Germany Retail Banking: Opportunities and Risks to 2023

Germany Retail Banking: Opportunities and Risks to 2023

Summary

Germany’s total loan balances outstanding (including credit card, personal loan, and residential mortgage balances outstanding) recorded a compound annual growth rate (CAGR) of 3.1% during the review period (2014-18) to reach €1.7tn ($1.9tn). The burden of household debt to GDP growth is lower than other developed nations around the world, as German consumers are more averse to debt and have a higher savings ratio. The German economy is characterized by income and employment growth that has provided a boost in domestic consumption. This has resulted in a consistent fall in the household debt-to-GDP ratio since 2009. Despite political tensions and an expected economic slowdown, the fall in unemployment rates and rise in gross household disposable income are expected to prevent the country’s debt from increasing further. Consequently, we estimate the total loan balances outstanding to maintain the growth trend and record a CAGR of 3.1% over the forecast period (2019-23).

Germany's gross household savings rate stood at 15.3% in 2018 - the fourth highest in Europe. This suggests that Germans invest much of their wealth via deposits, due to a longstanding investment preference for liquid and low-risk assets. Consequently, despite low deposit interest rates, retail deposit balances in Germany grew at a CAGR of 3.8% during the review period.

Based on our proprietary datasets, this report analyzes the German lending market, with a focus on the consumer lending segment. The report discusses in detail the credit card, personal, and mortgage loan markets, covering market size, competitors’ market shares, and survey insights. The report also provides a market overview and insights on the retail deposit segment. In addition, it covers the key digital disruptors in Germany’s retail lending segment.

Scope

• Residential mortgage loans in Germany registered a CAGR of 4.1% over 2014-18. This was due to the resulting low borrowing costs from the European Central Bank’s (ECB) negative rates policy, as well as benign macroeconomic conditions.
• The personal loans market in Germany recorded a review-period CAGR of 0.7% primarily due to the highly debt-averse nature of German consumers.
• Credit card balances outstanding recorded a healthy CAGR of 7.9% during 2014-18. The rising use of credit cards can be attributed to banks offering value-added services.

Reasons to buy

• Make strategic decisions using top-level historic and forecast data on the Germany retail lending industry.
• Identify the most promising lending segment.
• Receive detailed insights into lending in Germany, including consumer lending.
• Understand the changing market and competitive dynamics by learning about new competitors and recent deals in the retail lending space.
• Receive comprehensive coverage of the retail deposit market in Germany.