Personal Loans - Ireland - September 2014

INTRODUCTION
Key themes in the report
Data sources
Definitions
Abbreviations
EXECUTIVE SUMMARY
The market
Value of outstanding loans down €14 billion between 2009 and 2014
Figure 1: Outstanding loans to households, consumer credit and other loans, IoI, NI & RoI, 2009-19
Forecast
Figure 2: Indexed value of outstanding consumer credit and other loans, NI and RoI, 2009-19
Market factors
NI and RoI economies improving
Consumers regaining confidence and optimism for future
Cost of borrowing relatively low as a result of low interest rates
Half of Irish consumers have no personal loan products outstanding
Only minority of consumers are committed, organised and regular savers
The consumer
Just over half of consumers owe money on a personal loan product
Figure 3: Type of personal loan products that consumers currently owe money on, RoI and NI, July 2014
Majority of personal loan products taken for one-off purchases or major expenses
Figure 4: Reason that consumers took out last personal loan product, RoI and NI, July 2014
RoI consumers more open to borrowing in future than NI consumers
Figure 5: Whether consumers would take out a loan in the future for selected purposes, RoI and NI, July 2014
RoI consumers more likely to return to the same lenders than NI
Figure 6: Agreement with statements relating to the last loan consumers took out, NI and RoI, July 2014
What we think
ISSUES AND INSIGHTS
What type of personal loan products do consumers own?
The facts
The implications
Why do consumers borrow? And what would motivate them to borrow in the future?
The facts
The implications
Where do consumers get personal loan products from?
The facts
The implications
TREND APPLICATION
Extend My Brand
Prepare for the Worst
Locavore
MARKET OVERVIEW
Key points
Economic recovery now all but assured in RoI
Figure 7: Economic outlook, annual % change, RoI, 2012-15
Figure 8: Estimated unemployment levels, 2013-15
Economic growth of 2.3% expected for NI in 2014
Figure 9: Economic outlook, NI, 2012-15
Irish consumer sentiment more upbeat than in recent years
Figure 10: Consumer Sentiment, RoI, September 2010-August 2014
Figure 11: Consumer confidence, NI, September 2008-June 2014
Most consumers describe finances as either ‘healthy’ or ‘OK’
Figure 12: How consumers rate their current financial situation, NI and RoI, July 2014
Debt write-offs down in NI, but set to increase in RoI
Low interest rate environment keeping cost of borrowing down
Figure 13: Bank base interest rate, %, European Central Bank & Bank of England, 2008-14
Cost of borrowing creeping upwards for RoI consumers
COMPETITIVE CONTEXT
Key points
Almost half of all consumers have no personal loan products
Figure 14: Consumers that do not currently owe money on any personal loan product, by gender, NI and RoI, July 2014
Consumers in full-time employment most likely to owe money on a loan
Figure 15: Consumers that do not currently owe money on any personal loan product, by work status, NI and RoI, July 2014
Scant evidence of structured, committed saving among Irish consumers
Figure 16: Methods in which consumers contribute to their savings, NI and RoI, January 2014
MARKET SIZE AND FORECAST
Key points
Outstanding loans to consumers down one third between 2009 and 2014
Figure 17: Outstanding loans to households, consumer credit and other loans, IoI, NI & RoI, 2009-19
Value of outstanding loans expected to dip slightly between 2014-15
Pre-recessionary heights not likely in foreseeable future
Figure 18: Indexed value of outstanding consumer credit and other loans, NI and RoI, 2009-19
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
COMPANIES AND INNOVATIONS
Key points
 INNOVATIONS
Barclays’ new mobile app allows customers to apply for a personal loan
US company Kabbage to expand into the personal loan market
 COMPANY PROFILES
Allied Irish Bank (AIB) Group
Bank of Ireland (BoI)
Danske Bank
Halifax
HSBC
Nationwide
Permanent TSB
Santander
Ulster Bank
THE CONSUMER – OWNERSHIP OF PERSONAL LOAN PRODUCTS
Key points
More than half of consumers have a personal loan product
Figure 19: Type of personal loan products that consumers currently owe money on, RoI and NI, July 2014
Older consumers least likely to owe money on personal loans
Figure 20: Consumers who do not currently owe money on any personal loan product, by age, RoI and NI, July 2014
Credit union loan most popular in RoI, but far less so in NI
Figure 21: Consumers who currently owe money on a loan from credit union, by age, RoI, July 2014
Credit union loans more popular among C2DEFs than among ABC1s
Non-mainstream providers fill the ‘credit union gap’ in NI
