Amount Outstanding (£m and index 2001=100), Year End 2001-2006

Store-Branded Credit Cards

Table 29: Store-Branded Credit Cards by Total Balances (£m), Year End 2001-2006

Market Share

ADVERTISING

Table 30: Main Media Advertising Expenditure on Credit Cards and Store Cards (£000), Year Ending June 2006

CONSUMER DYNAMICS

Credit-Card Loan Repayment Fees

The Cost of Borrowing

Regulation

Key Note's Consumer Research

Borrowing on Credit Card

11. Debt

OVERINDEBTEDNESS

Table 31: Insolvencies in England and Wales (number and index Q2 2005=100), Second Quarter 2005 to Second Quarter 2006

Advertising

Suppliers

CREDIT-CARD DEBT

GOVERNMENT ACTION

National Strategy for Financial Capability

Impairment Charges

CONSUMER DYNAMICS

Key Note's Consumer Research

Saving to Avoid Debt

Ease of Getting a Loan

Borrowing from Multiple Lenders

Loan Repayment Concerns

12. An International Perspective

INTRODUCTION

CREDIT CARDS IN THE EU

FRANCE

ASIA

NORTH AMERICA

SOUTH AMERICA

13. PEST Analysis

POLITICAL FACTORS

ECONOMIC FACTORS

SOCIAL FACTORS

TECHNOLOGICAL FACTORS

14. Consumer Dynamics

OVERVIEW

Table 32: Summary of Attitudes Towards Borrowing (% of respondents), 2006

AVOIDING DEBT

"I Save Up in Advance to Avoid Debt"

Table 33: Saving in Advance to Avoid Debt (% of respondents), 2006

"Instead of a Loan, I Use My Combined Current/Savings Account"

Table 34: Using a Combined Current/Savings Account Instead of a Loan (% of respondents), 2006

BORROWING

"I Borrow on My Credit Card"

Table 35: Borrowing on a Credit Card (% of respondents), 2006

"If I Have Reached My Limit with One Lender, I Can Always Borrow from Another"

Table 36: Attitudes Towards Borrowing from Multiple Lenders (% of respondents), 2006

"I Take Out a Loan Based on Security such as Property"

Table 37: Taking Out Secured Loans (% of respondents), 2006

"I Look at Several Lenders' Interest Rates Before Borrowing"

Table 38: Comparing Interest Rates Before Borrowing (% of respondents), 2006

"I Think it is Too Easy to Get a Loan Nowadays"

Table 39: Attitudes Towards the Ease of Obtaining Loans (% of respondents), 2006

"I Worry About Repaying My Loan"

Table 40: Worries About Loan Repayments (% of respondents), 2006

"I Have Difficulty Getting a Loan Because I Am Self-Employed"

Table 41: Difficulties Obtaining a Loan Due to Self-Employment (% of respondents), 2006

"I Have Difficulty Getting a Loan Because of My Credit Record"

Table 42: Difficulties Obtaining a Loan Due to Credit Record (% of respondents), 2006

"I Think Interest Rates Should Be Capped"

Table 43: Attitudes Towards Capping Interest Rates (% of respondents), 2006

"I Choose a Lender Based on its Reputation"

Table 44: Selecting a Lender Based on Reputation (% of respondents), 2006

"I Take Out Payment-Protection Insurance on My Personal Loans"

Table 45: Taking Out Payment-Protection Insurance (% of respondents), 2006

"I Am Happy to Borrow at My Supermarket"

Table 46: Attitudes Towards Borrowing from a Supermarket (% of respondents), 2006

"I Am Happy to Borrow at the Post Office"

Table 47: Attitudes Towards Borrowing from the Post Office (% of respondents), 2006

"I Am Happy to Borrow Over the Telephone"

Table 48: Attitudes Towards Borrowing Over the Telephone (% of respondents), 2006

"I Am Happy to Borrow Over the Internet"

Table 49: Attitudes Towards Borrowing Over the Internet (% of respondents), 2006

"I am Happy to Borrow Through My Club or Professional Association"

Table 50: Attitudes Towards Borrowing Through a Club or Professional Association (% of respondents), 2006

"I Would Be Interested in Borrowing from a Credit Union"

Table 51: Attitudes Towards Borrowing from a Credit Union (% of respondents), 2006

"I Am Happy to Borrow to Pay for a Car Through the Retailer's Finance Facility"

Table 52: Attitudes Towards Borrowing Through a Car Dealer (% of respondents), 2006

15. Company Profiles

ALLIANCE & LEICESTER PLC

Corporate Strategy

New Product and Brand Developments

Distribution

Advertising

Profitability

Table 53: Financial Results for Alliance & Leicester PLC (£000, number, % and £), Years Ending 31st December 2003-2005

Future Company Developments

BARCLAYS PLC

Corporate Strategy

New Product and Brand Development

Distribution

Advertising

Profitability

Table 54: Financial Results for Barclays PLC (£000, number, % and £), Years Ending 31st December 2003-2005

Future Company Developments

HBOS PLC

Corporate Strategy

New Product and Brand Development

Distribution

Advertising

Profitability

Table 55: Financial Results for HBOS PLC (£000, number, % and £), Years Ending 31st December 2003-2005

Future Company Developments

HSBC BANK PLC

Corporate Strategy

New Product and Brand Development

Distribution

Advertising

Profitability

Table 56: Financial Results for HSBC Bank PLC (£000, number, % and £), Years Ending 31st December 2003-2005

Future Company Developments

LLOYDS TSB GROUP PLC

Corporate Strategy

New Product and Brand Development

Distribution

Advertising

Profitability

Table 57: Financial Results for Lloyds TSB Group PLC (£000, number, % and £), Years Ending 31st December 2003-2005

Future Company Developments

The ROYAL BANK OF SCOTLAND GROUP PLC

Corporate Strategy

New Product and Brand Development

Distribution

Advertising

Profitability

Table 58: Financial Results for The Royal Bank of Scotland Group PLC (£000, number, % and £), Years Ending 31st December 2003-2005

Future Company Developments

16. The Future

ECONOMIC FORECASTS

Population

Table 59: Forecast UK Resident Population by Sex (000), Mid-Years 2006-2010

Gross Domestic Product

Table 60: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2006-2010

Inflation

Table 61: Forecast UK Rate of Inflation (%), 2006-2010

Unemployment

Table 62: Forecast Actual Number of Unemployed Persons in the UK (million), 2006-2010

Household Disposable Income

Table 63: Forecast UK Household Disposable Income per Capita (£), 2006-2010

MARKET FORECASTS

Market Trends

Table 64: Forecast UK Consumer Credit by Gross Lending by Sector (£m), 2007-2011

Figure 1: Forecast UK Consumer Credit by Gross Lending (£m), 2001-2011

Market Size

Table 65: Forecast UK Consumer Credit by Amount Outstanding by Sector (£m), Year End 2007-2011

Figure 2: Forecast UK Consumer Credit by Amount Outstanding (£m), Year End 2007-2011

CONCLUSION

17. Consumer Confidence

METHODOLOGY

KEY FINDINGS THIS QUARTER

THE WILLINGNESS TO BORROW

Confidence Rebounds

Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), August 2005-2006

Fewer Adults Wish to Borrow

Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), August 2005-2006

SPENDING FROM SAVINGS

Strong Recovery in Spending from Savings

Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), August 2005-2006

Savings Grow in Relative Importance

Table D: The Average Amounts Adults Are Confident Spending to Purchase Expensive Items (£ and %), August 2005-2006

18. Further Sources

Associations

Government Sources

Other Sources

Bisnode Sources

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