Consumer Perspective: Industry Insights and Lending Dynamics. Matt Fabian Director, Research & Industry Analysis

Transcription

1 Consumer Perspective: Industry Insights and Lending Dynamics Matt Fabian Director, Research & Industry Analysis

2 Agenda 1 Context A summary of economic trends 2 An overall perspective on the Canadian consumer credit market 3 Basic performance statistics across the major loan product types: originations, balances and delinquency Our philosophy Lenders are best served when they understand the entire consumer wallet Trans Union of Canada, Inc. All Rights Reserved 2

3 Key Canadian economic trends: Steady fundamentals amid looming uncertainty

4 Canada s economy lost some momentum in the latter part of 2017, but remains quite solid Real GDP: Quarter-over-quarter growth rate (seasonally adjusted, annualized) 8% 6% 4% Forecast 2% 0% -2% Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q % -6% -8% -10% Source: Statistics Canada, CANSIM Table Gross domestic product, Oxford Economics 2018 Trans Union of Canada, Inc. All Rights Reserved 4

5 Unemployment rate Unemployment is declining, but labor force participation remains persistently low Unemployment and labor force participation rate 10% % 8% 7% 6% 5% 4% 3% 2% 1% Labor force participation rate (%) 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Source: Oxford Economics 2018 Trans Union of Canada, Inc. All Rights Reserved 5

6 Unemployment rate The oil producing provinces are showing signs of positive momentum that is expected to drive improved credit results Unemployment rate, seasonally adjusted 10% Canada Exc. AB & SK Alberta Saskatchewan Oil Price (WTI) $160 9% 8% 7% 6% 5% 4% 3% 2% 1% $140 $120 $100 $80 $60 $40 $20 WTI crude oil price per barrel, in $U.S. 0% $- Source: Statistics Canada, CANSIM, tables and Trans Union of Canada, Inc. All Rights Reserved 6

7 Economic Policy Uncertainty Index (3 mo. MA) Canadian economic uncertainty around tariffs is equal to the time of the U.S. election Canada Global Trump Election Tariffs Oil Shock Brexit Eurozone Global Trade Source: Baker, Bloom, Davis, Trans Union of Canada, Inc. All Rights Reserved 7

8 The impact of tariffs is generally small. Until it extends to the auto sector % Employment by Census Division 20% + 10% - 19% 2% - 9% Mining Metal Manufact g. Auto Manufact g. ~5% shift in unemployment ~ 40 bps increase in delinquency (Ontario) Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no X Trans Union of Canada, Inc. All Rights Reserved 8

9 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 As a result of the economy s strength, the Bank of Canada has removed some of the stimulus 4.5% 4.0% 3.5% 3.0% Bank of Canada target overnight rate 2.5% Forecast 1 2.0% 1.5% 1.0% 0.5% 0.0% Source: actual rate history Bank of Canada 1) Oxford Economics, RBC Economics, BMO Economics 2018 Trans Union of Canada, Inc. All Rights Reserved 9

10 Our payment shock study found that consumers will generally remain resilient against future increases 28.5 million credit active consumers 9.3 million consumers are potentially exposed to a payment shock Up to 425K consumers will experience a payment shock with an incremental 50 bp increase Of the those consumer affected, <100K will have a payment shock of more than $50 per month Source: 2018 TransUnion Canada Payment Shock Study 2018 Trans Union of Canada, Inc. All Rights Reserved 10

11 An overview of consumer credit health

12 Although household debt continues to increase, the burden of servicing it has declined as a share of income % of Total household disposable income Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16% Household debt-service ratios (%), % Principal + interest 12% 10% 8% Interest only 6% 4% 2% 0% Source: Statistics Canada, 2018, CANSIM table Trans Union of Canada, Inc. All Rights Reserved 12

13 Average non-mortgage consumer balance Average consumer debt rose by 4.5% year-over-year. However, average delinquency declined over the same period by 4.9%. $30,000 Average non-mortgage consumer debt balances and serious delinquency rate 6.0% $29,500 $29,000 $28,500 $28,000 $27,500 $27,000 $26, % 5.0% 4.5% Delinquency rate (90+ DPD) $26,000 Q Q Q Q Q Q Q Q Q % 2018 Trans Union of Canada, Inc. All Rights Reserved 13

