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Overview of the European consumer
credit market in 2014
For the 8th consecutive year, Crédit Agricole Consumer Finance is publishing its
annual review of the European consumer credit market.
15th July 2015
www.ca-consumerfinance.com
[email protected]
Consumer credit in Europe 2014
General overview
Stabilisation of outstanding consumer credit in the European
Union
Outstanding consumer credit more or less stabilised in
Europe, after five years of falls. At end-2014, outstandings were
€1,069 billion, showing a small decline (0.3%) over the year.
Outstandings per inhabitant and the ratio of consumer credit to
final household consumption (which measures the penetration
rate of consumer credit) help identify three groups of countries:
Outstanding consumer credit in the European Union,
€ billions
Currencies converted at the average 2014 exchange rate
-0,9%
1.158
-1,9%
1.148
1.127 -3,5%
Northern European countries (United Kingdom, Ireland,
Norway, Denmark and Sweden) and Germany, where
outstandings per head are the highest in the European Union at
over €2,500.
The countries of central and eastern Europe,
outstandings per head are the lowest, at below €1,000.
-0,6%
1.087
1.081
-0,8%
-0,3%
1.072
1.069
2013
2014
where
The countries of continental Europe (Belgium, France, the
Netherlands and Austria) and southern Europe (Spain, Italy,
Greece and Portugal) have figures per head of between €1,000
and €2,500.
2008
2009
2010
2011
2012
These figures are subject to changes from one year to the next, due to
revisions made by central banks and changes in exchange rates.
Sources: Central banks, Asterès.
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General overview
Fall in outstandings in a sluggish and uncertain economic climate
In 2014, more than half of the countries of the European Union (16 of 28) saw a fall in outstanding consumer credit. Those
countries that have seen significant structural adjustments, following the sovereign debt crisis, are in a period of deleveraging and
are naturally seeing outstandings decline (as in Spain, Italy, Greece, Ireland and Cyprus) or stagnate (Portugal).
The sharpest fall came in the Netherlands, where outstandings fell by 17%. This fall came alongside a fall in consumption for
the 3rd consecutive year.
The biggest growth came in Luxembourg, with 16%.
In France, outstandings increased by 1%.
16%
8%
2014 trends in consumer
credit by EU country
4% 4% 3% 3%
2% 2% 1% 0% 0%
0% -1%-1%-2%
-3%-3%-5%-5%
-6%-7%-7%-8%-8%
-8%-9%
-16%-17%
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Focus by region – Southern Europe
Consumer credit structurally under-developed
in southern European countries
Spain, Italy and Portugal account for 12% of total outstandings in Europe.
Outstandings per inhabitant are below the European Union average of €2,100:
€1,700 in Italy, €1,300 in Spain and €1,200 in Portugal.
Outstanding consumer credit
Southern Europe
€ billions
Italie
In 2014, outstanding credit fell by 7% in Spain (where it has been falling since
2009), 3% in Italy (since 2011) and was stable in Portugal after 4 years of falls.
Economic prospects (the unemployment rate is still 24% in Spain and 14% in
Portugal) have had a significant influence on the trend in outstandings.
Espagne
Portugal
120
100
80
60
40
In Italy, difficult economic conditions also limited the growth in outstandings.
The country experienced its third consecutive year of recession, with gross
domestic product falling by 0.4% over 2014. The unemployment rate has risen
from 12.5% to 12.7% and consumer spending has stagnated. At the same
time, the household savings rate in these countries remains high: 10% of
household income in Portugal and Spain and 12% in Italy.
20
2008 2009 2010 2011 2012 2013 2014
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Focus by region – Northern Europe
Northern Europe, the engine of consumer credit
Denmark, Finland, Norway and Sweden represent 3% of Europe’s total population, but
5% of outstanding consumer credit.
In Norway, Denmark and Finland, outstandings per inhabitant are above the European
average: €5,500 in Norway (the highest in Europe), €3,300 in Denmark (3rd) and €2,500
in Finland (7th). Sweden is slightly below the European average, with outstandings per
head of €2,000.
