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Personal Loans - Ireland - April 2010

Merger and acquisition activity, stringent credit standards and fewer lenders offering loans has reduced supply of loans, resulting in weak competition and higher lending rates.

Consequently, unsecured loans have become less competitive compared to overdrafts, credit cards and MEW.

Recession and rising unemployment have contributed to lower consumer confidence and lower demand for all forms of credit.

With the end of the downturn in sight, the labour market stabilising and early signs of consumer confidence returning, demand for loans is likely to increase but, despite government intervention, supply side pressures are expected to persist in the medium term as a result of liquidity concerns, especially in RoI.

The market for consumer loans is quite specific, typically nesters (part-time working women, aged 35-44, living as married) and debt loaders (16-24-year-old men working full-time). Targeting these groups, however, is increasingly niche with overdrafts, credit cards and MEW becoming progressively more attractive alternatives.

While market conditions for personal loans will return to more normal levels over the next two years, it is highly unlikely the market will return to pre-credit crunch levels.

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Table of contents

  1. Issues in the Market

      • Key themes in the report
        • Definition
          • Abbreviations
          • Insights and Opportunities

            • Room for competition
              • Developing niche products
                • Debt restructuring
                • Market in Brief

                  • Fall in new business in unsecured loans
                    • Unsecured loans not centre stage
                      • Weaker credit supply and less competition…
                        • … leading to higher lending rates?
                          • The target market
                            • Consumer Trends
                              • Going forward
                              • Fast Forward Trends

                                  • Trend 1: Learning Through Play
                                    • What's it about?
                                      • What we've seen
                                        • Specifics
                                          • What next?
                                            • Trend 2: Trading Up, Trading Down, Trading Over
                                              • What's it about?
                                                • What we've seen
                                                  • What next?
                                                  • Internal Market Environment

                                                    • Key points
                                                      • Supply side pressures increasing
                                                        • Market consolidation concerning
                                                          • Fewer players in the unsecured loans market
                                                            • Loan approvals remain low
                                                              • Figure 1: Change in credit standards (RoI) Jan 2007-Jan 2010
                                                            • Liquidity pressures persist
                                                              • Figure 2: A summary of UK and RoI initiatives to restore stability to the banking system
                                                              • Figure 3: NI & RoI banks’ pre-tax losses/profits, 2009
                                                            • Interest rates on credit remain higher
                                                              • Figure 4: Effective interest rates on unsecured lending, 2004-09
                                                              • Figure 5: Interest rates for personal loans in NI and RoI for selected lenders (£10,000/€11,000 over five years)
                                                            • Consumer appetite for debt still low
                                                              • NI
                                                                • RoI
                                                                  • Figure 6: RoI Consumer Sentiment Index (three-month moving average), 2006-09
                                                                • Regulation
                                                                • Broader Market Environment

                                                                  • Key points
                                                                    • Is the recession over?
                                                                        • Figure 7: Macroeconomic factors and their impact on the Irish personal loans market, 2010
                                                                      • Youth unemployment a particular threat to loans market
                                                                        • Providers likely to shift focus away from younger consumers
                                                                          • Figure 8: NI projected population, by age band 2008-51
                                                                          • Figure 9: RoI projected population, by age band 2006-41
                                                                        • Older consumers a growing area for loan providers
                                                                        • Competitive Context

                                                                          • Key points
                                                                            • Credit card market relatively strong
                                                                              • Figure 10: Net lending flows – new personal loans vs credit cards, UK, January 2007-09
                                                                              • Figure 11: Effective interest rates on personal loans vs credit cards, UK, January 2004-July 2009
                                                                            • Overdrafts
                                                                              • Secured loans
                                                                                • Alternative sources of credit
                                                                                • Strengths and Weaknesses

                                                                                  • Strengths
                                                                                    • Weaknesses
                                                                                    • Who’s Innovating?

                                                                                      • Key points
                                                                                        • Peer-to-peer Lending
                                                                                          • Green loans
                                                                                            • Payday loans
                                                                                            • Market Size and Forecast

                                                                                              • Key points
                                                                                                • Market acceleration pre-credit crunch
                                                                                                  • Figure 12: New business in the unsecured personal loans market, IoI, NI and RoI, 2004-14
                                                                                                • Outlook
                                                                                                • Companies and Products