Figure 22: Selected personal loan products that consumers currently owe money on, RoI and NI, July 2014
Overdrafts most popular loan type in NI, second in RoI
Figure 23: Consumers who currently owe money on a current account overdraft facility, by age, RoI and NI, July 2014
Figure 24: Consumers who currently owe money on a current account overdraft facility, by work status, RoI and NI, July 2014
Overdrafts are good short-term solution, but may not offer the best value to consumers
Figure 25: Annual average retail interest rates on overdraft facilities, UK (including NI) and RoI, 2009-14
Free overdraft facilities more common in NI than in RoI
Figure 26: If consumers who use a current account overdraft facility pay for this facility, RoI and NI, July 2014
35-44s most likely to have outstanding personal loans
Figure 27: Consumers who currently owe money on a personal loan (eg from a bank), by age, RoI and NI, July 2014
THE CONSUMER – REASONS FOR LAST LOAN OWNERSHIP
Key points
Most loans taken for one-off purchases or major expenses
Figure 28: Reason that consumers took out last personal loan product, RoI and NI, July 2014
Significant minority borrow to ease financial stress
Figure 29: Consumers who borrowed money for financial reasons, RoI and NI, July 2014
Little appetite for borrowing to finance lifestyle or non-essential buying
Figure 30: non-essential reasons that consumers took out last personal loan product for holiday, occasion or celebration, RoI and NI, July 2014
THE CONSUMER – REASONS FOR FUTURE LOAN OWNERSHIP
Key points
RoI consumers more open generally to borrowing than NI consumers
Figure 31: Whether consumers would take out a loan in the future for selected purposes, RoI and NI, July 2014
Key difference is greater access to public education and healthcare in NI
Figure 32: What consumers would take out a loan for, RoI and NI, July 2014
Half RoI and a third of NI consumers would borrow to buy a car
Figure 33: Consumers who would in future take out a loan to pay for a new car/vehicle, by age, RoI and NI, July 2014
ABC1s and women most open to borrowing for education/qualifications
Figure 34: Consumers who would in future take out a loan to pay for selected education and training-related expenses, by gender and socio-economic background RoI and NI, July 2014
35-54 most likely to borrow for home improvements and large purchases
Figure 35: If consumers would in future take out a loan to pay for home improvements, by gender and age, RoI and NI, July 2014
Figure 36: If consumers would in future take out a loan to pay for a large purchase, by gender and age, RoI and NI, July 2014
Borrowing for occasions and presents/celebrations appeals to young
Figure 37: Consumers who would in future take out a loan to pay for a special occasion, by age, RoI and NI, July 2014
Figure 38: Consumers who would in future take out a loan to pay for Christmas or birthday presents/celebrations, by age, RoI and NI, July 2014
ABC1s in employment would borrow to consolidate existing debts
Figure 39: If consumers would in future take out a loan to consolidate debts/pay off other credit products, by gender and socio-economic background and work status, RoI and NI, July 2014
… whereas intent to borrow to make ends meet should set off alarm bells
Figure 40: If consumers would in future take out a loan to help make ends meet, by work status and age, RoI and NI, July 2014
THE CONSUMER – ATTITUDES TOWARDS PERSONAL LOAN PRODUCTS
Key points
Familiarity, existing relationship key factors when taking loan in RoI
Figure 41: Agreement with statements relating to the last loan consumers took out, NI and RoI, July 2014
Only quarter of RoI, and a fifth of NI consumers borrowed from their main bank
Figure 42: Agreement with the statement ‘I took the loan out with my main bank’, by gender, NI and RoI, July 2014
Only small minority undertook online research before taking loan
Majority of consumers handling loan repayments comfortably
Figure 43: Consumers who agree ‘I have struggled to make loan repayments in the last 12 months’, by socio-economic background, NI and RoI, July 2014
APPENDIX
NI Toluna tables
Figure 44: Types of personal loan products that consumers currently owe money on, by demographics, NI, July 2014
Figure 45: Types of personal loan products that consumers currently owe money on, by demographics, NI, July 2014 (continued)
Figure 46: Types of personal loan products that consumers currently owe money on, by demographics, NI, July 2014 (continued)
Figure 47: If consumers using current account overdraft facilities pay for their overdraft facility, by demographics, NI, July 2014
