Competitive Dynamics in the UK Personal Loan Market 2008

• Provides market shares in balances outstanding and gross advances for major unsecured loan providers.
• Provides advertising spend for top personal loan providers.
• Discusses the key competitive changes in the market over the last twelve months.

• Gain insight into the performance of your competitors.
• Learn how the market is changing and evaluate any opportunities for your business arising from these changes.
• Learn how your competitors are adapting their strategies in a changing market.

DATAMONITOR VIEW

CATALYST

SUMMARY

ANALYSIS

A contracting market in 2007 saw major personal loan providers reach lower lending levels

Major lenders' new personal loan business levels in 2007 were below 2006 levels

Many of the major personal loan providers also experienced a contraction in balances outstanding in 2007

Competitive intensity in the UK personal loan market has eased somewhat

There are significantly fewer players now operating in this sector

Most lenders are focusing on their own customer database to sell personal loans

The credit crunch is forcing lenders to review their lending strategies

Advertising spend has declined in 2007, as a result of more focus on cross-selling

The credit crunch is making the personal loan market less price sensitive

Personal loan providers have increased their rate significantly in the space of a year

Going forward, bad debt and PPI issues remain a threat to lenders' profitability

Bad debt still remains an issue for lenders, although lenders seem to have learnt from their recent experience

Nonetheless, overindebtedness continues to remain a concern

The future of the PPI sector is still undecided

Personal loan providers' profitability will be adversely affected

APPENDIX

Supplementary data

Definitions

Balances outstanding

Bank of England base rate

CAGR

Gross advances

PPI

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Unsecured personal loan gross lending for major competitors, 2005-07

Table 2: Unsecured personal loan balances outstanding and market share for major competitors, 2006-07

Table 3: List of unsecured personal loan providers in the UK as per Moneyfacts May 2008

Table 4: Typical interest rates of major providers on a £5,000 unsecured personal loan

Table 5: Pricing structure for a sample of personal loan providers

Table 6: Gross lending market shares for major unsecured personal loan providers, 2005-07

Table 7: Advertising spend on personal loans for major providers, 2006-07

Table 8: Monthly interest rates on unsecured personal loans

Table 9: UK banks' and building societies' write-offs on consumer lending

Table 10: PPI gross written premium by product line, 2006

List of Figures

Figure 1: With the exception of Alliance & Leicester, all major lenders witnessed a fall in business level in 2007

Figure 2: All major providers witnessed a fall in market share of personal loan balances outstanding over 2007

Figure 3: All major personal loan providers have cut back on advertising spend over 2007

Figure 4: Interest rates on unsecured personal loans have risen again in the last couple of months despite a cut in the base rate

Figure 5: Barclaycard and Alliance & Leicester are in Moneyfacts' Best Buys table, May 2008

Figure 6: Write-offs on unsecured lending other than credit cards fell slightly in 2007

Figure 7: The average unsecured consumer debt per UK adult increased further in 2007

Figure 8: Lloyds TSB and RBS Group stand to lose the most with the CC's investigation of the PPI sector