Consumer Credit in Europe

2007 European Consumer Credit EFMA Thursday June 21th 2007 1/20

Consumer Credit in Europe

- Topics, trends and drivers -


Jasmin in a few words

o Founded in 2001 in Bordeaux, France

o 15 financial services industry specialists

o A strong track record in the consumer credit

industry

o Working mainly with European but also North

American companies

o Produces operational reports on European

consumer credit drivers…

o … but also specifically monitors focused on :

• International innovation in financial

services

• European consumer credit markets and

leaders

• French market offer


Today’s contents

1. Market Overview of the Consumer Credit Industry

2. Perspectives on European Consumer Credit Market

a. The upsurge of european champions

b. Debt consolidation bracket

c. Time of convergence



Sources : Central Banks, National Statistics Offices, Jasmin

Consumer Credit Industry amounts 4 Trillion € outstandings in the World at the

end of 2005.

It represents around 11% of World GDP.

2004 2005 2006 (f)

3 440 B€ 4 233 B€ 5 100 B€


Asia

811 Billion €

500 Billion €

Americas

2 301 Billion €

1 965 Billion €

31 Billion €

Oceania

59 Billion €

43 Billion €

2005 World Market Shares

Americas...........................54.4%

United States

46.4%

Europe.............................24.5%

European Union

23.6%

Asia..................................19.2%

Japan

11.8%

Oceania..............................1.4%

Australia 1.0%

Africa..................................0.6%

South Africa

0.2%

Europe

1 038 Billion €

1 000 Billion €

European Consumer Credit industry totalizes 1

Trillion € outstandings (1 038 Billion €) for 2005.


Africa

24 Billion €

10 Billion €



Top 5 European countries represent 76% of the total European market at the

end of 2005.

At the same time, Top 3 represent two thirds of the total European market.

The " Others " part include 29 different European countries



• Albania

• Austria

• Belgium

• Bielorussia

• Bulgaria

• Croatia

• Cyprus

• Czech Republic

• Denmark

• Estonia

• Finland

• Greece

• Hungary

• Ireland

• Island

• Lettonia

• Lituania

• Luxemburg

• Malta

• Netherlands

• Norway

• Poland

• Portugal

• Romania

• Slovakia

• Slovenia

• Sweden

• Switzerland

• Ukrain

Others24%

Top 5 Europe76%

788 Billion € Outstandings

for 2005

Others24%

Top 5 Europe76%

788 Billion € Outstandings

for 2005


U.K.

GER

FRA

SPA

ITA

04

05

06

279.4 B€#1

04

05

06

234 B€

04

05

06

124.8 B€

04

05

06

77.1 B€

04

05

06

72.3 B€

266.9 B€ Outstandings

236.9 B€

115.8 B€

62.3 B€

60.6 B€

#2

#3

#4

#5

131.3 B€

92.1 B€

228.4 B€

85.3 B€

316 B€

United Kingdom ranks 1st in

Europe and despite signs of

maturity, market remains

dynamic

Germany was the most

important European market in

the late 90’s and now declines

France is one of the most

competitive markets in the

world and will certainly develop

with new cobranding regulation

Spain and Italy present a solid

outstandings’ growth for the

last two years


05/04

06/05

+ 5%

- 1%

+ 8%

+ 24%

+ 19%

05/04

06/05

05/04

06/05

05/04

06/05

05/04

06/05

+ 5%

+ 19%

- 2%

+ 18%

(Evolution in GBP terms)

+ 11%

(Evolution in € terms)




These pie charts show there’s no common European consumer credit market

structure in place

The importance of cultural aspects reflects different models

Countries where consumers are reluctant to credit show strong development with

Product Specific Personal Loans

Sources : Central Banks, N Statistics Offices, Jasmin – Datas : Outstandings

Revolving Lines + Overdrafts

Product Specific Personal Loans

Other Personal Loans

14%

55%

31%

U.K.

14%

55%

31%

U.K.

56%

34%

10%

GER

56%

34%

10%

GER

21%

47%

32%

FRA

21%

47%

32%

FRA

60%

36%

4%

SPA

60%

36%

4%

SPA

41%

45%

14%

ITA

41%

45%

14%

ITAITA


(Evolution in US $ terms)

+ 4%05/04

06/05 + 5%

(Evolution in ¥ terms)

+ 4%05/04

06/05 + 2%

(Evolution in € terms)

+ 8%05/04

06/05 + 7%

USA

1 964.6 B€

1 636.5 B €

1 847.7 B€

04

05

06

JAP

523.2 B€

500 B€

471.9 B€

04

05

06

787.6B€

734.9 B€ Outstandings

853.1 B€

04

05

06Top 5

in Europe

5



Consumer credit growth records higher in the European zone than United States and

Japan

European zone shows possible higher potential given Household debt to GDP ratio

Household Debt to GDP ratio

94% 69% 43% 72% 31%

116%

113%


Outsta

ndin

gs

0

5/0

4

Outstandings/GDP

10% 20%-5%

5%

10%

15%

30% 40% 50% 60%

8%

20%

0% 70% 80% 90% 100%

Three main patterns in Europe :