Northern Europe
€ billions
Finlande
Danemark
Suède
Norvège
30
However, penetration of consumer credit varies from country to country. Use of
consumer credit has developed rapidly in Norway, thanks mainly to the continual
increase in living standards. Consumer credit penetration is in line with the European
average in Finland, whilst it is slightly under-developed in Sweden. This difference is
due to the high savings rate of Swedish households (16% in 2014). In Denmark,
outstandings fell by 1% in 2014, following a deleveraging trend that began in 2009.
25
20
15
10
2008 2009 2010 2011 2012 2013 2014
Ratios of outstandings to consumption show a similar pattern: high in Norway (19%)
and Denmark (15%), and slightly above the European average in Finland (13%). In
Sweden, outstandings represent only 10% of final household consumption.
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Country Focus – France
In France, outstandings have ceased their decline
With outstandings of €2,244 per head, a ratio of outstandings to consumption
of 13% and a ratio of outstandings to gross disposable income of 11%,
France is right on the European average.
In 2014, after 3 years of falls, consumer credit outstandings stabilised, posting
growth of 1% to €148 billion. However, consumer spending growth remained
sluggish at 0.4%. Production remains more than 20% below its record levels
of 2007.
France
€ billions
156
154
152
150
This increase in outstandings in 2014 in France was partly due to a recovery
in unallocated personal loans, but particularly to the good performance of car
finance (new and second-hand): two-thirds of allocated loans were for car
purchases.
148
146
144
142
140
2008 2009 2010 2011 2012 2013 2014
Revolving credit continued to shrink (falling 1.8% according to the Association
des Sociétés Financières), whilst rent-to-buy lending saw strong growth (16%
according to the Association des Sociétés Financières).
The profitability of the sector as a whole is under pressure, with interest rate
ceilings having fallen continuously and significantly since 2011, particularly for
loans of over €3,000.
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Country Focus – Germany
In Germany, credit penetration has fallen since 2009
In 2014, repayments rose by 2% in Germany and household consumption
increased by 1%. A minimum wage of €8.50 gross per hour was introduced on
1, January 2015. At the same time, the savings rate (the 2nd highest in the EU
after Sweden) has been falling since 2008 (from 10.5% to 9.2%).
All these factors, coupled with the low unemployment rate (4.9% at end-2014)
did not result in an increase in outstanding consumer credit, which was virtually
unchanged compared to 2013. Outstandings stood at €222 billion at end-2014.
In general terms, the German market is mature, with a level of outstandings and
a ratio of credit to consumption that are both fairly stable. Since 2011, the share
of repayable credit has increased, rising from €144 billion to €150 billion*.
Outstandings per inhabitant were €2,754 in 2014.
Germany
€ billions
228
227
226
225
224
223
222
221
220
219
2008 2009 2010 2011 2012 2013 2014
This said, the penetration of consumer credit has fallen since 2009, with a ratio
of outstandings to consumption dropping from 17% to 14% in 2014. This
penetration is structurally limited by the overdraft facilities offered by German
banks.
* Source: Deutsche Bundesbank
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Country Focus – UK
The United Kingdom: Europe’s biggest consumer credit market
With €286 billion in outstandings at end-2014, the United Kingdom is
Europe’s biggest consumer credit market.
In 2014, consumer credit saw its third consecutive year of growth: 2% in
2012, 5% in 2013 and 4% in 2014. Outstanding consumer credit represented
20% of household disposable income and 21% of consumption.
Outstandings per inhabitant were €4,446 in 2014, making the UK the 2nd
largest user of consumer credits in Europe (behind Norway).
The high penetration rate of consumer credit is due in particular to the low
average unemployment rate (7% between 2008 and 2014) and household
wealth (gross disposable income is €22,000 per capita, against an average of
€17,235 in Europe).
United Kingdom
€ billions
300
290
280
270
260
250
240
230
2008200920102011201220132014
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Morocco – a dynamic market
Morocco: the largest market in North Africa
The largest market in North Africa, with outstandings of €8.1 billion at end-2014,
Morocco has a high credit penetration rate, with a ratio of outstandings to
consumption of 17%. The ratio of outstandings to gross disposable income is
10%.
After continuous growth from 2007, outstandings declined slightly in 2014,
dropping 2%. This fall was due to a less dynamic economy in 2014.
Morocco
€ billions
9,0
8,0
7,0
GDP growth of 4.4% in 2013 was halved to 2.2% in 2014. Consumer spending
also grew more slowly (2.8% in 2014, from 5.4% a year earlier). The
unemployment rate rose from 9.1% in 2013 to 9.6% in 2014.
