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Personal Loans - Ireland - November 2012

As with other facets of the finance market, the personal loan market in Ireland was hugely disrupted by the 2008 financial crisis and subsequent economic downturn. Aside from the sharp decline in the number of suppliers, lending criteria were severely tightened as lenders sought to protect themselves from defaults and bad debts. Only those consumers with strong credit histories and in secure employment now qualify for personal loans, while most banks are also restricting lending to existing customers. Ultimately, there has been a dramatic decline in the supply and availability of unsecured loans.

Drawing on a range of industry and consumer research, this report assesses the factors impacting upon and shaping the personal loans market in Ireland. It also looks at the size of the market – and how this has changed in recent years. It also analyses ownership of loans among Irish consumers, including an analysis of the characteristics and nature of these loans. It looks, too, at the channels to the market – how consumers apply for and arrange personal loans. Finally, it analyses consumers' attitudes towards loans, borrowing and debt.

Some questions answered in this report include:

  • How has the structure of the market changed in recent years?
  • What effect has tighter lending criteria had on availability of credit?
  • What impact have economic challenges had on supply and demand?
  • What are the main channels to market?
  • What level of loan ownership exists among Irish consumers?
  • Why do Irish consumers take out personal loans?
  • What are Irish consumers' general attitudes towards borrowing and debt?

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Table of contents

  1. Issues in Market

      • Key themes
        • Data sources
          • Definitions
            • Abbreviations
            • Trend Applications

              • The Nouveau Poor
                • Who Needs Humans?
                  • 2015 Brand Intervention
                  • Market in Brief

                    • Around £1 billion being issued in personal loans every month in UK
                      • Value of outstanding personal loans down significantly in RoI
                        • Economic growth expected, but major challenges remain
                          • Fewer suppliers of unsecured loans since financial crisis
                            • Access to credit tighter, loan approvals down since financial crisis
                              • Evidence of price competition returning to UK (including NI) market
                                • Mis-selling of payment protection insurance to cost sector heavily
                                  • Personal loans market dominated by banks/building societies
                                    • Loan ownership higher among RoI than NI consumers
                                      • Loans most commonly used to purchase cars
                                        • Consumers generally responsible about borrowing and debts
                                        • Internal Market Environment

                                          • Key points
                                            • Effective duopoly in RoI's banking sector severely threatens competition
                                              • NI's banking sector relatively unchanged by financial crisis
                                                • Access to credit tighter, loan approvals down since financial crisis
                                                  • Demand for credit among UK (including NI) consumers is up in 2012
                                                    • Figure 1: Demand for household unsecured lending, % change, UK (including NI), 2008-H1 2012
                                                  • Credit standards for personal loans getting ever tighter for RoI consumers
                                                    • Figure 2: Change in credit standards, consumer credit and other lending, RoI, 2003-12
                                                  • Consumers' perceived creditworthiness affecting credit standards
                                                    • Figure 3: Factors affecting credit standards, consumer credit and other lending, RoI, October 2012
                                                  • Alongside tightening standards, demand for personal loans declining in RoI
                                                    • Figure 4: Demand for loans, consumer credit and other personal lending, RoI, 2003-12
                                                  • Price competition returning to personal loans market in UK (including NI)
                                                    • Banking sector still struggling to absorb massive losses
                                                      • Cost of loan can differ greatly across different providers
                                                        • Figure 5: Cost of €10,000/£10,000 personal loan repayable over five years, domestic providers, RoI and NI, November 2012
                                                      • Are higher rates in RoI than in NI related to imminent insolvency legislation?
                                                        • 10% of RoI consumers missing or delaying loan payments
                                                          • Figure 6: Consumers who have delayed/missed loan repayments in the last two years, by age of household reference person, RoI, February 2012
                                                        • PPI mis-selling scandal could cost UK industry £15 billion
                                                          • RoI institutions now embroiled in similar scandal
                                                          • Broader Market Environment

                                                            • Key points
                                                              • Economic growth to be constrained for foreseeable future
                                                                • Figure 7: Economic outlook, RoI and NI, estimated and forecast, 2010-13
                                                              • Unemployment set to continue upward trend
                                                                • Figure 8: Unemployment levels, RoI and NI, 2008-12
                                                              • Slight improvements in confidence among Irish consumers
                                                                • RoI consumers feeling positive – but alert to challenges ahead
                                                                  • Figure 9: Consumer sentiment index, RoI, October 2011-November 2012
                                                                • NI confidence up for third consecutive quarter
                                                                  • Figure 10: Consumer confidence, NI, June 2009-June 2012
                                                                • RoI and NI household debt among the highest in Europe
                                                                  • Figure 11: Household debt as % of nominal GDP, UK (including NI), RoI* and other selected counties, Q4 2011
                                                              • Competitive Context

