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Consumer Credit in Europe

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Consumer Credit in Europe

  1. 1. Consumer Credit in Europe - Topics, trends and drivers -
  2. 2. Jasmin in a few words <ul><li>Founded in 2001 in Bordeaux, France </li></ul><ul><li>15 financial services industry specialists </li></ul><ul><li>A strong track record in the consumer credit industry </li></ul><ul><li>Working mainly with European but also North American companies </li></ul><ul><li>Produces operational reports on European consumer credit drivers… </li></ul><ul><li>… but also specifically monitors focused on : </li></ul><ul><ul><li>International innovation in financial services </li></ul></ul><ul><ul><li>European consumer credit markets and leaders </li></ul></ul><ul><ul><li>French market offer </li></ul></ul>
  3. 3. Today’s contents <ul><li>Market Overview of the Consumer Credit Industry </li></ul><ul><li>Perspectives on European Consumer Credit Market </li></ul><ul><ul><li>The upsurge of european champions </li></ul></ul><ul><ul><li>Debt consolidation bracket </li></ul></ul><ul><ul><li>Time of convergence </li></ul></ul>
  4. 4. 1. Market Overview of the Consumer Credit Industry Sources : Central Banks, National Statistics Offices, Jasmin Consumer Credit Industry amounts 4 Trillion € outstandings in the World at the end of 2005. It represents around 11% of World GDP. 2004 2005 2006 (f) 3 440 B€ 4 233 B€ 5 100 B€
  5. 5. Asia 811 Billion € 500 Billion € Americas 2 301 Billion € 1 965 Billion € 31 Billion € Oceania 59 Billion € 43 Billion € <ul><li>2005 World Market Shares </li></ul><ul><li>Americas...........................54.4% </li></ul><ul><ul><li>United States 46.4% </li></ul></ul><ul><li>Europe.............................24.5% </li></ul><ul><ul><li>European Union 23.6% </li></ul></ul><ul><li>Asia..................................19.2% </li></ul><ul><ul><li>Japan 11.8% </li></ul></ul><ul><li>Oceania..............................1.4% </li></ul><ul><ul><li>Australia 1.0% </li></ul></ul><ul><li>Africa..................................0.6% </li></ul><ul><ul><li>South Africa 0.2% </li></ul></ul>Europe 1 038 Billion € 1 000 Billion € European Consumer Credit industry totalizes 1 Trillion € outstandings (1 038 Billion €) for 2005. 1. Market Overview of the Consumer Credit Industry Africa 24 Billion € 10 Billion € Sources : Central Banks, National Statistics Offices, Jasmin
  6. 6. <ul><li>Top 5 European countries represent 76% of the total European market at the end of 2005. </li></ul><ul><li>At the same time, Top 3 represent two thirds of the total European market. </li></ul><ul><li>The &quot; Others &quot; part include 29 different European countries </li></ul>1. Market Overview of the Consumer Credit Industry Sources : Central Banks, National Statistics Offices, Jasmin <ul><li>Albania </li></ul><ul><li>Austria </li></ul><ul><li>Belgium </li></ul><ul><li>Bielorussia </li></ul><ul><li>Bulgaria </li></ul><ul><li>Croatia </li></ul><ul><li>Cyprus </li></ul><ul><li>Czech Republic </li></ul><ul><li>Denmark </li></ul><ul><li>Estonia </li></ul><ul><li>Finland </li></ul><ul><li>Greece </li></ul><ul><li>Hungary </li></ul><ul><li>Ireland </li></ul><ul><li>Island </li></ul><ul><li>Lettonia </li></ul><ul><li>Lituania </li></ul><ul><li>Luxemburg </li></ul><ul><li>Malta </li></ul><ul><li>Netherlands </li></ul><ul><li>Norway </li></ul><ul><li>Poland </li></ul><ul><li>Portugal </li></ul><ul><li>Romania </li></ul><ul><li>Slovakia </li></ul><ul><li>Slovenia </li></ul><ul><li>Sweden </li></ul><ul><li>Switzerland </li></ul><ul><li>Ukrain </li></ul>
