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Loans & Alternate Sources of Credit - Ireland - January 2018

“Together with economic growth, rising employment and increased consumer confidence, low interest rates – particularly for NI consumers – have returned growth and momentum to the unsecured personal loans market. However, lingering uncertainties around the eventual impact of Brexit, in particular, have resulted in some consumers postponing plans to borrow for the time being."
– Brian O’Connor, Senior Consumer Analyst

This Report discusses the following key topics:

  • Both Irish economies doing well, despite underlying doubts
  • Credit conditions worsen for NI, but improve for RoI consumers in 2017
  • Consumer confidence high – but with a notable caveat
  • Most Irish consumers say own finances are 'healthy' or 'OK'
  • Almost two thirds of consumers have an outstanding loan or credit

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Table of contents

  1. Overview

    • What you need to know
      • Issues covered in this Report
        • Definitions
        • Executive Summary

            • The market
              • Figure 1: Credit advanced to private households (excluding mortgage loans for property purchase), IoI, RoI and NI, 2013-22
            • Forecast
              • Figure 2: Indexed value of outstanding consumer credit and other loans, actual, estimated, forecast and projected, RoI and NI, 2013-22
            • Market factors
              • Both Irish economies doing well, despite underlying doubts
                • Credit conditions worsen for NI, but improve for RoI consumers in 2017
                  • Consumer confidence high – but with a notable caveat
                    • Most Irish consumers say own finances are 'healthy' or 'OK'
                      • Companies and brands
                        • Permanent TSB, Ulster Bank and AIB all suffering from legacy issues
                          • Bank of Ireland announces downsize of up to 1,000 staff
                            • Chill Money betting on speed of processing and collaborative approach to drive sales
                              • Credit unions score highly for customer experience
                                • Credit Reporting Act comes into force in RoI from 30 June
                                  • The consumer
                                    • Almost two thirds of consumers have an outstanding loan or credit
                                      • Figure 3: Types of loans and credit products owned, NI and RoI, November 2017
                                    • Main reason to take out loan is to finance purchase of new car/vehicle
                                      • Figure 4: Main reason for taking out most recent loan, RoI and NI, November 2017
                                    • Consumers value familiarity, control and transparency
                                      • Figure 5: Agreement with statements relating to loans, RoI and NI, November 2017
                                    • What it means
                                    • The Market – What You Need to Know

                                      • Both Irish economies doing well, despite underlying doubts
                                        • Credit conditions worsen for NI, improve for RoI consumers in 2017
                                          • Consumer confidence high – but with a notable caveat
                                            • Most Irish consumers say own finances are 'healthy' or 'OK'
                                            • Market Size and Forecast

                                                • Value of outstanding loans down 6% from 2013-17
                                                  • Figure 6: Credit advanced to private households (excluding mortgage loans for property purchase), IoI, RoI and NI, 2013-22
                                                • Borrowing expected to reach almost €31 billion by 2022 on all-Ireland basis
                                                  • Figure 7: Indexed value of outstanding consumer credit and other loans, actual, estimated, forecast and projected, RoI and NI, 2013-22
                                              • Market Drivers

                                                • Economic conditions bode well for loans market in RoI
                                                  • Figure 8: Key economic indicators, RoI, actual, estimated and forecast, 2016-18
                                                  • Figure 9: Labour market summary, estimated and forecast, 2016-18
                                                • NI economy continuing to grow, despite Brexit doubts
                                                  • Figure 10: Economic growth, annual % increase, estimated and forecast, NI and UK, 2017-19
                                                  • Figure 11: Unemployment rate, NI, estimated and forecast, 2017 and 2018
                                                • Credit conditions deteriorated for UK (including NI) consumers in 2017
                                                  • Increased demand, eased credit conditions in eurozone in Q4 2017
                                                    • RoI consumers feeling positive, but not overly optimistic
                                                      • Figure 12: Consumer sentiment index, RoI, December 2016-December 2017
                                                    • Doubts and anxiety weighing slightly on NI consumer confidence
                                                      • Majority of consumers rate finances as being either 'healthy' or 'OK'
                                                        • Figure 13: How consumers rate their own financial situation, NI and RoI, November 2017
                                                      • Decline in number of RoI consumers describing situation as 'healthy'
                                                        • Figure 14: Consumers who rate their own financial situation as being 'healthy', NI and RoI, October 2014-October 2017
                                                    • Companies and Brands – What You Need to Know

