Competitive Dynamics in the UK Personal Loan Market: Industry Report

Competitive Dynamics in the UK Personal Loan Market

Product Type: Market Research Report
Published by: Datamonitor
Published: May 2007
Product Code: R313-22003

Description

Introduction

2005 saw a subdued performance from many unsecured loan providers as the market contracted. Moreover, 2006 was another tough year for unsecured personal loans. In fact, lenders are feeling a number of competitive pressures, as the personal loan market remains as competitive as ever.

Scope

Provides insight on how lenders are dealing with a number of competitive pressures. Discusses the key competitive changes in the market over the last year. Incorporates primary interviews from industry experts and secondary data from a wide range of sources.

Highlights

Though the personal loan market is highly competitive, the UK's top five lenders maintained their market share of the market in 2005, at 41.4 per cent. Northern Rock, AA Financial Services, Egg, Abbey and Nationwide performed particularly well over 2005. Given the poor performance of the unsecured personal loan market in 2006, it is unsurprising that the majority of lenders saw mixed performances. Indeed, many lenders even saw a drop in balances outstanding compared to the end of 2005. Responding to the tough competitive market environment, the leading unsecured personal loan providers have raised their share of total advertising expenditure yet again in 2006. While total unsecured personal loan advertising expenditure decreased from 2005 to 200 , the top 30 competitors' spend in the market increased from 45.2 to 50.6 per cent.

Reasons to Purchase

Gain insight on which lenders are performing well in a highly competitive market. Learn how the market is changing and evaluate any opportunities for your business arising from these changes. Understand how lenders are responding in a market where bad debt remains an issue.

Table of Contents

DATAMONITOR VIEW
CATALYST
SUMMARY
ANALYSIS: 2005 saw a subdued performance from many lenders; Most lenders saw a rise in balances outstanding over 2005; Meanwhile, the five largest banking groups strengthened their market share over 2005 in terms of gross advances; Moreover, 2006 was another difficult year for personal lending; Personal loans also experienced a tough year; Indeed, most lenders experienced a difficult H1 2006; Not all players grew their balances over the half year; Moreover, many lenders saw a drop in new lending volumes; Unsurprisingly, lenders are feeling a number of competitive pressures; Competition is as tough as ever; The top competitors are spending more on advertising in terms of share; Lenders are having to look at other ways to compete successfully; Differentiation is key; But ultimately, the structure of pricing will have to change in the long-run; Moreover, bad debt continues to be a challenge when looking to beat the competition; Bad debt remains an issue for lenders; Such a situation has impacted upon lenders' competitive strategies and results
APPENDIX: Supplementary data; Definitions; Balances outstanding; CAGR; CCJ; Consumer credit; Gross advances; Methodology; Further reading; European consumer credit reports; UK consumer credit reports; UK consumer credit briefings; Relevant links; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: Unsecured personal loan balances outstanding and market share by group, 2004-2005; Table 2: Unsecured personal loan gross advances and market share by group, 2004-2005; Table 3: Unsecured personal loan balances outstanding and market share by group, H2 2005-H1 2006; Table 4: Advertising personal loan spend by the leading competitors, 2005-2006; Table 5: Half-year growth and market share in terms of balances outstanding by group, H2 2005-H1 2006; Table 6: Debt write-offs for unsecured lending (excluding credit cards), March 2002-December 2006
List of Figures: Figure 1: Barclays Bank and Northern Rock were the market's biggest winners over 2005 in terms of balances outstanding, 2004-2005; Figure 2: The top five lenders gained share over 2005 in terms of gross advances, 2004-2005; Figure 3: The first half of 2006 was tough on a large number of lenders, even in terms of balances outstanding, H2 2005-H1 2006; Figure 4: Debt write-offs on unsecured lending (except credit cards) has continued to rise, March 2002-December 2006

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