  7. 7. U.K. GER FRA SPA ITA 04 05 06 279.4 B€ #1 04 05 06 234 B€ 04 05 06 124.8 B€ 04 05 06 77.1 B€ 04 05 06 72.3 B€ 266.9 B€ Outstandings 236.9 B€ 115.8 B€ 62.3 B€ 60.6 B€ #2 #3 #4 #5 131.3 B€ 92.1 B€ 228.4 B€ 85.3 B€ 316 B€ <ul><li>United Kingdom ranks 1st in Europe and despite signs of maturity, market remains dynamic </li></ul><ul><li>Germany was the most important European market in the late 90’s and now declines </li></ul><ul><li>France is one of the most competitive markets in the world and will certainly develop with new cobranding regulation </li></ul><ul><li>Spain and Italy present a solid outstandings’ growth for the last two years </li></ul>1. Market Overview of the Consumer Credit Industry 05/04 06/05 + 5% - 1% + 8% + 24% + 19% 05/04 06/05 05/04 06/05 05/04 06/05 05/04 06/05 + 5% + 19% - 2% + 18% (Evolution in GBP terms) + 11% (Evolution in € terms) Sources : Central Banks, National Statistics Offices, Jasmin
  8. 8. 1. Market Overview of the Consumer Credit Industry <ul><li>These pie charts show there’s no common European consumer credit market structure in place </li></ul><ul><li>The importance of cultural aspects reflects different models </li></ul><ul><li>Countries where consumers are reluctant to credit show strong development with Product Specific Personal Loans </li></ul>Sources : Central Banks, N Statistics Offices, Jasmin – Datas : Outstandings Revolving Lines + Overdrafts Product Specific Personal Loans Other Personal Loans
  9. 9. (Evolution in US $ terms) + 4% 05/04 06/05 + 5% (Evolution in ¥ terms) + 4% 05/04 06/05 + 2% (Evolution in € terms) + 8% 05/04 06/05 + 7% USA 1 964.6 B€ 1 636.5 B € 1 847.7 B€ 04 05 06 JAP 523.2 B€ 500 B€ 471.9 B€ 04 05 06 787.6B€ 734.9 B€ Outstandings 853.1 B€ 04 05 06 Top 5 in Europe 5 1. Market Overview of the Consumer Credit Industry Sources : Central Banks, National Statistics Offices, Jasmin <ul><li>Consumer credit growth records higher in the European zone than United States and Japan </li></ul><ul><li>European zone shows possible higher potential given Household debt to GDP ratio </li></ul>Household Debt to GDP ratio 94% 69% 43% 72% 31% 116% 113%
  10. 10. Outstandings  05/04 Outstandings/GDP 10% 20% -5% 5% 10% 15% 30% 40% 50% 60% 8% 20% 0% 70% 80% 90% 100% Three main patterns in Europe : 1/ Very dynamic markets but starting from a small base 2/ Matured markets with a consumer contribution to GDP above 9% 3/ Other countries where consumer credit growth and consumer credit contribution are balanced 1. Market Overview of the Consumer Credit Industry Sources : Central Banks, National Statistics Offices, Jasmin Outstandings/GDP Outstanding’s  05/04
  11. 11. Today’s contents <ul><li>Market Overview of the Consumer Credit Industry </li></ul><ul><li>Perspectives on European Consumer Credit Market </li></ul><ul><ul><li>The upsurge of european champions </li></ul></ul><ul><ul><li>Debt consolidation bracket </li></ul></ul><ul><ul><li>Time of convergence </li></ul></ul>
  12. 12. 2. Perspectives on European Consumer Credit Market a. The upsurge of european champions
  13. 13. Mulliez Family 15 CC implantations in Europe 8 12 22 11 20 19 8 16 3 11 CC International contribution Poor High High High Poor High High Average High Poor Poor Preferred Market Entry Strategy M&A M&A M&A M&A GField GField M&A M&A M&A GField GField Unique Brand Policy YES YES YES NO YES YES YES YES YES YES YES CC Outstandings Scale >45 B€ >35 B€ >20 B€ >50 B€ >35 B€ >25 B€ >20 B€ >45 B€ >50 B€ >25 B€ > 5 B€ Sources : Operators, Jasmin, 2005&2006 situation datas a. The upsurge of european champions 2. Perspectives on European Consumer Credit Market
  14. 14. U.K 04 05 06 07 (f) 263 B€ 260 B€ 280 B€ CAGR 07-04 +2,1% 280 B€ #1 GER 17.9 B€ 17.9 B€ 18 B€ 17 B€ -1,7% #3 FRA 15 B€ 18 B€ 20.2 B€ 22 B€ #2 +13,6% ITA #4 5 B€ 6 B€ 7 B€ 7.8 B€ +16% SPA #5 4.2 B€ 6.7 B€ 7.9 B€ 10.1 B€ +34% b. Debt Consolidation bracket Sources : Central Banks, National Statistics Offices, Jasmin – Datas : Production estimates <ul><li>Launched in the United Kingdom ten years ago </li></ul><ul><li>Has become an important animator of the whole market </li></ul><ul><li>Targeted first towards subprime lenders, now approach is becoming widespread on mass markets </li></ul><ul><li>A big contributor to credit convergence </li></ul><ul><li>Strong development in recent years although small volumes in Portugal, Greece and Poland </li></ul>2. Perspectives on European Consumer Credit Market
