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Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

MARKET SECTORS

MARKET TRENDS

Table 1: Leasing Penetration in the UK Market (£m and percent), 1994-1998

Table 2: UK Market New Business Growth by Finance Type, 1994-1998

Table 3: Assets Acquired During the Year (£m), 1994-1998

Table 4: Asset Finance Business by Asset Type (£m), 1994-1998

Table 5: UK Business Investment in Manufacturing and Non-Manufacturing Industries (£m at current prices), 1995-1998

Table 6: Total UK Net Lending for Consumer Credit by Finance Sector ( percent), 1995-1999

Table 7: Proportion of External Funding Used by EU Countries ( percent), 1998

Market Size

THE TOTAL MARKET

BUSINESS FINANCE

CONSUMER FINANCE

Table 8: Total UK Market for Business and Consumer Finance (£m at Current Prices), 1995-1999

Table 9: Estimated Market Penetration by Finance Houses (£m at current prices and percent), 1995-1999

Table 10: Total UK Market for UK Business Finance by Sector (£m at Current Prices), 1995-1999

Table 11: Sources of External Finance Used by SMEs ( percent),1987/1990 and 1995/1997

Table 12: Impact of the Introduction of the Euro on Interest Rates ( percent balanceÅ), 1st January 1999

Table 13: Investment Expectations of SMEs in the European Union ( percent balancesÅ), 1995-1999

Table 14: Expected Investment Trends for the Whole Year ( percent balancesÅ), 1999

Table 15: UK Net Lending to Individuals (£m), 1995-1999

Table 16: UK Unsecured Net Lending to Individuals by Key Market Segments (£m and percent), 1995-1999

Table 17: UK Bank Credit Cards (000 cards on issue and £m outstanding credit), 1995-1999

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

EMPLOYMENT

HOME COLLECTED CREDIT

RETAILERS` STORE CARDS

DISTRIBUTION

TRADE ASSOCIATIONS

Table 18: UK VAT-Based Enterprises Offering Financial Leasing and Other Credit by Turnover (£000), 1999

Table 19: Ten Largest UK Finance Houses, 1998

Table 20: Top Ten Finance Houses by Number of Employees, 1995/1996-1997/1998

Table 21: Examples of Option (Credit) Cards of Major UK Retailers, 1999

Table 22: Examples of Budget Card Accounts of Major UK Retailers, 1999

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 23: UK Consumer Finance Statistics by Type of Loan (£m), Year Ending September 1998 and 1999

Table 24: Net Loans and Advances to Customers by Selected Leading Providers of Business Finance and Consumer Credit (£m), 1997 and 1998

Table 25: Abbey National PLC/First National Leasing Ltd - Market Shares, 1st January 1999

Table 26: Ten Largest UK Finance Houses by Turnover (£m), 1997/1998

Table 27: Financial Profile of Abbey National PLC/ First National Finance House (£m), 1997 and 1998

Table 28: Financial Profile of Cattles PLC (£m), 1997 and 1998

Table 29: Financial Profile of Forward Trust Group Ltd (£m), 1997 and 1998

Table 30: Financial Profile of Lloyds UDT Ltd (£m), 1997 and 1998

Table 31:Financial Profile of National Westminster Bank`s Lombard Business (£m), 1997 and 1998

Table 32: Financial Profile of Provident Financial PLC (£m), 1997 and 1998

Table 33: Main Media Advertising Expenditure by Credit and Loan Companies (£m), Year Ending December 1998 and 1999

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

CONSUMER CREDIT

Table 34: Composition of UK Consumer CreditÅ ( percent and £bn at constant 1997 prices), 1987-1997

Table 35: Personal Expenditure Financed by CreditÅ by Social Class ( percent), 1997-1998

Table 36: Average Levels of Debt Among British Borrowers by Region (£bn, million and £), May 1999

Table 37: Forms of Credit Used in the Last 12 Months ( percent of adults ),1994-1999

Table 38: Ownership of Retailer Store Cards in the UK by Type of Account (000 adults), 1995-1999

Table 39: Use of Home Collected Credit in the UK (000 and percent of adults), 1999

Table 40: Weekly Consumer Credit Payments in Average UK Households (£), 1997/1998

Outside Suppliers to the Industry

THE BANK OF ENGLAND

CREDIT REFERENCES

EUROPEAN BUSINESS SURVEY

CARD FRAUD SERVICES

TECHNOLOGY

CROSS-SELLING SOFTWARE

NEW CHANNELS

ATMS AND SMART CARDS

TRAINING

SELECTION AND REMUNERATION

Current Issues

CORPORATE ACTIVITY

MANUFACTURING INDUSTRY PROFITS IMPROVING

HELLER FINANCE INCORPORATED

Forecasts

INTRODUCTION

ECONOMIC AND FINANCIAL OUTLOOK

FORECASTS 2000 TO 2004

Table 41: Forecast Finance House Sales of Business and Consumer Finance, (£m at current prices), 2000-2004

Table 42: Forecast Finance House Sales Business and Consumer Finance (£m at constant 1999 Prices), 2000-2004

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

BONNIER INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

In 1999, the total UK market for business and consumer finance was worth £170.33bn. Penetration by finance houses was estimated at 13.8 percent, giving a total market value of £23.44bn.
Economic reports published in early 2000 have been mixed. On the one hand, there have been claims that the UK economy is in a healthier state than it has been for a generation and that productivity has been rising swiftly, owing to the high levels of investment financed out of profits.
On the other hand, surveys have suggested that, in small and medium-sized manufacturing businesses (SMEs), even though orders and output are starting to rise, prices and employment are still falling. Moreover, the proportion of small firms expecting to invest more is still outnumbered by those expecting to cut investment.
Even in the more buoyant consumer finance sector, there are conflicting views. While some expect the economy to grow well ahead of its
long-term trend rate in 2000 and 2001, others predict that growth in the consumer market will slow.
In the business market, finance houses continue to work hard to regain the tax advantages for leasing enjoyed prior to the Budget of 1997. The target is to put lease finance back onto a level playing field, but as yet, these efforts have not shown tangible results. The market for motor finance is facing a difficult time, as a result of reducing residual values and the increasing demand for parity throughout Europe on new car prices (Euro-transparency). Another problem is the growth in the use of credit and store cards for the provision of short-term loan finance.
The market needs to find a way of reporting sales more accurately. As the major finance houses become absorbed into the major banks which own them, it becomes harder to separate the sales they achieve as finance houses and those achieved by the holding banks. Since finance houses come under a separate regulatory regime, there are those within the industry that believe they should report separately. This is already particularly difficult in the case of credit card and directly-marketed personal loan business, and there is a danger that the situation will become even more confused as the markets expand into online banking.
Key Note forecasts a 13.7 percent increase in finance house sales between 2000 and 2004, to £27.56bn. Growth in business finance will be modest at 12 percent, but the smaller consumer finance sector will remain more buoyant, showing growth of 24.6 percent.

Text © 2000 Key Note

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