                                                                • Key points
                                                                  • Borrowing from friends/family an option for some consumers
                                                                    • 10% of RoI consumers have borrowed from friends or family
                                                                      • Figure 12: Consumers who have borrowed money from friends/family in the past two years, by household composition, RoI, February 2012
                                                                      • Figure 13: Consumers who have borrowed money from friends/family in the past two years, by work status, RoI, February 2012
                                                                    • 15% of UK (including NI) families 'regularly lending' to one another
                                                                      • Most consumers turn to family/friends to cover household bills
                                                                        • Peer-to-peer lending growing in popularity in UK (including NI)
                                                                          • Payday lenders under scrutiny from UK (including NI) authorities
                                                                            • RoI government reject proposals to cap interest charged by money lenders
                                                                            • Strengths and Weaknesses

                                                                              • Strengths
                                                                                • Weaknesses
                                                                                • Market Value Overview

                                                                                  • Key points
                                                                                    • £1 billion a month in personal loans in UK (including NI)…
                                                                                      • Figure 14: Structured personal loans, gross monthly amounts, £ millions, UK (including NI), October 2011-September 2012
                                                                                    • ...but this is only around a third of the peak period in 2003
                                                                                      • Figure 15: Structured personal loans, gross amounts during month, £ billions, UK (including NI), September 1997-September 2012
                                                                                    • Repayment of personal loans outweighing new lending in UK (including NI)
                                                                                      • Figure 16: Consumer credit, net monthly flow in £ billions, UK (including NI), 2007-Q2 2012
                                                                                    • Outstanding personal loan amounts down almost 50% on peak in UK (including NI)
                                                                                      • Figure 17: Structured personal loans, outstanding amounts, £ billion, UK (including NI), 1997-2012
                                                                                    • Quarterly lending ‘falling steadily’ since Q2 2010 in NI
                                                                                      • Value of outstanding personal lending back to 2005's level in RoI
                                                                                        • Figure 18: Total value of outstanding personal lending, € billion, RoI, June 2003-June 2012
                                                                                    • Companies and Products

                                                                                        • Banks and building societies
                                                                                          • Allied Irish Bank (AIB) Group
                                                                                            • Bank of Ireland (BoI) Group
                                                                                              • Grupo Santander
                                                                                                • Danske Bank Group
                                                                                                  • Halifax Bank of Scotland
                                                                                                    • Nationwide
                                                                                                      • Permanent TSB
                                                                                                        • Ulster Bank
                                                                                                          • Credit unions
                                                                                                            • Irish League of Credit Unions
                                                                                                              • Supermarket finance
                                                                                                                • Tesco
                                                                                                                  • Sainsbury’s
                                                                                                                    • Marks & Spencer
                                                                                                                    • Channels to the Market

                                                                                                                      • Key points
                                                                                                                        • Banks/building societies dominate personal loans market
                                                                                                                          • Figure 19: How loan was arranged, NI and RoI, 2012
                                                                                                                        • Dominance of banks/building societies particularly strong in RoI
                                                                                                                          • ABC1s most inclined to arrange loans through banks/building societies
                                                                                                                            • Figure 20: Consumers who arranged a personal loan directly through a bank or building society in the last 12 months, by socio-economic group, RoI and NI, 2012
                                                                                                                          • Banks/building societies becoming less active in RoI personal loans market
                                                                                                                            • Figure 21: How loan was arranged, RoI and NI, 2011 and 2012
                                                                                                                          • Majority of loans arranged through branches
                                                                                                                            • Figure 22: Method used to arrange bank loan, NI and RoI, 2012
                                                                                                                        • The Consumer – Ownership of Personal Loans

                                                                                                                          • Key points
                                                                                                                            • Higher level of loan ownership among RoI consumers
                                                                                                                                • Figure 23: Number of loans held, RoI and NI, 2012
                                                                                                                              • Ownership highest among consumers aged 25-54
                                                                                                                                • Figure 24: Consumers who have one loan, by age, RoI and NI, 2012
                                                                                                                              • Loan ownership among Irish consumers relatively steady since 2011
                                                                                                                                  • Figure 25: Number of loans held, RoI and NI, 2011 and 2012
                                                                                                                                • Most loans taken out more than 12 months ago
                                                                                                                                    • Figure 26: When consumers took out their most recent loan, RoI and NI, 2012
                                                                                                                                    • Figure 27: When consumers took out their most recent loan, RoI and NI, 2011 and 2012
                                                                                                                                  • Wide variation in value of loans taken out
                                                                                                                                      • Figure 28: Value of most recent loan taken out, RoI and NI, 2012
                                                                                                                                    • Loan terms of four to five years most common among Irish consumers
                                                                                                                                      • Figure 29: Length of most recent loan term, RoI and NI, 2012
                                                                                                                                    • Decline in long-term loans in NI and in mid-term loans in RoI
                                                                                                                                        • Figure 30: Length of most recent loan term, RoI and NI, 2011 and 2012
                                                                                                                                    • The Consumer – Purpose of Loans

                                                                                                                                      • Key points
                                                                                                                                        • Loans most commonly used to purchase cars
                                                                                                                                            • Figure 31: Purpose of most recent loan, RoI and NI, 2012
                                                                                                                                          • Consumers aged 35-44 borrowing to finance purchase of motor vehicle
                                                                                                                                              • Figure 32: Consumers who took out their most recent loan to pay for a new/used motor vehicle, by age and socio-economic group, RoI and NI, 2012
                                                                                                                                            • Consumers aged 45-54 borrowing for home improvements
                                                                                                                                                • Figure 33: Consumers who took out their most recent loan to pay for home improvements, by age and socio-economic group, RoI and NI, 2012
                                                                                                                                            • The Consumer – Attitudes towards Saving, Borrowing and Debt

