Personal Lending in Australia

Published by: Datamonitor

Published: Dec. 23, 2009

Table of Contents

Overview

Catalyst

Summary

Executive Summary

Market sizing and key issues

Competitor market shares and developments

Customer acquisition and retention strategies

Market Sizing and Key Issues

One in five Australian consumers have a personal loan and one in 10 plan to take one out

Personal credit has grown over the last decade but has declined slightly due to the downturn in the global economy

Fixed vehicle loans have fallen while refinancing has increased

Recent drops in the cash rate have not fully flowed through to personal loans

Competitor Market Shares and Developments

Over the last decade banks have steadily increased market share of fixed loans

NAB and ANZ have cemented their market share of outstanding bank personal loans

Customer Acquisition and Retention Strategies

Personal loans are often chosen by default rather than as the result of extensive research

Personal loan customers can be effectively segmented by length of loan

Product convergence and innovation will become more important

Low consumer confidence ensures that pricing continues to be of paramount importance

APPENDIX

Supplementary data

Definitions

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

TABLE OF FIGURES

Figure 1: Outstanding personal credit reached its apex in May 2008, January 2000-August 2009

Figure 2: Fixed vehicle loans have lost in relative importance, January 2000-September 2009

Figure 3: Recent drops in the cash rate have not resulted in equivalent drops in banks’ average personal loans rate, January 2000-September 2009

Figure 4: Banks have increased market share of new fixed loans over the last decade, January 2000-September 2009

Figure 5: NAB has the highest market share of outstanding bank personal loans, September 2009

Figure 6: The most common reason for choosing a personal loan provider is already having a transaction account with the institution, April 2009

Figure 7: One in five Australian consumers hold a personal loan, April 2009

Figure 8: Original uses for main personal loan, April 2009

Figure 9: There is a wide range of personal loan sizes, April 2009

Figure 10: One in 10 consumers plan to take out a personal loan, April 2009

Figure 11: 14% of personal loan customers expect to hold their loan for less than a year, April 2009

Figure 12: Outstanding personal credit reached its apex in May 2008, January 2000-August 2009

Figure 13: Recently outstanding bank personal credit has fallen slightly, August 2007-August 2009

Figure 14: New monthly personal lending has held firm in the last several years, January 2000-September 2009

Figure 15: New lending has recovered in the last year, September 2007-September 2009

Figure 16: Fixed vehicle loans have lost in relative importance, January 2000-September 2009

Figure 17: Refinancing has grown in importance over the last two years, January 2008-September 2009

Figure 18: Personal loans are a significant source of fee income for banks, 2000-08

Figure 19: Personal loans commonly have no application fee attached, April 2009

Figure 20: Recent drops in the cash rate have not resulted in equivalent drops in banks’ average personal loans rate, January 2000-September 2009

Figure 21: The margin of the average bank term loan variable rate over the cash rate has increased drastically as a result of the economic crisis, January 2005-September 2009

Figure 22: Term loan rates have not fallen as much as mortgage rates, October 2007-September 2009

Figure 23: Australians have increased their leverage in the last decade, March 2000-June 2009

Figure 24: Australians have reduced their leverage in the last two years, September 2007-June 2009

Figure 25: The most common monthly payment is between A$250 and A$499, April 2009

Figure 26: Banks have steadily increased personal finance commitments over the last decade, January 2000-September 2009

Figure 27: Banks have increased market share of new fixed loans over the last decade, January 2000-September 2009

Figure 28: Banks capture an increasing proportion of new fixed loans, January 2008-September 2009

Figure 29: Banks have increased their market share of new fixed vehicle loans over the last two years, January 2008-September 2009

Figure 30: NAB has the highest market share of outstanding bank personal loans, September 2009

Figure 31: ANZ and NAB have increased market share in the last two years, January 2008-September 2009

Figure 32: Most banks have lost market share in the last two years, January 2008-September 2009

Figure 33: The most common reason for choosing a personal loan provider is already having a transaction account with the institution, April 2009

Figure 34: Consumers commonly do little research when choosing main personal loan provider, April 2009