Figure 48: Reason that consumers took out last personal loan product, by demographics, NI, July 2014
Figure 49: Reason that consumers took out last personal loan product, by demographics, NI, July 2014 (continued)
Figure 50: Reason that consumers took out last personal loan product, by demographics, NI, July 2014 (continued)
Figure 51: If consumers would in future take out a loan to consolidate debts/pay off other credit products, by demographics, NI, July 2014
Figure 52: If consumers would in future take out a loan to pay for a new car/vehicle, by demographics, NI, July 2014
Figure 53: If consumers would in future take out a loan to pay for home improvements, by demographics, NI, July 2014
Figure 54: If consumers would in future take out a loan to pay for a large purchase, by demographics, NI, July 2014
Figure 55: If consumers would in future take out a loan to pay for a holiday, by demographics, NI, July 2014
Figure 56: If consumers would in future take out a loan to pay for a special occasion, by demographics, NI, July 2014
Figure 57: If consumers would in future take out a loan to pay child/children’s education, by demographics, NI, July 2014
Figure 58: If consumers would in future take out a loan to help make ends meet, by demographics, NI, July 2014
Figure 59: If consumers would in future take out a loan to pay for qualifications/training, by demographics, NI, July 2014
Figure 60: If consumers would in future take out a loan to pay for education expenses, by demographics, NI, July 2014
Figure 61: If consumers would in future take out a loan to pay for medical expenses, by demographics, NI, July 2014
Figure 62: If consumers would in future take out a loan to help a family member out, by demographics, NI, July 2014
Figure 63: If consumers would in future take out a loan to pay for Christmas or birthday presents/celebrations, by demographics, NI, July 2014
Figure 64: Agreement with statements relating to the last loan consumers took out, by demographics, NI, July 2014
Figure 65: Agreement with statements relating to the last loan consumers took out, by demographics, NI, July 2014 (continued)
RoI Toluna tables
Figure 66: Types of personal loan products that consumers currently owe money on, by demographics, RoI, July 2014
Figure 67: Types of personal loan products that consumers currently owe money on, by demographics, RoI, July 2014 (continued)
Figure 68: If consumers using current account overdraft facilities pay for their overdraft facility, by demographics, RoI, July 2014
Figure 69: Reason that consumers took out last personal loan product, by demographics, RoI, July 2014
Figure 70: Reason that consumers took out last personal loan product, by demographics, RoI, July 2014 (continued)
Figure 71: Reason that consumers took out last personal loan product, by demographics, RoI, July 2014 (continued)
Figure 72: If consumers would in future take out a loan to consolidate debts/pay off other credit products, by demographics, RoI, July 2014
Figure 73: If consumers would in future take out a loan to pay for a new car/vehicle, by demographics, RoI, July 2014
Figure 74: If consumers would in future take out a loan to pay for home improvements, by demographics, RoI, July 2014
Figure 75: If consumers would in future take out a loan to pay for a large purchase, by demographics, RoI, July 2014
Figure 76: If consumers would in future take out a loan to pay for a holiday, by demographics, RoI, July 2014
Figure 77: If consumers would in future take out a loan to pay for a special occasion, by demographics, RoI, July 2014
Figure 78: If consumers would in future take out a loan to pay child/children’s education, by demographics, RoI, July 2014
Figure 79: If consumers would in future take out a loan to help make ends meet, by demographics, RoI, July 2014
Figure 80: If consumers would in future take out a loan to pay for qualifications/training, by demographics, RoI, July 2014
Figure 81: If consumers would in future take out a loan to pay for education expenses, by demographics, RoI, July 2014
Figure 82: If consumers would in future take out a loan to pay for medical expenses, by demographics, RoI, July 2014
Figure 83: If consumers would in future take out a loan to help a family member out, by demographics, RoI, July 2014
Figure 84: If consumers would in future take out a loan to pay for Christmas or birthday presents/celebrations, by demographics, RoI, July 2014
Figure 85: Agreement with statements relating to the last loan consumers took out, by demographics, RoI, July 2014
Figure 86: Agreement with statements relating to the last loan consumers took out, by demographics, RoI, July 2014 (continued)