UK Consumer Credit 2011: Competitive Dynamics Market Overview in the UK Unsecured Personal Loan Industry

• Publication date: August 2011

About This Report Competition in the industry remained largely flat in 2010 as major lenders focused their attention on selling to existing customers. There were minor competitive developments but the overriding focus of lenders was ensuring that bad debt levels remained under control. A dual industry has begun to develop, with retail banks seeking to increase profitability and smaller lenders targeting industry share. Wh...

About This Report

Competition in the industry remained largely flat in 2010 as major lenders focused their attention on selling to existing customers. There were minor competitive developments but the overriding focus of lenders was ensuring that bad debt levels remained under control. A dual industry has begun to develop, with retail banks seeking to increase profitability and smaller lenders targeting industry share.

What's Included in This Report?


* Provides industry share data for gross advances and balances outstanding for the largest UK personal loan providers.

* Analyzes developments in the channels used to arrange a loan and considers different lender profiles in terms of borrower loan size and term.

* Includes data on advertising expenditure to understand how much providers are willing to spend to promote their products and via which channels.

Key Market Facts

While the level of competition in the unsecured personal loans industry has been subdued over the past three years there are signs of increasing competition. A dual industry is developing, as retail banks aim to cross sell unsecured personal loans to high quality existing customers and smaller lenders are aiming to grow industry share.
Under an uncertain economic outlook, major lenders have continued to focus on their core business. There is a need to find business where they can write a good margin yet avoid taking on potential bad debt. Data indicate that demand is increasing among consumers, while on the supply side there has been a market research report ed loosening of credit conditions.
The overall level of advertising expenditure on unsecured personal loans increased 12.9% in 2010. While advertising expenditure among the major lenders decreased there was a rise in advertising expenditure by smaller lenders, especially pay day lenders such as Wonga and quickquid.co.uk.

Why Should You Buy This Report?


* What is the current industry size and structure?

* Who is aggressively targeting industry share?

* What have been the chief issues affecting the industry over the last 12 months?

Credit And Loan Industry in the United Kingdom

OVERVIEW
Catalyst
Summary
ANALYSIS
Lloyds Banking Group continues to dominate the unsecured personal loans industry
Lloyds Banking Group is still the largest provider of unsecured personal loans in the UK
Datamonitor research shows that the industry for new personal loans has remained steady
Lloyds Banking Group still had the largest exposure to unsecured personal loans in 2010
Datamonitor research indicates that NatWest and Santander have increased their industry share
The gross value of unsecured personal loans decreased in 2010, despite a rise in consumer credit
Four in 10 unsecured loans are for amounts below GBP 5,000
Lloyds TSB and NatWest customers borrow the largest amounts
Average APRs began to decrease in 2010
The advertised APR has decreased in 2010
Gaining industry share has been a key driver of increased credit availability
The major lenders have APRs above the industry average
Banks have been successful in cross selling unsecured personal loans to current account holders
The best rates are offered by smaller providers
Tesco and Sainsbury's are pushing their competitive advantage
Several lenders have exited the unsecured personal loans industry
Major lenders cut back on advertising spending in 2010
Expenditure on unsecured personal loans advertising fell for the top three providers in 2010
Expenditure on direct mail decreased for the third year in a row
Improving conditions in the competitive environment provide opportunities for growth
Both supply and demand for unsecured personal loans has begun to increase
The level of write-offs for unsecured lending has fallen every quarter since Q2 2010
Competitors that provide loans now will get a higher quality borrower
The branch is still the most popular channel for arranging a personal loan
Regulatory changes have begun to impact the industry
Lenders are already considering the upcoming Basel III requirements when providing loans
Lenders have adapted at a different pace to the Consumer Credit Directive
APPENDIX
Supplementary data
Definitions
Balances outstanding
Bank of England base rate
CAGR
Gross advances
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

Credit and Loan in United Kingdom

United Kingdom Domestic Bank Lending Rate, %, Ave

• $ 250
• Industry data
• February 2013

Yearly, From 2001 To 2016
By Business Monitor International
Source: IMF

• Industries : Credit and Loan
• Countries : United Kingdom

United Kingdom Real Domestic Bank Lending Rate, %, Ave

• $ 250
• Industry data
• February 2013

Yearly, From 2001 To 2016
By Business Monitor International
Source: BMI/IMF

• Industries : Credit and Loan
• Countries : United Kingdom

United Kingdom Loan/deposit Ratio

• $ 250
• Industry data
• January 2013

Yearly, From 1998 To 2017
By Business Monitor International
Source: Bank of England / BMI

• Industries : Credit and Loan
• Countries : United Kingdom

United Kingdom Loan/asset Ratio

• $ 250
• Industry data
• January 2013

Yearly, From 1998 To 2017
By Business Monitor International
Source: Bank of England / BMI

• Industries : Credit and Loan
• Countries : United Kingdom