1/ Very dynamic markets but starting from a small base

2/ Matured markets with a consumer contribution to GDP above 9%

3/ Other countries where consumer credit growth and consumer credit contribution

are balanced



Outstandings/GDP

Outstanding’s 05/04

Austria 11% 11%Belgium 5% 5%Bulgaria 10% 60%Chypre 7% -4%Czech Rep. 4% 40%Denmark 7% 3%Estonia 3% 65%Finland 3% 13%France 7% 8%Germany 10% -1%Greece 11% 22%Hungary 7% 79%Ireland 13% 18%Italy 5% 19%Lettonia 4% 72%Lituania 2% 103%Luxembourg 4% 2%Malta 4% 10%Netherlands 3% -3%Norway 10% 8%Poland 9% 16%Portugal 6% 4%Romania 5% 70%Slovakia 2% 22%Slovenia 7% 11%Spain 9% 24%Sweden 13% 7%Switzerland 3% 3%U.Kingdom 16% 5%Ukraine 5% 76%


Today’s contents



a. The upsurge of european champions

b. Debt consolidation bracket



2. Perspectives on European Consumer Credit Market a. The upsurge of european champions


Mulliez Family

15

CC implantations in Europe

8

1222

11

20

19

8

16

3

11

CC International contribution

Poor

HighHigh

High

Poor

High

High

Average

High

Poor

Poor

Preferred Market Entry Strategy

M&A

M&AM&A

M&A

GField

GField

M&A

M&A

M&A

GField

GField

Unique Brand Policy

YES

YESYES

NO

YES

YES

YES

YES

YES

YES

YES

CC Outstandings Scale

>45 B€

>35 B€>20 B€

>50 B€

>35 B€

>25 B€

>20 B€

>45 B€

>50 B€

>25 B€

> 5 B€

Sources : Operators, Jasmin, 2005&2006 situation datas

a. The upsurge of european champions2. Perspectives on European Consumer Credit Market


U.K

04 05 06 07 (f)

263 B€ 260 B€ 280 B€

CAGR 07-04

+2,1%280 B€#1

GER

17.9 B€ 17.9 B€ 18 B€ 17 B€ -1,7%#3

FRA

15 B€ 18 B€ 20.2 B€ 22 B€#2 +13,6%

ITA

#4 5 B€ 6 B€ 7 B€ 7.8 B€ +16%

SPA

#5 4.2 B€ 6.7 B€ 7.9 B€ 10.1 B€ +34%

b. Debt Consolidation bracket

Sources : Central Banks, National Statistics Offices, Jasmin – Datas : Production estimates

Launched in the United Kingdom ten years ago

Has become an important animator of the whole market

Targeted first towards subprime lenders, now approach is becoming widespread on mass

markets

A big contributor to credit convergence

Strong development in recent years although small volumes in Portugal, Greece and

Poland




Internet Mobile phones

Access to consumers personal finance has become a priority for many different actors

Traditional financial competitors have to face new actors with alternative technological

skills

These new actors promote simplicity and comfort of use for customers

Cards Leisure




World Pay is an Internet Payment System provider, now part of RBS Group.

The company has developed the first payment system interlinked to advanced

voice biometric technologies. It allows all financial transactions to be signed and

guaranteed by voice recognition. The Voice Pay account is linked to a Visa or

Mastercard Debit/Credit card.


Helps the consumer for shopping and informs him about promotions

linked to the product. Helps him to find items in the alleys.

Can also inform the customer on the points to be earned from the

loyalty program and the extra rebate the consumer can gain using his

credit card.

Source : 2007 Jasmin International Innovation Financial Services Monitor


c. Time of convergence2. Perspectives on European Consumer Credit Market

First Meta is a start up company based in Singapour.

It projects to launch the first credit card in the « Second Life » virtual world before the

end of 2007.

Second life avatars would be able to ask for a credit line and a credit card.

Source : 2007 Jasmin Innovation Monitor

Mizuho Bank will launch next year a personal loan for the bank’s customers.

That’s not the first time banks having test with this, but that’s the first time a

bank decided to go through and has clearly announced ambitious objectives,

maybe in order to rentabilize the ATM network.



Housing Credit Insurance Loyalty programsConsumer Credit Brokers

Retailers

Banks’ leading power drives to cover consumer’s global account banking needs

Consumer’s perception of differences between main lines of financial personal products

vanish rapidly

Banks now tend to acquire structures to supply credit for the main events in the

consumer life cycle

Real Estate




One month ago, SCF launched « Prestamo Formula Zero », a new kind of personal

loan. The bank has linked the product to 5 blue chips (France Telecom, Total Fina

ELF, Nestle, Iberdrola and BBVA) and offers to reimburse 6 months of interest to

customers if the wallet goes up 10% on a 4 year period.

The fondo pensione famiglia has launched an original product to allow

italian mothers to redeem the points of their loyalty card with retirement

points.

Consumer Credit Housing Credit Debt Consolidation Consumer CreditReal Estate

BNP Paribas decided two weeks ago to regroup its different specialist business lines

in one dedicated to Personal Finance. BNP Paribas is intending to work on synergies

between those different business lines directed towards the same customers.



Next future...

IT Systems Integration at European level

A global market which has to be run like an industry

Understanding cultural aspects is particularly important in local markets

in Europe

Growing importance of loyalty programs to animate customer

relationship

Next battle for private/domestic networks with Visa and Mastercard

networks

Sustainable development products will gain coverage

Enhance rising risk steering control

Target non prime customers acquisition programs

Become a Brand with Intelligent Marketing Drive

Europeanstandardisation

Businessconvergences

Technologicalconvergences

Business Processes Marketing & Distribution

Economy & Finance

Consumer Credit in Europe