Consumer Credit in Europe at end-2012 Introduction Crédit Agricole Consumer Finance has published its annual survey of the consumer credit market in 27 European Union countries (EU-27) for the sixth year running. June, the 6th (2013) www.ca-consumerfinance.com presse@ca-cf.fr
Consumer Credit in Europe at end-2012 Summary With 1,056 billion in loans outstanding at end-2012, the European Union accounts for around one-quarter of the global consumer finance market. For the fourth year running, the European consumer finance market declined in 2012 as a result of the financial crisis. Outstandings in EU-27 fell by -1.9% during the year. This decline concerns all regions : Eastern Europe: -4.4%; Southern Europe: -3.2%; Northern Europe: -0.8%. Outstandings in billion by region at end-2012 Of the 27 EU countries, only 6 saw an increase in 2012, including Finland (+3.5%) and Germany (+0.8%). The decline in outstandings was particularly significant in countries facing a serious public finance crisis, particularly in southern Europe: Portugal (-12.7%), Greece (-8.3%), Spain (-7.9%) and, to a lesser extent, Italy (-1.3%). These outstandings are unevenly distributed: five countries (UK, Germany, France, Italy and Spain) together account for 76% of total outstandings (they also account for 63% of the European Union's population). The European Union can be divided into three sub-groups: Northern Europe with 58% of total outstandings (41% of the EU population); Southern Europe (including France) with 35% of total outstandings (39% of the EU population); Eastern Europe with 7% of total outstandings (20% of the EU population). Average outstandings per capita in the European Union stood at 2,094 at end-2012, down -2.2% relative to 2011 ( 2,141). There are some sharp disparities in the European consumer finance market, with the level of consumer credit outstandings per capita ranging from 186 in Lithuania to almost 4,000 in the UK ( 3,984). The ratio of consumer credit outstandings to total annual household consumption sheds light on the actual penetration of consumer finance relative to consumer spending. This indicator is useful in that it eliminates variances due to differences in living standards between countries. At end-2012, the ratio was 14.4% in the European Union compared with 15.0% a year earlier. It has decreased in nearly all European countries. Page 2
Consumer Credit in Europe at end-2012 Methodology The primary data used in this report have been obtained from central banks and adjusted by economic research and consulting firm Asterèsto provide a uniform base in terms of products and markets. Final 2012 figures are not available for a number of countries and some data are therefore based on estimates. The data in this report cover all credit operators, banks and specialist companies. Product data include overdrafts but not mortgages. Consumer credit outstandings in non-euro zone countries have been converted at the average exchange rate for 2012. Some figures (outstandings, changes, consumer finance penetration rates) may differ from previous reports for two reasons: revision of primary data by central banks; changes in the exchange rates used to convert outstandings in foreign currencies to euros. For the sixth consecutive year, this Overview of the consumer finance market in the 27 European Union countries (EU-27) aims to measure: 1- The level of outstandings per country at the year end 2- The annual change observed 3- The level of outstanding consumer loans per capita 4- The economic weight of consumer finance Two concepts can be used to quantify consumer credit usage : Production : the total amount of new loans made during a given year (flows). Outstandings : the total amount of loans (excluding interest) still outstanding at any given time (stock). Page 3
