Report reveals slowing retail credit growth in Europe

Efma, the not-for-profit organisation representing retail financial services companies in over 130 countries, and consultant Oliver Wyman have produced a report that splits Europe’s lending markets into three distinct categories: ‘watch list’ markets that suffered most in the economic crisis, those that are growing, and stagnant markets.

European Retail Credit Survey: Exploring the map looked at 21 countries and used data from publicly available resources, including analyst reports, market commentary, press articles, and information gathered from Efma surveys.

Countries were categorised according to their economic growth and non-performing loan status.

Six countries fall into the growing credit market segment, five into the stagnant credit amrket segment, and 10 into the watch list segment. The countries reviewed included: Denmark, Norway, Sweden, Finland, Russia, Turkey, Greece, Hungary, Poland, Czech Republic, Germany, Austria, Italy, Switzerland, Belgium, Luxembourg, Netherlands, Spain, Portugal, Republic of Ireland and the UK.

The report warned that even the few growing credit markets will start to see slower growth in the next five years.

Matthew Sebag-Montefiore, partner at Oliver Wyman, said: “Institutions in those markets need to prepare for a tougher environment. To avoid making the same mistakes as the watch-list countries, these institutions should invest in retail credit analytics covering underwriting, portfolio management and collections.”

Growth in European retail markets will slow in the next two years as the eurozone crisis continues to put pressure on both supply and demand for credit.

Yet, the report also said there signs of growing total outstanding balances, suggesting opportunities for growth for banks that positioned themselves for the upcoming market developments.

Patrick Desmarès, secretary general of Efma, said: “We hope that the recommendations we have made in this report will help banks to develop better processes and analytics, increase sales conversion, and improve pricing, credit and NPL management to boost retail credit profits.”

To read the full report, click here: European Retail Credit Survey

 

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