14 Consumer score distribution has remained generally consistent over time with some expansion in super prime Consumer risk score distribution of credit-active consumers 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 34% 16% 16% 22% 12% 35% 16% 15% 21% 13% 37% 37% 36% 37% 16% 16% 15% 15% 15% 16% 16% 15% 20% 21% 21% 20% 12% 12% 12% 12% Q Q Q Risk tiers Super prime Prime plus Prime Near prime Subprime Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = Trans Union of Canada, Inc. All Rights Reserved 14

15 Risk Tier Last Year Q % of Canadian consumers remained in the same risk tier or improved Risk Tier this Year Q Subprime Near Prime Prime Prime Plus Super Prime Subprime 71.8% 25.1% 2.5% 0.5% 0.1% Near Prime 12.9% 59.5% 19.5% 6.2% 1.9% Prime 2.1% 21.0% 41.3% 26.0% 9.6% Prime Plus 0.5% 6.4% 15.7% 46.2% 31.2% Super Prime 0.1% 1.5% 3.4% 9.3% 85.7% Worse Same Better 2018 Trans Union of Canada, Inc. All Rights Reserved 15

16 Origination growth rate Continued momentum in the auto finance sector has fueled origination volume. Other lending products are down Q origination growth* (year-over-year) 6% 4% 2% 0% 5.6% 1.7% 4.2% -2% -4% -5.6% -3.4% -6% Q origination volumes (M) 1, * Origination volumes reported 1 quarter in arrears 2018 Trans Union of Canada, Inc. All Rights Reserved 16

17 Consumer credit balances continue to grow as the economy has expanded Q year-over-year balance growth 13.8% 5.1% 6.0% 0.6% 4.7% Q Outstanding balance Bankcard Auto loan Line of credit Installment $99 B $61 B $264 B $154 B Mortgage $1,241 B 2018 Trans Union of Canada, Inc. All Rights Reserved 17

18 National delinquency rates have been stable Consumer-level delinquency rates 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Credit Card Auto Line of Credit Installment Mortgage 14 bps -5 bps -12 bps -11 bps -8 bps Q Q Q Q Q Q Q Q Q Note: 90+ DPD for Cards, and 60+ DPD for other product types 2018 Trans Union of Canada, Inc. All Rights Reserved 18

19 Overall consumer non-mortgage delinquency shows regional variation, however, Nationally the rate is stable at 5.43% (-28 bp from prior year) 5.33% -24 bps 6.88% % % % % % % % % % Trans Union of Canada, Inc. All Rights Reserved 19

20 To summarize consumer credit health: Positive dynamics Generally stable credit health Higher use of credit Stable levels of delinquency Things to consider Impact of rising interest rates, Household debt stress and payment shock dynamics Future direction of Canada s economy and impact on key credit drivers (Regional shifts, NAFTA/Tariffs) Housing market s response to new mortgage rules This is a well-functioning market with no immediate causes for concern. However, as always, there are dynamics and segments that merit scrutiny Trans Union of Canada, Inc. All Rights Reserved 20

21 Credit card sector The card market grew as originations rebounded slightly, and outstandings growth continued. Delinquency rates remain controlled with continued bifurcation between oil and non-oil provinces.

22 NUMBER OF ACCOUNTS The number of active cards remains relatively stable with a recent trend of upward growth 44,500,000 Number of active cards 44,000,000 43,500,000 43,000,000 Q2-16 Q2 17 = -0.9% Q2-17 Q2 18 = 0.8% 42,500,000 42,000,000 Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 22

23 NUMBER OF NEW ACCOUNTS Bankcard originations grew over previous year, but remain below historical levels 1,800,000 1,600,000 Quarterly bankcard originations* 1,400,000 1,200, % 1,000, , , , ,000 - Q Q Q Q Q Q Q Q Q * Origination volumes reported 1 quarter in arrears QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 23

24 NUMBER OF NEW ACCOUNTS Origination volumes increased across all risk tiers mitigating concerns of a down market shift Number of new bankcard accounts, by risk tier 400, , , % Q Q % 5.6% 250, % 200, , % 100,000 50,000 - Subprime Near Prime Prime Prime Plus Super Prime BORROWER CV RISK TIER Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = Trans Union of Canada, Inc. All Rights Reserved 24

