The consumer credit business is good. The conditions for further growth in the installment loan market are quite good. Confidence in the labor market has been strengthened, interest rates are low and consumers’ income expectations are rising significantly. The willingness to consume and to borrow is again more noticeable. For the next five years between 2014 and 2019, according to the forecast, a higher rate of growth in the installment loan portfolio of 7.8 percent overall is to be expected. This corresponds to an annual average growth rate of around 1.6 percent.
The mood of consumers is again more optimistic. In addition, the propensity to save, which has plummeted due to the interest rate decision of the Central Bank (CB), is supporting the consumer climate. At any rate, banks can look forward to an View Statsimproved consumer credit business.
This is already signaled by the trend towards installment credit, which now accounts for well over half of all consumer loans. By the end of the first quarter of 2014, a value of 66.5 percent had been recorded.
According to a survey, the highest proportion of users of installment loans can be determined among the citizens from the middle income groups. At 28 percent, it is in the income class between 1,500 and 2,000 euros highest, the second highest proportion is between 2,500 and 3,000 with 26 percent. Lower share values in the use of installment loans can be found in the lower income groups, with the lowest percentage being found in the income group below R10,000 with 5 percent.
The clear majority is well aware that an installment loan is usually cheaper than a syndicated loan. Nevertheless, the short-term financing requirement is often the first choice even with a short-term financing requirement.
The market will grow moderately and will benefit mainly the direct and specialized banks, so the experts of the credit institutions. But even the big commercial banks are said to have good prospects by the experts.
Direct banks will gain significant market share in the installment loan market. But the experts also agree: the direct banks will not be able to rise to at least 2019, the most important distribution channel for installment loans.
In the particularly high-growth financing objects of installment loans, the surveyed decision-makers from banks regard not only renovations and renovations of the apartment as above all new cars and furniture as particularly promising. A good three out of four survey respondents named remodeling and renovation.