                                                                                                                                              • Key points
                                                                                                                                                • Cautious overall attitude towards borrowing and debt
                                                                                                                                                    • Figure 34: Agreement with selected statements related to saving, borrowing and debt, RoI and NI, 2012
                                                                                                                                                  • Resistance to taking on debt grows with age
                                                                                                                                                      • Figure 35: Agreement with statement 'I don't like the idea of being in debt', by age, RoI and NI, 2012
                                                                                                                                                    • Women more inclined to save up for things than borrow
                                                                                                                                                        • Figure 36: Agreement with the statement 'If there's something I want, I save up for it', by gender, RoI and NI, 2012
                                                                                                                                                      • Reluctance to taking out credit/loans highest among 35-54s
                                                                                                                                                          • Figure 37: Agreement with statement 'I only take out credit/loans when absolutely necessary', by age, RoI and NI, 2012
                                                                                                                                                      • Appendix

                                                                                                                                                        • Channels to market
                                                                                                                                                          • Figure 38: Method used to arrange bank loan, RoI and NI, 2012
                                                                                                                                                          • Figure 39: Type of loan taken out in the last 12 months, by demographics, RoI, 2012
                                                                                                                                                          • Figure 40: Type of loan taken out in the last 12 months, by demographics, NI, 2012
                                                                                                                                                        • Ownership of loans
                                                                                                                                                          • Figure 41: Loans taken out in the last 12 months, by demographics, RoI, 2012
                                                                                                                                                          • Figure 42: Number of loans held, by demographics, RoI, 2012
                                                                                                                                                          • Figure 43: Loans taken out in the last 12 months, by demographics, NI, 2012
                                                                                                                                                          • Figure 44: Number of loans held, by demographics, NI, 2012
                                                                                                                                                        • When loan taken out
                                                                                                                                                          • Figure 45: When consumers have taken any loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 46: When consumers have taken most recent loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 47: When consumers have taken any other loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 48: When consumers have taken any loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 49: When consumers have taken most recent loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 50: When consumers have taken any other loan, by demographics, NI, 2012
                                                                                                                                                        • Length of loans
                                                                                                                                                          • Figure 51: Length of any loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 52: Length of most recent loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 53: Length of any other loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 54: Length of any loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 55: Length of most recent loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 56: Length of any other loan, by demographics, NI, 2012
                                                                                                                                                        • Value of loans
                                                                                                                                                          • Figure 57: Value of any loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 58: Value of most recent loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 59: Value of any other loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 60: Value of any loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 61: Value of most recent loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 62: Value of any other loan, by demographics, NI, 2012
                                                                                                                                                        • Purpose of loans
                                                                                                                                                          • Figure 63: Purpose of any loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 64: Purpose of most recent loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 65: Purpose of any other loan, by demographics, RoI, 2012
                                                                                                                                                          • Figure 66: Purpose of any loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 67: Purpose of most recent loan, by demographics, NI, 2012
                                                                                                                                                          • Figure 68: Purpose of any other loan, by demographics, NI, 2012
                                                                                                                                                        • Agreement with statements
                                                                                                                                                          • Figure 69: Agreement with selected lifestyle statements related to finance, by demographics, RoI, 2012
                                                                                                                                                          • Figure 70: Agreement with selected lifestyle statements related to finance, by demographics, RoI, 2012
                                                                                                                                                          • Figure 71: Agreement with selected lifestyle statements related to finance, by demographics, RoI, 2012
                                                                                                                                                          • Figure 72: Agreement with selected lifestyle statements related to finance, by demographics, RoI, 2012
                                                                                                                                                          • Figure 73: Agreement with selected lifestyle statements related to finance, by demographics, RoI, 2012
                                                                                                                                                          • Figure 74: Agreement with selected lifestyle statements related to finance, by demographics, RoI, 2012
                                                                                                                                                          • Figure 75: Agreement with selected lifestyle statements related to finance, by demographics, NI, 2012
                                                                                                                                                          • Figure 76: Agreement with selected lifestyle statements related to finance, by demographics, NI, 2012
                                                                                                                                                          • Figure 77: Agreement with selected lifestyle statements related to finance, by demographics, NI, 2012
                                                                                                                                                          • Figure 78: Agreement with selected lifestyle statements related to finance, by demographics, NI, 2012
                                                                                                                                                          • Figure 79: Agreement with selected lifestyle statements related to finance, by demographics, NI, 2012
                                                                                                                                                          • Figure 80: Agreement with selected lifestyle statements related to finance, by demographics, NI, 2012

                                                                                                                                                      Companies Covered

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

                                                                                                                                                      Personal Loans - Ireland - November 2012

                                                                                                                                                      US $1,411.13 (Excl.Tax)