25 AVG. CREDIT LINES IN DOLLARS Newly originated limits increased over 10% from prior year as lenders appear to be more aggressive to offset acquisition volume Average Credit Line of New Bankcards 5,200 5,100 5,000 4,900 4,800 4,700 4,600 4,500 4,400 4,300 4,200 Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 25

26 BALANCES IN $ BILLIONS Balance expansion continues in the Canadian card market as total assets grew 5.2% from previous year and approach a $100B milestone Total Balance of all Bankcards $100 $98 $96 $94 $92 5.2% $90 $88 $86 $84 Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 26

27 BALANCES IN $ BILLIONS Despite the drop in the number of card accounts, average balances have increased across all segments Year-over-year change in bankcard balances by risk tier Q Q $40 $35 4.4% $30 $25 $20 3.7% 5.1% 6.6% $15 6.9% $10 $5 $0 Subprime Near Prime Prime Prime Plus Super Prime CV RISK TIER Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = Trans Union of Canada, Inc. All Rights Reserved 27

28 Delinquency Rate Dollar weighted delinquency rates remain manageable, however the size of real balance at risk are increasing 4.7% Bankcard balance-level delinquencies (90+ DPD) $ % 4.5% 4.4% 4.3% 4.2% $4.4 $4.3 $4.2 $4.1 $4. 0 $3.9 $3.8 $3.7 Balance at Risk ($B) 4.1% Q Q Q Q Q Q Q Q Q $ Trans Union of Canada, Inc. All Rights Reserved 28

29 Unit Delinquency Rates (90+ DPD) The energy provinces are still lagging the rest of Canada despite overall economic recovery in these regions 3% Bankcard 90+ DPD Unit delinquency rates $80 3% $70 2% 2% $60 $50 $40 $30 WTI crude oil ($US) 1% Q Q Q Q Q Q Q Q Q Non-Oil Producing Provinces Oil Producing Provinces Oil Price $ Trans Union of Canada, Inc. All Rights Reserved 29

30 Real estate lending sector The impact of new mortgage rules combined with rising rates has cooled the market, but regional disparities continue

31 Canada s mortgage landscape has seen significant change Market Pressure OSFI Capital Requirements Qualifying Rules New Stress Test Interest Rate Hikes 2 years of low rates 75 bp point climb in 7 months BC / ON Fair housing Foreign buyer tax 2018 Trans Union of Canada, Inc. All Rights Reserved 31

32 NUMBER OF NEW ACCOUNTS The combination of regulatory changes and interest rate increases have slowed the housing and mortgage market 350,000 Quarterly mortgage originations* 300, , , ,000 Q1-16 Q1 17 = -10.5% Q1-17 Q1 18 = -3.4% 100,000 50,000 - Q Q Q Q Q Q Q Q Q QUARTER * Origination volumes reported 1 quarter in arrears 2018 Trans Union of Canada, Inc. All Rights Reserved 32

33 NUMBER OF NEW ACCOUNTS Super Prime was the only risk tier with positive growth, further reinforcing the impact of new rules and higher rates Quarterly mortgage originations by risk tier* 80,000 70,000 60,000 Q Q % 50,000 40,000 30,000 20, % -8.9% -5.8% 10, % Subprime Near Prime Prime Prime Plus Super Prime BORROWER CV RISK TIER * Origination volumes reported 1 quarter in arrears 2018 Trans Union of Canada, Inc. All Rights Reserved 33

34 AVG. BALANCE IN DOLLARS New mortgage balance growth has also slowed as a result of new rules and higher cost of borrowing Average Balance of New Mortgage Loans* 300, , , ,000 Q1-16 Q1 17 = 7.8% Q1-17 Q1 18 = 0.5% 260, , ,000 Q Q Q Q Q Q Q Q Q QUARTER * Origination volumes reported 1 quarter in arrears 2018 Trans Union of Canada, Inc. All Rights Reserved 34

35 YOY change new mortgage volume New rules and affordability have slowed new mortgage origination significantly in Ontario, while B.C. mortgage rates increased Y-O-Y mortgage originations by Province (Q1 17 to Q1 18) 12% PEI 10% 8% 6% 4% 2% BC SK QC 0% -2% -4% -6% -8% -10% NS MB AB NB NL ON Canada -3.4% 2018 Trans Union of Canada, Inc. All Rights Reserved 35