                                                      • Permanent TSB, Ulster Bank and AIB all suffering from legacy issues
                                                        • Bank of Ireland announces downsize of up 1,000 staff
                                                          • Chill Money betting on speed of processing and collaborative approach to drive sales
                                                            • Credit unions score highly for customer experience
                                                              • Credit Reporting Act comes into force in RoI from 30 June
                                                              • Companies and Brands

                                                                  • AIB/First Trust
                                                                    • Key facts
                                                                      • Product portfolio
                                                                        • Recent developments
                                                                          • Ulster Bank
                                                                            • Key facts
                                                                              • Product portfolio
                                                                                • Recent developments
                                                                                  • Avant Card
                                                                                    • Key facts
                                                                                      • Product portfolio
                                                                                        • Recent developments
                                                                                          • Permanent TSB
                                                                                            • Key Ffcts
                                                                                              • Product portfolio
                                                                                                • Figure 15: Permanent TSB interest rates, 2017
                                                                                              • Recent developments
                                                                                                • Bank of Ireland
                                                                                                  • Key facts
                                                                                                    • Product portfolio
                                                                                                      • Figure 16: Bank of Ireland interest rates, RoI, 2017
                                                                                                    • Recent Developments
                                                                                                      • Chill Money
                                                                                                        • Key facts
                                                                                                          • Product portfolio
                                                                                                            • Figure 17: Chill Money interest rates, 2017
                                                                                                          • Recent developments
                                                                                                            • Dubco Credit Union
                                                                                                              • Key facts
                                                                                                                • Product portfolio
                                                                                                                  • Figure 18: Dubco Credit Union interest rates, 2017
                                                                                                                • Recent developments
                                                                                                                  • Irish League of Credit Unions
                                                                                                                    • Key facts
                                                                                                                      • Product portfolio
                                                                                                                        • Recent developments
                                                                                                                          • First Direct
                                                                                                                            • Key facts
                                                                                                                              • Product portfolio
                                                                                                                                • Figure 19: First Direct interest rates, 2017
                                                                                                                              • Recent developments
                                                                                                                                • KBC Ireland
                                                                                                                                  • Key facts
                                                                                                                                    • Product portfolio
                                                                                                                                      • Recent developments
                                                                                                                                      • Who’s Innovating?

                                                                                                                                        • Chatbots helping to assist loans application process
                                                                                                                                          • Fintech companies changing the loan process, but traditional banking still appeals
                                                                                                                                            • Loans as Christmas gifts
                                                                                                                                            • The Consumer – What You Need to Know

                                                                                                                                              • Almost two thirds of consumers have an outstanding loan or credit
                                                                                                                                                • Main reason to take out loan is to finance purchase of new car/vehicle
                                                                                                                                                  • Consumers value familiarity, control and transparency
                                                                                                                                                  • Ownership and Value of Loans/Credit Products

