FICO (NYSE:FICO), and Efma announced recently the results of the seventh European Credit Risk Survey, which measures retail bankers’ outlook for the availability of credit along with their investment priorities for the year ahead. In the February survey, completed by 130 credit risk professionals from 41 countries, the forecast for a “credit gap” between credit supply and demand fell sharply from the last survey, conducted this past fall.
For consumers, the projected gap was just 4 percentage points, with 30 percent of respondents projecting some increase in the amount of credit requested and 26 percent projecting an increase in supply. By comparison, in the autumn 2012 survey the spread between projected demand and supply was a full 20 percentage points.
For small businesses, the gap was even smaller. In the new survey, 31 percent of respondents reported that they expect the aggregate amount of credit requested by small businesses to increase, and 29 percent expect the amount granted by lenders to also increase.
European bankers also laid out their priorities for investment in analytics. More than 40 percent of respondents reported they will invest in improving their analytics, with the highest priorities being credit risk models for both new credit applicants (61 percent of respondents) and existing customers (50 percent). In addition, 38 percent of respondents said they will increase their investment in risk analytics that incorporate Big Data.
The delinquency forecast was nearly unchanged from the last survey, with at least 40 percent of respondents forecasting an increase in delinquencies during the next six months on mortgages, credit cards and small business loans. “We don’t expect a reversal of this trend until the economies of Europe show greater recovery,” said Patrick Desmarès, secretary general of Efma. “That said, Europe is a heterogeneous region, with some countries preparing for a triple-dip recession while others, such as Turkey, look quite robust. The uncertainty across much of the region is particularly challenging for multi-national banks.”
A detailed report, including specific results for the UK/Ireland, Germany/Austria/Switzerland and Spain/Portugal, is available online. Participants included credit-granting institutions ranging from local banks to global institutions.
Source: Bankinganalyticsblog FICO