1 Consumer Credit in Europe at end-2012 1,056 billion of consumer credit outstandings at end-2012 Consumer credit outstandings in the 27 European Union countries totalled 1,056 billion at end-2012. 251 225 These outstandings are unevenly distributed: the five largest markets in terms of outstandings (UK, Germany, France, Italy and Spain) account for over 76% of the total and represent 63% of the European Union's population. The European Union can be divided into three sub-groups: Northern Europe: 58% of total outstandings (41% of the population) Southern Europe: 35% of total outstandings (39% of the population) Eastern Europe: 7% of total outstandings (20% of the population) In 2012, northern Europe's weighting increased by almost one percentage point due to relatively buoyant activity in general and particularly in the German consumer finance market. Conversely, southern Europe's weighting fell by almost one percentage point. Eastern Europe's weighting remained stable. 149 110 Consumer credit outstandings at end-2012 71,2 31,6 30,2 25,9 22,8 21,2 19,1 16,1 14,2 13,3 13 11,8 10,6 4 3,9 3,3 2,9 2,5 1,2 0,8 0,7 0,6 0,4 UK Germany France* Italy* Spain* Poland Greece Netherlands* Austria Belgium* Sweden Denmark Ireland Finland Romania Portugal Czech Rep. Source: Central banks, *Asterès estimates Hungary Bulgaria Cyprus Slovakia Slovenia Luxembourg Latvia Lithuania Estonia Malta Page 4
2.1 Consumer Credit in Europe at end-2012 For the fourth consecutive year, the European consumer credit market declined in 2012, by -1.9% The level of consumer finance outstandings in EU-27 fell by -1.9% in 2012 as a result of the deterioration in economic and financial conditions in Europe (economic activity contracted in the EU, with GDP down -0.3%). In 2012, consumer credit outstandings declined in almost all European Union countries, driven by two factors which played either a primary or secondary role depending on the country. First, rising unemployment made households less solvent and secondly, credit was more difficult to obtain as banks focused on cleaning up their balance sheets. Outstandings in billion (end of period) (converted at the average exchange rate for 2012) Change in outstandings at end-2012 by region -1,5% 1 158 1 141-2,3% -8,8% 1 115-3,4% 1 077-1,9% Consumer credit outstandings fell by more than 100 billion over the last 4 years. (average exchange rate for 2012) 1 056 2008 2009 2010 2011 2012 Source: Central banks, Asterès estimates Page 5
2.2 Consumer Credit in Europe at end-2012 2012/2008 change in consumer credit outstandings Only 10 of the EU-27 countries saw an increase between end-2008 and end-2012. Global consumer credit outstandings in the EU-27 fell by more than 100 billion over the last 4 years, which represents a decline of 8.8% between end-2008 and end-2012. (average exchange rate for 2012) Country Change 2012/2008 (end of period - in local currency) France -4,8% UK -13% Country Change 2012/2008 (end of period - in local currency) Austria -13% Czech Rep. -13% Slovenia -14% Slovakia* 36% Malta 16% Sweden 15% Finland 10% Belgium 8,2% Italy 7,9% Poland 5,0% Luxembourg 0,6% Germany 0,2% Netherlands 0,2% Bulgaria -14% Greece -17% Hungary -18% Portugal -20% Romania -21% Cyprus -22% Denmark -26% Estonia -29% Latvia -31% Ireland -35% Spain -36% Lithuania -48% Source: Central banks, Asterès *Asterès estimates N.B. changes are calculated in local currency Page 6
2.3 Consumer Credit in Europe at end-2012 Only 6 of the EU-27 countries enjoyed a positive trend in 2012 Only 6 of the EU-27 countries saw an increase in 2012. These six countries also represent just over one quarter (27%) of total consumer finance outstandings in Europe. 2012/2011 change in consumer credit outstandings Of the five largest European markets in terms of outstandings, the German market was the only one to have seen any growth (+0.8%), driven by some resilience in employment and consumer spending. Country Change 2012/2011 (end of period) Slovakia + 10,1% Finland + 3,5% Estonia + 1,5% Sweden + 1,4% Germany + 0,8% Belgium* + 0,5% Source: Central banks, Asterès *Asterès estimates N.B. changes are calculated in local currency Page 7
2.4 Consumer Credit in Europe at end-2012 21 of the EU-27 countries saw a fall in consumer credit outstandings The decline ranged from -0.04% for Bulgaria to -14.5% for Ireland. The UK, Europe's largest market in terms of outstandings (24% of the EU-27 total) declined by -1.2%. France, Europe's third largest market, saw a slight decline of -0.3% due to a sharp slowdown in consumer spending and more specifically a significant fall in car purchases. Italy, Europe's fourth largest market, fell by -1.3%, whilst Spain suffered another significant decline of -7.9% in 2012. Country Change 2012/2011 (end of period) Country Change 2012/2011 (end of period) Bulgaria -0,04% Luxembourg -0,1% France* -0,3% Czech Republic -0,6% Malta -0,7% Cyprus -0,7% UK -1,2% Italy -1,3% EU-27-1,9% Netherlands* -2,7% Austria -3,4% Denmark -3,7% Poland -4,9% Lithuania -5,1% Romania -6,4% Spain* -7,9% Greece -8,3% Slovenia -8,6% Latvia -10,6% Hungary -11,8% Portugal -12,7% Ireland -14,5% Source: Central banks, Asterès *Asterès estimates N.B : Changes are calculated on the basis of outstandings in local currency Page 8
