Competitive Dynamics in the UK Personal Loan Market 2008: Industry Research Report

Competitive Dynamics in the UK Personal Loan Market 2008

Published Date: June 2008

Published By: Datamonitor

Page Count: 161

Order Code: R313-33521

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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