36 YOY change new mortgage volume New growth markets are emerging while a combination of regulatory rules has softened demand in Toronto Y-O-Y mortgage originations by Major Market (Q4 16 to Q4 17) 10% Ottawa 5% Halifax Montreal Quebec City 0% -5% Vancouver Saskatoon Hamilton Winnipeg Edmonton Canada -3.4% -10% Calgary -15% -20% Toronto 2018 Trans Union of Canada, Inc. All Rights Reserved 36

37 BALANCES IN $ BILLIONS Mortgage balance growth was driven by the better than Prime risk tiers, with an erosion in below Prime lending Quarterly mortgage loans balance by risk tier $700 $600 Q Q % $500 $400 $300 $ % 0.1% 2.8% $ % $0 Subprime Near Prime Prime Prime Plus Super Prime BORROWER CV RISK TIER Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = Trans Union of Canada, Inc. All Rights Reserved 37

38 % OF DOLLARS PAST DUE Despite market volatility, mortgage risk remains well managed Dollar Delinquency Rates on All Mortgage Loans Accounts 0.7% 30+ DPD 60+ DPD 90+ DPD 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% Y-O-Y Change -5 bps -3 bps -2 bps 0.0% Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 38

39 Auto lending sector Torrid pace to the auto sector is slowing. Prices and balances remained generally stable

40 NUMBER OF NEW ACCOUNTS Auto lending originations cooling after a year of torrid sales Quarterly Captive Auto Originations 300, , , , % 100,000 50,000 - Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 40

41 NUMBER OF NEW ACCOUNTS Distribution of new account risk remained constant, with some expansion in Subprime Origination volume of new auto loans, by Risk Tier* 70,000 Q Q % 60,000 50, % 40,000 30, % -0.3% -0.6% 20,000 10,000 - Subprime Near Prime Prime Prime Plus Super Prime BORROWER CV RISK TIER Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = 800+ * Origination volumes reported 1 quarter in arrears 2018 Trans Union of Canada, Inc. All Rights Reserved 41

42 Average auto loan balance at origination The average amount being financed remains relatively stable and aligned to vehicle price movement New auto loan balances* vs. CPI Personal vehicles $30,500 $30,000 $29,500 $29,000 $28,500 $28,000 $27,500 $27,000 $26,500 $26,000 $25,500 Q Q Q Q Q Q Q Q Q Q Q Q Consumer Price Index (2002 = 100) Purchase and leasing of passenger vehicles * Origination volumes reported 1 quarter in arrears Statistics Canada. Table Consumer Price Index, monthly, Purchase and leasing of passenger vehicles 2018 Trans Union of Canada, Inc. All Rights Reserved 42

43 AVG. BALANCE IN DOLLARS Larger auto balances skew toward higher risk Average Balance of all Auto Loans, by Risk Tier Q Q $21,500 $21,000 $20,500 $20,000 $19,500 $19,000 $18,500 $18,000 $17,500 $17,000 $16, % 2.7% 1.0% 1.4% -0.1% Subprime Near Prime Prime Prime Plus Super Prime BORROWER CV RISK TIER Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = Trans Union of Canada, Inc. All Rights Reserved 43

44 % OF DOLLARS PAST DUE Overall, delinquency rates have remained stable within the auto sector, despite increased overall consumer debt rate Auto loans and leases balance delinquency rates 1.6% 30+ DPD 60+ DPD 90+ DPD 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 44

45 Unit Delinquency Rates (60 DPD) The auto delinquency story also reflects differences between energy and non-energy provinces Auto loans and leases 60 DPD Unit delinquency rates 4.0% 3.5% $80 $70 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% $60 $50 $40 $30 $20 $10 WTI crude oil ($US) 0.0% Q Q Q Q Q Q Q Q Q Oil Producing Provinces Non-Oil Producing Provinces Oil Price $ Trans Union of Canada, Inc. All Rights Reserved 45

46 Line of credit sector Overall LOC volumes and balances remain flat, however certain markets are driving larger balances and utilization potentially from secured home lines