                                                                                                                                                      • Majority of consumers have an outstanding loan or credit
                                                                                                                                                        • Figure 23: Types of loans and credit products owned, NI and RoI, November 2017
                                                                                                                                                      • ABC1s and 35-54s most likely to have outstanding credit card balances
                                                                                                                                                        • Figure 24: Consumers who currently owe money on a credit card, by age and social class, NI and RoI, November 2017
                                                                                                                                                      • Around one in six consumers have an outstanding personal loan
                                                                                                                                                        • Consumers aged 25-34 most likely to have an outstanding personal loan
                                                                                                                                                          • Figure 25: Consumers who currently have an outstanding personal loan, by gender and age, NI and RoI, November 2017
                                                                                                                                                        • ABC1s more likely than C2DEFs to own personal loans
                                                                                                                                                          • Figure 26: Consumers who currently have an outstanding personal loan, by social class, NI and RoI, November 2017
                                                                                                                                                        • A quarter of consumers in full-time employment have personal loans
                                                                                                                                                          • Figure 27: Consumers who currently have an outstanding personal loan, by work status, NI and RoI, November 2017
                                                                                                                                                        • C2DEF women in part-time employment have credit union loans
                                                                                                                                                          • Figure 28: Consumers who currently have a credit union loan, by gender and work status, RoI, November 2017
                                                                                                                                                          • Figure 29: Consumers who currently have a credit union loan, by social class and gross annual household income, RoI, November 2017
                                                                                                                                                        • Young and old, low earners and high earners most likely to be debt-free
                                                                                                                                                          • Figure 30: Consumers who currently do not owe money on any loan or credit product, by age and gross annual household income, NI and RoI, November 2017
                                                                                                                                                        • One in five owe less than £500 (NI) / €600 (RoI)
                                                                                                                                                          • Figure 31: Value of loans: how much consumers currently owe on loans and credit products, NI and RoI, November 2017
                                                                                                                                                      • Reasons for Taking Out Loans

                                                                                                                                                          • Almost a quarter borrowed to pay for a new car or vehicle
                                                                                                                                                            • Figure 32: Main reason for taking out most recent loan, RoI and NI, November 2017
                                                                                                                                                          • Men and ABC1s in NI, 35-44s in RoI borrowing to purchase cars
                                                                                                                                                            • Figure 33: Consumers who took out their most recent loan to pay for a new car/vehicle, by gender, age and social class, RoI and NI, November 2017
                                                                                                                                                          • Major expenses and big purchases the main reasons for borrowing
                                                                                                                                                            • Figure 34: Reasons (relating to one-off purchases/major expenses) why consumers took out their most recent loan, RoI and NI, November 2017
                                                                                                                                                          • One in seven borrowing to help make ends meet
                                                                                                                                                            • Figure 35: Reasons (relating management of personal finances) why consumers took out their most recent loan, RoI and NI, November 2017
                                                                                                                                                        • Attitudes towards Loans

                                                                                                                                                            • Familiarity, control and ease of management appeal to consumers
                                                                                                                                                              • Figure 36: Agreement with statements relating to loans, RoI and NI, November 2017
                                                                                                                                                            • Strong majority would prefer not to have to borrow or use credit at all
                                                                                                                                                              • Figure 37: Agreement with statement "I would prefer to save for the things I need rather than rely on a loan or credit", RoI and NI, November 2017
                                                                                                                                                              • Figure 38: Agreement with statement "I would prefer to save for the things I need rather than rely on a loan or credit", by gender, age and social class, RoI and NI, November 2017
                                                                                                                                                            • Majority of consumers would welcome greater visibility and control
                                                                                                                                                              • Figure 39: Agreement with statements relating to convenient management/organisation of loans and debts, RoI and NI, November 2017
                                                                                                                                                            • Familiarity important, although significant minority open to novelty
                                                                                                                                                              • Figure 40: Agreement with statements relating to choice of lender, RoI and NI, November 2017
                                                                                                                                                            • Almost half of consumers would be comfortable using alternative sources of credit
                                                                                                                                                              • Figure 41: Agreement with statement “I am comfortable using alternative sources of credit to fund emergency purchases (such as house repairs)”, by average daily internet usage, RoI and NI, November 2017
                                                                                                                                                            • Most consumers expect cost of lending to increase in coming year
                                                                                                                                                              • Figure 42: Agreement with statements relating to confidence in borrowing, RoI and NI, November 2017
                                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                            • Data sources
                                                                                                                                                              • Market size rationale
                                                                                                                                                                • Generational cohort definitions
                                                                                                                                                                  • Abbreviations

                                                                                                                                                                  Loans & Alternate Sources of Credit - Ireland - January 2018

                                                                                                                                                                  £1,095.00 (Excl.Tax)