Australian Consumer Credit: Forecasts and Future Opportunities 2018

Table of Contents

1. EXECUTIVE SUMMARY

• 1.1. Market summary
• 1.2. Key findings
• 1.3. Critical success factors

2. OVERVIEW

• 2.1. Personal lending balances decreased in 2018
  • 2.1.1. 2018 gross advances showed signs of weakness
  • 2.1.2. Balances outstanding marginally contracted in 2018
  • 2.1.3. Economic growth has continued, but capacity and willingness to take on more debt will be constrained
  • 2.1.4. Fixed-rate loans remain most attractive to Australian consumers
  • 2.1.5. Australian consumers are more price-sensitive on car loans
• 2.2. Macroeconomic disparities across Australia’s states have led to debt concentration increasing
  • 2.2.1. The rebound in the share of lending on the Eastern Seaboard has not come from dramatically higher volume

3. OUTLOOK FOR 2018 AND BEYOND

• 3.1. Total fixed and revolving credit loans will reach A$164.7bn by 2022
  • 3.1.1. Market growth will resume, but only with modest gains
  • 3.1.2. 2018 was the start of a slow turnaround for gross advances
• 3.2. Demand for credit will slow
  • 3.2.1. Macroeconomic conditions will help maintain consumer demand at current levels
  • 3.2.2. Lenders need to be aware of the geographic concentration of their assets as household debt-to-income reaches a new high
  • 3.2.3. Consumer confidence is recovering, albeit with some hesitancy, suggesting consumers may be unsure of their ability to take on new debt
  • 3.2.4. Retail sales are showing signs of weakening, pointing to softer lending growth
• 3.3. Traditional lenders risk further loss in market share as new competitors take advantage of shifts in consumer behavior
  • 3.3.1. Australian consumers are becoming more comfortable using non-ADIs for financing
  • 3.3.2. Providers need to maximize their cross-selling opportunities
  • 3.3.3. Consumers have become more comfortable with non-traditional lenders
  • 3.3.4. The internet has become a standard research channel, with consumers comparing reputation and rates
• 3.4. Lending across consumer credit subsectors will vary significantly
  • 3.4.1. The new and used car finance market will be the strongest-performing sector
  • 3.4.2. Gross advances will grow moderately over the forecast period as consumers exercise caution
  • 3.4.3. Increased credit card lending will require winning clients off rivals
  • 3.4.4. Demand for debt consolidation and refinancing products will remain flat over the forecast period
  • 3.4.5. Demand for new and used car finance will be stronger than most other sectors
  • 3.4.6. The travel and other lending category will remain flat as consumers stop splurging
  • 3.4.7. Credit for land and housing construction will enjoy strong growth
  • 3.4.8. Financing for household goods will experience strong growth over the forecast period
• 3.5. Innovation will nurture new sources of credit

4. APPENDIX

• 4.1. Abbreviations and acronyms
• 4.2. Supplementary data
• 4.3. Definitions
  • 4.3.1. Balances outstanding
  • 4.3.2. Gross advances
  • 4.3.3. Line of credit
• 4.4. Methodology