  15. 15. c. Time of convergence Internet Mobile phones <ul><li>Access to consumers personal finance has become a priority for many different actors </li></ul><ul><li>Traditional financial competitors have to face new actors with alternative technological skills </li></ul><ul><li>These new actors promote simplicity and comfort of use for customers </li></ul>Cards Leisure 2. Perspectives on European Consumer Credit Market
  16. 16. c. Time of convergence World Pay is an Internet Payment System provider, now part of RBS Group. The company has developed the first payment system interlinked to advanced voice biometric technologies. It allows all financial transactions to be signed and guaranteed by voice recognition. The Voice Pay account is linked to a Visa or Mastercard Debit/Credit card. 2. Perspectives on European Consumer Credit Market Helps the consumer for shopping and informs him about promotions linked to the product. Helps him to find items in the alleys. Can also inform the customer on the points to be earned from the loyalty program and the extra rebate the consumer can gain using his credit card. Source : 2007 Jasmin International Innovation Financial Services Monitor
  17. 17. c. Time of convergence 2. Perspectives on European Consumer Credit Market First Meta is a start up company based in Singapour. It projects to launch the first credit card in the « Second Life » virtual world before the end of 2007. Second life avatars would be able to ask for a credit line and a credit card. Source : 2007 Jasmin Innovation Monitor Mizuho Bank will launch next year a personal loan for the bank’s customers. That’s not the first time banks having test with this, but that’s the first time a bank decided to go through and has clearly announced ambitious objectives, maybe in order to rentabilize the ATM network.
  18. 18. c. Time of convergence Housing Credit Insurance Loyalty programs Consumer Credit Brokers Retailers <ul><li>Banks’ leading power drives to cover consumer’s global account banking needs </li></ul><ul><li>Consumer’s perception of differences between main lines of financial personal products vanish rapidly </li></ul><ul><li>Banks now tend to acquire structures to supply credit for the main events in the consumer life cycle </li></ul>Real Estate 2. Perspectives on European Consumer Credit Market
  19. 19. c. Time of convergence One month ago, SCF launched « Prestamo Formula Zero », a new kind of personal loan. The bank has linked the product to 5 blue chips (France Telecom, Total Fina ELF, Nestle, Iberdrola and BBVA) and offers to reimburse 6 months of interest to customers if the wallet goes up 10% on a 4 year period. The fondo pensione famiglia has launched an original product to allow italian mothers to redeem the points of their loyalty card with retirement points. Consumer Credit Housing Credit Debt Consolidation Consumer Credit Real Estate BNP Paribas decided two weeks ago to regroup its different specialist business lines in one dedicated to Personal Finance. BNP Paribas is intending to work on synergies between those different business lines directed towards the same customers. 2. Perspectives on European Consumer Credit Market
  20. 20. Next future... IT Systems Integration at European level A global market which has to be run like an industry Understanding cultural aspects is particularly important in local markets in Europe Growing importance of loyalty programs to animate customer relationship Next battle for private/domestic networks with Visa and Mastercard networks Sustainable development products will gain coverage Enhance rising risk steering control Target non prime customers acquisition programs Become a Brand with Intelligent Marketing Drive European standardisation Business convergences Technological convergences Business Processes Marketing & Distribution

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