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UK Consumer Credit 2017: Forecasts and Future Opportunities

  • ID: 4465613
  • Report
  • Region: United Kingdom, Great Britain
  • 34 pages
  • GlobalData
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FEATURED COMPANIES

  • Dollar Financial
  • Lloyds Bank
  • Money Shop
  • Provident Financial
  • QuickQuid CashEuroNet
  • RBS
  • MORE
UK Consumer Credit 2017: Forecasts and Future Opportunities

Summary

Rate of growth in consumer credit gross advances, which picked up in 2015, has slowed and year-end figures for 2017 are expected to show growth of around 4.6%. Growth will remain moderate throughout the rest of the forecast period, meaning that gross advances are expected to total of around £329bn by 2021. On the supply side, high incidences of bad debt, tighter lending criteria, and a cautious approach towards unsecured lending among providers and regulators will check the rate of growth of credit supply over the forecast period.

On the demand side, the slow pace of economic recovery, political uncertainty arising from the Brexit negotiations, low levels of consumer confidence, and weak retail sales- largely due to consumers choosing to withhold spending -will adversely impact consumers’ appetite for lending.

Critical success factors include in this report:
  • Retail finance specialists should identify which retail sectors offer the best opportunities for growth, whether due to rising levels of spending or lack of current finance options. Innovation from fintech companies will soon provide small retailers with new financing options, increasing competition in the market. Hence, they should tailor their propositions to meet the needs of customers.
  • Partnerships with established firms that have a longstanding reputation will help achieve the much needed scale for P2P platforms to compete.
The report "UK Consumer Credit 2017: Forecasts and Future Opportunities", offers five-year gross lending forecasts for all major lines of consumer credit up to 2021, along with a detailed examination of the various demand- and supply-side factors that will determine the market outlook.

Moreover, these report offers insight into:
  • The key macroeconomic, regulatory, and other factors that will drive the demand for, and supply of, consumer credit over the next five years.
  • The outlook for total consumer credit including overdrafts, P2P, motor finance, payday lending, home credit, credit cards, and retail finance.
Companies mentioned in this report: TSB, RBS, Lloyds Bank, Provident Financial, Wonga, Money Shop, Dollar Financial, QuickQuidCashEuroNet, Zopa

Scope
  • Peer-to-peer (P2P) lending will see double-digit growth up to 2021. The sector will continue to enjoy rapid expansion due to increased consumer awareness and partnerships with other related sectors.
  • The motor finance boom has started to decline, with growth falling to a lower level of 3.4% in 2017. New car sales are falling, and the excess of vehicles that will enter the used car market over the next few years will drive down prices. Both trends will dampen demand for credit.
  • Payday lending has been severely curtailed by tougher regulation, including strict price caps and comprehensive affordability checks. These measures have significantly reduced the supply of credit and will depress gross lending.
Reasons to buy
  • Develop more targeted strategies through the analysis of key market developments.
  • Inform your future plans with our five-year forecast of gross advances for all credit lines.
  • Analyze trends with details of historic gross advances across a range of credit lines
  • Benchmark yourself against competitors and ensure you remain competitive as new innovations begin to enter the market.
  • Be prepared for how regulation will impact the consumer credit market over the next few years.
  • List companies, categories, geographies and target audiences covered in the report.
READ MORE
Note: Product cover images may vary from those shown
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FEATURED COMPANIES

  • Dollar Financial
  • Lloyds Bank
  • Money Shop
  • Provident Financial
  • QuickQuid CashEuroNet
  • RBS
  • MORE
1. EXECUTIVE SUMMARY
1.1. The state of the UK consumer credit market
1.2. Prospects for niche sectors
1.3. Critical success factors

2. CONSUMER CREDIT GROSS ADVANCES SAW MODERATE GROWTH IN 2017
2.1. Gross advances are estimated to reach £329.5bn by 2021
2.2. Consumer credit supply is expected to contract further
2.2.1. Credit availability is set to slow as supply tightens
2.2.2. The quality of new credit has worsened further over the last 12 months
2.2.3. Quarterly write-offs on credit card and other unsecured debt have declined following a spike in Q3 2016
2.2.4. The PRA is implementing a more stringent regulatory regime
2.2.5. New techniques in credit assessment have the potential to reduce risk
2.3. Consumer demand for unsecured credit will be impacted
2.3.1. Credit providers reported a slump in demand for unsecured credit in Q4 2017
2.3.2. Low consumer confidence will limit demand for borrowing
2.3.3. Retail sales declined, with increased prices squeezing consumer spending
2.3.4. Tighter lending criteria and affordable personal loans are underpinning demand for credit

3. FUTURE PERFORMANCE WILL VARY SIGNIFICANTLY BY SECTOR
3.1. P2P lending will be the biggest contributor to growth
3.2. Strong credit card lending growth will be driven by online and mobile commerce and consumer spending
3.3. Motor finance is set for a period of more conservative growth
3.4. Overdraft usage will continue to stagnate
3.5. Retail finance will witness steady growth over the next few years
3.6. Home credit lending will be effectively static over the forecast period
3.7. Payday lending will achieve equilibrium over the next few years
3.8. P2P lending is set to enjoy substantial growth

4. APPENDIX
4.1. Abbreviations and acronyms
4.2. Definitions
4.2.1. Gross advances
4.2.2. Balances outstanding
4.2.3. Home credit
4.2.4. Payday loan
4.3. Methodology
4.3.1. Future Sentiment Index
4.4. Bibliography
4.5. Further reading

List of Tables
Table 1: Consumer credit forecasts by product line (£m), 2017-21f

List of Figures
Figure 1: Unsecured gross advances are expected to record a CAGR of 5% over the forecast period
Figure 2: Credit availability has deteriorated since the beginning of 2017
Figure 3: Relaxed credit scoring criteria have contributed to worsening credit quality
Figure 4: Credit card debt write-offs rose sharply in Q3 2016
Figure 5: The proportion of lenders reporting an increase in default rates grew throughout 2017
Figure 6: Lenders are reporting a decline in consumer demand for credit
Figure 7: Consumer confidence was low throughout 2017
Figure 8: Retail sales are not showing any signs of recovery at present
Figure 9: The cost of borrowing has fallen in recent years
Figure 10: Consumer credit gross advances will amount to £284bn in 2018
Figure 11: Credit card gross advances will be driven by more frequent card usage
Figure 12: Growth in motor finance is set to slow over the forecast period
Figure 13: Competition and regulatory pressure will weigh on overdraft usage
Figure 14: Online growth will support retail finance over the next few years
Figure 15: Home credit offers very limited prospects for growth with a CAGR of 2% from 2017-21
Figure 16: Payday lending will stabilize at a much reduced level
Figure 17: P2P lending will develop considerably and grow at a CAGR of 15.8% between 2017-21
Note: Product cover images may vary from those shown
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  • TSB
  • RBS
  • Lloyds Bank
  • Provident Financial
  • Wonga
  • Money Shop
  • Dollar Financial
  • QuickQuid CashEuroNet
  • Zopa
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown
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