47 NUMBER OF NEW ACCOUNTS Line of credit originations fell slightly from Q and have been largely flat over the past two years LOC quarterly originations* 400, , , , % 200, , ,000 50,000 - Q Q Q Q Q Q Q Q Q QUARTER * Origination volumes reported 1 quarter in arrears 2018 Trans Union of Canada, Inc. All Rights Reserved 47

48 AVG. BALANCE IN DOLLARS Average LOC balances have increased driven partially by HELOC activity Average balance of all lines of credit 37,500 37, % 36,500 36,000 35,500 35,000 Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 48

49 AVG. BALANCE IN DOLLARS LOC balance growth is bifurcated between Subprime and Super Prime risk tiers Average Balance of All Line of Credit, by Risk Tier $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Q Q % 0.7% 1.0% 0.4% 1.7% Subprime Near Prime Prime Prime Plus Super Prime BORROWER CV RISK TIER Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = Trans Union of Canada, Inc. All Rights Reserved 49

50 % OF DOLLARS PAST DUE Overall, delinquency rates remained very low within the LOC sector, despite increased overall consumer debt rate Auto loans and leases balance delinquency rates 1.6% 30+ DPD 60+ DPD 90+ DPD 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 50

51 Installment loan sector Overall installment growth is steady with some shift toward Subprime volume.

52 NUMBER OF NEW ACCOUNTS Installment loan originations have seen consistent growth with 4.2% YOY increase in Q , ,000 Total number of new installment loans Q1 2018* 700, , , % 400, , , ,000 - Q Q Q Q Q Q Q Q Q QUARTER * Origination volumes reported 1 quarter in arrears 2018 Trans Union of Canada, Inc. All Rights Reserved 52

53 NUMBER OF NEW ACCOUNTS New installment loan growth occurred in Prime and below tiers, fueled partly by growth in alternative lending Number of new installment loan accounts by risk tier* Q Q , % 200, , % 1.5% -0.3% -1.8% 100,000 50,000 - Subprime Near Prime Prime Prime Plus Super Prime BORROWER CV RISK TIER * Origination volumes reported 1 quarter in arrears Credit Vision risk score: Subprime = ; Near prime = ; Prime = ; Prime plus = ; Super prime = Trans Union of Canada, Inc. All Rights Reserved 53

54 AVG. BALANCE IN DOLLARS Average balance of installment loans has continued to grow over the past two years Average balance of all installment loans $22,500 $22,000 $21,500 $21,000 $20, % $20,000 $19,500 $19,000 $18,500 $18,000 Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 54

55 % OF DOLLARS PAST DUE Overall, delinquency rates remained flat within the Installment sector, despite increased overall consumer debt rate Installment loan balance delinquency rates 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 30+ DPD 60+ DPD 90+ DPD Q Q Q Q Q Q Q Q Q QUARTER 2018 Trans Union of Canada, Inc. All Rights Reserved 55

56 Summary

57 To summarize our perspective on the consumer credit market: Auto loan balances continue to rise Pace of vehicle sales has softened impacting originations Auto Some expansion in underwriting to higher-risk tiers Drop in originations may be due to softening market Rising home values drive mortgage balance growth and increased home equity presents an opportunity for HELOC growth Real Estate Mortgage delinquencies remain low Bankcard origination are growing again, but below previous levels, balance growth is strong Some growth in limits suggests issuers are driving balance growth despite low originations Credit Card Delinquency remains stable, however the balance at risk is growing which may impact future origination Growth in access and demand Higher focus on lower-risk 5tiers Manageable and consistent levels of delinquencies Personal Loans 2018 Trans Union of Canada, Inc. All Rights Reserved 57

58 Looking forward: Be aware of these opportunities and risk factors Some signs of relief in oil Provinces may provide renewed opportunities, however these trends are early and delinquency levels are still above the national average. Additional headwinds including economic fallout from 2016/17 wildfires, continued home price increases in major markets and potential changes to NAFTA may slow growth and affect certain regions more dramatically The risk mix shift between prime and non-prime consumers should be monitored. There may be areas of revenue opportunity. As consumers continue to engage digitally, there may be some short term channel friction (and opportunity) in origination volumes. Multi-channel engagement and frictionless onboarding may be a competitive advantage Interest rate increases and economic uncertainty are projected to continue into Are you well prepared to cope with a payment shock? 2018 Trans Union of Canada, Inc. All Rights Reserved 58

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