Figure 35: The median personal loan term is five to six years, April 2009

Figure 36: Fees and rates are the most important factors when choosing a new personal loan, April 2009

Figure 37: Lower ranked factors include deposit requirements and repayment options, April 2009

Figure 38: A third of personal loans customers are experiencing financial stress, April 2009

Figure 39: A third of personal loans customers have cut back on household spending, April 2009

TABLE OF TABLES

Table 1: Personal loan holders and their different types of personal loans, April 2009

Table 2: Bank proportion of personal finance commitments, 2000-08

Table 3: Outstanding bank personal loans by competitor, January 2008-September 2009

Table 4: Borrower segmentation based on loan time

Table 5: Differences between personal loan market and credit card market

Table 6: Proportion of consumers with one or more personal loans, April 2009

Table 7: Original uses for main personal loan, April 2009

Table 8: Personal loan intentions, April 2009

Table 9: Personal loan term, time held personal loan, and time expected to hold loan, April 2009

Table 10: Total outstanding personal credit including securitizations and outstanding personal credit on the books of banks (A$ billions), January 2000-August 2009

Table 11: New monthly personal loans including fixed loans and revolving credit (A$ billions), January 2000-September 2009

Table 12: New monthly lending by type, October 2007-September 2009

Table 13: Non-housing personal debt ratios, March 2000-June 2009

Table 14: Original size of main personal loan, April 2009

Table 15: Uses of new fixed personal loans (A$m), January 2000-September 2009, part 1

Table 16: Uses of new fixed personal loans (A$m), January 2000-September 2009, part 2

Table 17: Uses of new fixed personal loans (A$m), January 2000-September 2009, part 3

Table 18: Uses of new fixed personal loans (A$m), January 2000-September 2009, part 4

Table 19: Bank fees paid by households for personal loans, 2000-08

Table 20: Application fee on main personal loan, April 2009

Table 21: Interest rates and margin over cash rate, January 2000-September 2009, part 1

Table 22: Interest rates and margin over cash rate, January 2000-September 2009, part 2

Table 23: Interest rates and margin over cash rate, January 2000-September 2009, part 3

Table 24: Interest rates and margin over cash rate, January 2000-September 2009, part 4

Table 25: Monthly payments and application fees on main personal loans, April 2009

Table 26: Monthly personal finance commitments by lender type (A$ billions), January 2000-September 2009, part 1

Table 27: Monthly personal finance commitments by lender type (A$ billions), January 2000-September 2009, part 2

Table 28: Monthly personal finance commitments by lender type (A$ billions), January 2000-September 2009, part 3

Table 29: Monthly personal finance commitments by lender type (A$ billions), January 2000-September 2009, part 4

Table 30: Proportion of new personal finance commitments captured by banks by type of loan, January 2000-September 2009, part 1

Table 31: Proportion of new personal finance commitments captured by banks by type of loan, January 2000-September 2009, part 2

Table 32: Proportion of new personal finance commitments captured by banks by type of loan, January 2000-September 2009, part 3

Table 33: Proportion of new personal finance commitments captured by banks by type of loan, January 2000-September 2009, part 4

Table 34: Proportion of new personal finance commitments captured by banks by purpose of loan, January 2008-September 2009

Table 35: Market share of outstanding bank personal credit not including mortgages or credit cards, January 2008-September 2009

Table 36: Reasons for choosing main personal loan provider, April 2009

Table 37: Sources of information when choosing main personal loan provider, April 2009

Table 38: Attitudes of personal loan customers, April 2009

Table 39: Considerations if taking out a personal loan, April 2009

Abstract

• The report uses consumer survey data as well as interviews with bank executives.
• Covers fixed personal loans, overdrafts and motor finance in Australia with the main focus on traditional fixed personal loans.
• Includes market share data for major personal loan providers and examines the latest competitor developments shaping the market.
• Provides discussion and analysis of several key issues facing Australian consumer credit lenders.

• Confirm what consumers look for when choosing a personal loan, and understand your target group better.
• Improve your profitability by tailoring your products to consumer needs.
• Receive updated market share data to tell you how your company compares to your closest rivals.

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