Competitive Dynamics in the UK Personal Loan Market 2008

Publication Date	June 2008
Publisher	Datamonitor
Product Type	Report
Pages	24
ISBN Number	not applicable
Product Code	DAT12358

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Summary

Introduction

The UK unsecured personal loan sector has continued to contract in 2007 and more lenders are now focusing on good quality customers rather than volume. Moreover, the advent of the credit crunch has led to fewer players in this sector and to significant increases in personal loan interest rates, as well as a marked change in customer acquisition strategies.

Scope

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.

Highlights

Many lenders have intentionally been reducing their market share as they shift their focus to good quality lending and reject more customers, as opposed to losing share naturally.

From a total of 57 unsecured personal loan providers in May 2007, this number has fallen to just 46 in May 2008, representing a contraction of 19% in the number of unsecured personal loan providers.

While rising bad debts was the trigger for a shift away from mass customer acquisition, the credit crunch has further contributed to this trend.

Reasons to Purchase

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.

Content

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