3 Consumer Credit in Europe at end-2012 Consumer credit outstandings per capita at end-2012 (in ) Average outstandings per capita in the European Union stood at 2,094 at end-2012, down -2.2% relative to 2011 ( 2,141). There are some major disparities in the European consumer finance market due to the specific characteristics of each country. At end-2012, the level of consumer finance outstandings per capita ranged from 186 in Lithuania to almost 4,000 in the UK ( 3,984). 3 984 3 928 Consumer credit outstandings per capita at end-2012 (in ) 3 007 2 913 2 808 2 769 2 741 2 520 2 365 2 267 2 101 2 094 2 031 1 793 1 551 1 513 1 252 1 094 1 040 976 822 596 European average ( 2.094) 556 523 471 400 357 186 UK Cyprus Ireland Denmark Greece Austria Germany Source: Central banks, Asterès Finland Luxembourg France* Sweden EU-27 Belgium* Italy *Asterès estimates Netherlands* Spain* Slovenia Portugal Czech Rep. Malta Poland Romania Bulgaria Slovakia Estonia Hungary Latvia Lithuania Page 9
4.1 Consumer Credit in Europe at end-2012 Consumer credit outstandings relative to household consumption in 2012 28,3% At end-2012, the ratio of consumer credit outstandings to total annual household consumption was 14.4% in the European Union compared with 15,0% a year earlier. The ratio has decreased in nearly all European countries and is relatively weak in southern Europe (12.7%) compared with northern Europe (16.0%). It is used to assess the structural level of consumer credit penetration relative to consumer spending. Some markets have a high penetration rate (over 20%): Cyprus (28.3%), Greece (21.7%), UK (20.9%). In others, use of consumer credit is moderate: France (13.2%), Italy (11.6%), Portugal (11.1%), Belgium (10.9%). Consumer credit outstandings relative to consumer spending in 2012 by region 21,7% 20,9% 18,2% 16,2% 15,4% 15,2% 14,4% 14,0% 13,8% 13,8% 13,6% 13,2% 12,7% 12,2% 11,6% 11,6% 11,1% 10,9% 10,1% 10,0% 9,7% 9,2% European average (14,4%) 7,7% 7,1% 7,0% 5,8% 3,1% Cyprus Greece UK Ireland Romania Bulgaria Germany EU-27 Czech Rep. Austria Poland Denmark France* Finland Slovenia Source: Central banks, Asterès Spain* Italy Portugal Belgium* *Asterès estimates Malta Sweden Netherlands* Luxembourg Hungary Slovakia Estonia Latvia Lithuania Page 10
4.2 Consumer Credit in Europe at end-2012 Focus on the five main European markets: Consumer credit outstandings relative to consumer spending in 2012 The consumer finance penetration rate declined in almost all European Union countries in 2012, including the five largest markets. However, with the exception of Germany, the decline was less pronounced in 2012 than in previous years. The decline was stemmed significantly in Spain, where the penetration rate had fallen by more than 2 percentage points in 2010 and 2011, compared with 1 percentage point in 2012. 22,7% 22,1% 20,9% Focus on the five main markets: Consumer credit outstandings relative to consumer spending 2010 2011 2012 European Union average 15,9% 15,8% 15,2% 13,8% 13,6% 13,2% 14,8% 12,7% 11,6% 12,2% 11,7% 11,6% 15,5% 15,0% 14,4% UK Germany France* Spain* Italy* EU-27 Page 11 Source: Central banks, Asterès *Asterès estimates
Consumer Credit in Europe at end-2012 Crédit Agricole Consumer Finance, a key consumer finance player in Europe Crédit Agricole Consumer Finance is a key player in the European consumer finance market with 73.2 billion of consumer credit outstandings under management at end-2012. Through its subsidiaries, Crédit Agricole Consumer Finance operates in twenty European countries (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland and the UK), as well as in Saudi Arabia, Morocco and China. At end-2012, two-thirds of outstandings under management came from international operations. Page 12