6,0
5,0
4,0
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Future trends in the consumer credit sector in France
Consumer credit as a source of economic and social leverage
Consumer credit is an important source of economic leverage. In
France, it represented 7.3% of GDP in 2014.
It allows consumers to make purchases at a specific moment, as
a function of their needs and their disposable income.
Consumer credit usage rates
By type of spending, as % of French households
One French household in every four (25.6%) had a consumer
credit product in 2014, with total outstandings of €146.3 billion.
Amongst these households:
More than 50% had credit relating to the acquisition of a car
or motorbike;
25% had credit to help equip their homes;
More than 10% used credit to finance improvement works on
their homes;
10% used credit to cover their current consumption spending.
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What are the consequences of the sharing economy?
Digital technologies are causing deep-seated changes in consumer behaviour. A new model of consumption, where use is
more important than ownership, has emerged over recent years. According to an IFOP study in April 2014, 75% of people
in France are involved in the collaborative economy, often without even realising it. Access to goods through rental,
sharing, or buying second-hand has developed thanks to the internet and the platforms it makes available.
Consumers are turning more naturally to rental options, allowing them to manage budgets more adroitly. Rentto-Buy solutions have thus seen strong growth in France (16% in 2014, according to the Association des Sociétés
Financières) against a background of an overall decline in consumer credit.
Those households which choose to buy are making more regular use of second-hand markets. In France in
2014, financing for the purchase of a second-hand vehicle grew by 5.4% (according to the Association des Sociétés
Financières). This new trend in purchasing patterns has led lending establishments, particularly in the automotive
market, to develop specific offerings.
Households generate revenue on purchases of durable goods by renting them out. This rental generates
additional revenue which can help drive a more regular renewal of goods and more frequent use of credit financing
solutions.
The sharing economy is driving lenders to develop new offerings and new expertise: analysis of new consumer
trends and consumer expectations, development of simple and effective communication about their offerings, control of
on-line subscription technologies.
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The digital transformation
The digitalisation of French consumers in figures
• Internet access for European households was close to 80% in 2014 (source: Observatoire du numérique, Internet Access
Report, 2014);
• 61% of people in France owned a smartphone in 2014. This figure was 39% in 2012 (source: Deloitte 2014);
• The percentage of French people owning a tablet has risen from 15% in 2012 to 46% in 2014 (source: Deloitte 2014);
• 59% of people in France made an on-line purchase in 2013 (source: Eurocast 2013). Between 2012 and 2013 internet
transactions increased by 17.5% (source: Fevad 2014). 87% of purchasers made internet orders (source: Fevad / QualiQuanti
– September 2013).
Faced with these changing behaviours, consumer credit companies are re-inventing their offerings
and their support
• Development of the dematerialisation of the client pathway, including most notably electronic signatures. CA-CF has used this
solution on one of his major partner websites, a first in the French consumer credit market.
• A more fluid approach to client communication and client satisfaction: bespoke support and proposal of suitable financing
solutions. In this area CA-CF has developed a click-to-chat solution to support clients navigating its website.
•
Creating more competitive offerings meeting consumer expectations, notably through rental solutions. With one of its main
partners, CA-CF has developed “Le Pass Location”, a rent-to-buy offering allowing clients to have a smartphone for less than
€30 per month.
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Methodology
Data for outstanding consumer credit included in this report are provided by central banks or national statistical
services.
They were collected for CA Consumer Finance by the research and consultancy company Asterès, which committed to
using homogenous product samples and markets:
Data covers banking and non-banking establishments (i.e. all lending establishments).
They include (to the extent allowed by source data) bank overdrafts, but exclude mortgage lending, even for the
purposes of financing current consumption.
To enable a comparison between markets, data have been converted to euros, at the average exchange rate for
2014. This element explains some of the significant variation in outstandings from one year to another. As all historic
data is converted at the same exchange rate, growth rates reflect the market in question and are not affected by
exchange rate fluctuations.
The data set out in this report should be considered as estimates, the complete accuracy of which can not be
guaranteed.
The quality of statistics produced by the primary source (frequently central banks) is variable. Coverage of the sample
of non-banking lenders is not consistent. Lastly, these statistics are frequently revised.
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