                                                                                                  • Key points
                                                                                                    • Banks and building societies
                                                                                                      • Allied Irish Bank (AIB) Group
                                                                                                        • Background
                                                                                                          • Personal loan products
                                                                                                            • Brand positioning
                                                                                                              • Bank of Ireland (BoI) Group
                                                                                                                • Background
                                                                                                                  • Personal loan products
                                                                                                                    • Brand positioning
                                                                                                                      • Grupo Santander
                                                                                                                        • Background
                                                                                                                          • Personal loan products
                                                                                                                            • Brand positioning
                                                                                                                              • Danske Bank Group
                                                                                                                                • Background
                                                                                                                                  • Personal loan products
                                                                                                                                    • Brand Positioning
                                                                                                                                      • Halifax Bank of Scotland
                                                                                                                                        • Background
                                                                                                                                          • Personal Loan Products
                                                                                                                                            • Brand Positioning
                                                                                                                                              • Nationwide
                                                                                                                                                • Description
                                                                                                                                                  • Personal Loan Products
                                                                                                                                                    • Brand Positioning
                                                                                                                                                      • Permanent TSB
                                                                                                                                                        • Background
                                                                                                                                                          • Personal loan products
                                                                                                                                                            • Brand Positioning
                                                                                                                                                              • Ulster Bank
                                                                                                                                                                • Background
                                                                                                                                                                  • Personal loan products
                                                                                                                                                                    • Brand positioning
                                                                                                                                                                      • Credit Unions
                                                                                                                                                                        • Irish League of Credit Unions
                                                                                                                                                                          • Background
                                                                                                                                                                            • Personal loan products
                                                                                                                                                                              • Brand positioning
                                                                                                                                                                                • Supermarket finance
                                                                                                                                                                                  • Background
                                                                                                                                                                                    • Tesco
                                                                                                                                                                                      • Sainsbury’s
                                                                                                                                                                                        • Marks & Spencer
                                                                                                                                                                                        • Channels to Market

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • Familiarity a key factor when seeking credit
                                                                                                                                                                                              • Figure 13: How loan was arranged, NI and RoI, 2009
                                                                                                                                                                                              • Figure 14: Percentage of consumers that visited their bank branch to apply for a loan, RoI and NI, 2006-09
                                                                                                                                                                                              • Figure 15: Channels used to apply for loan, NI and RoI, 2009
                                                                                                                                                                                            • Loans too complex to arrange online
                                                                                                                                                                                              • Figure 16: Banking/personal finance activities conducted online, NI and RoI, September 2009
                                                                                                                                                                                          • Consumer Ownership and Motivation

                                                                                                                                                                                            • Key points
                                                                                                                                                                                              • Loan ownership at standstill
                                                                                                                                                                                                  • Figure 17: Loan ownership, NI and RoI, 2008 and 2009
                                                                                                                                                                                                • Loan ownership likely to fall over course of 2010
                                                                                                                                                                                                  • Figure 18: When loan was taken out, NI, 2008 and 2009
                                                                                                                                                                                                  • Figure 19: When loan taken out, RoI, 2008 and 2009
                                                                                                                                                                                                • Middle-aged most likely to have loan
                                                                                                                                                                                                  • Figure 20: Loan ownership, by age, NI and RoI, 2009
                                                                                                                                                                                                • Getting on the road
                                                                                                                                                                                                  • Figure 21: Top five purposes of loan, NI and RoI, 2009
                                                                                                                                                                                                • Irish consumers embracing community services
                                                                                                                                                                                                  • Figure 22: Credit Union account ownership, NI and RoI, 2004-09
                                                                                                                                                                                                • NI credit union users restricted by regulations
                                                                                                                                                                                                  • Credit Union popularity more prevalent in rural areas
                                                                                                                                                                                                    • Figure 23: Credit Union account ownership, by region, NI, 2009
                                                                                                                                                                                                    • Figure 24: Credit Union account ownership, by region, RoI, 2009
                                                                                                                                                                                                  • Credit Union activity regains ground
                                                                                                                                                                                                      • Figure 25: Used Credit Union in the last 12 months, NI and RoI, 2004-09
                                                                                                                                                                                                  • Consumer Target Groups

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • NI target groups
                                                                                                                                                                                                        • Figure 26: Consumer typologies, RoI, 2009
                                                                                                                                                                                                      • Savvy Savers
                                                                                                                                                                                                        • Cash Carriers
                                                                                                                                                                                                          • Debt Loaders
                                                                                                                                                                                                            • Nesters
                                                                                                                                                                                                              • RoI target groups
                                                                                                                                                                                                                • Figure 27: Consumer typologies, RoI, 2009
                                                                                                                                                                                                              • Old-School Spenders
                                                                                                                                                                                                                • Big Spenders
                                                                                                                                                                                                                  • Debt Dodgers
                                                                                                                                                                                                                    • Credit Dependent
                                                                                                                                                                                                                    • Appendix

                                                                                                                                                                                                                      • Consumer ownership and motivation
                                                                                                                                                                                                                        • Figure 28: Credit facilities used in the last 12 months, NI, 2004-07
                                                                                                                                                                                                                        • Figure 29: Credit facilities used in the last 12 months, NI, 2004-07
                                                                                                                                                                                                                      • Consumer target groups
                                                                                                                                                                                                                        • Figure 30: Consumers who agree with various statements relating to finance, by consumer typologies, NI, 2009
                                                                                                                                                                                                                        • Figure 31: Consumer typologies, by demographic breakdown, NI, 2009
                                                                                                                                                                                                                        • Figure 32: Consumers who agree with various statements relating to finance, by consumer typologies, RoI, 2009
                                                                                                                                                                                                                        • Figure 33: Consumer typologies, by demographic breakdown, RoI, 2009

                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                    Personal Loans - Ireland - April 2010

                                                                                                                                                                                                                    US $1,360.54 (Excl.Tax)