Summary

The French consumer credit market, as part of the broader European market, has experienced a degree of recovery since 2020 despite a downturn in 2023 due to rising interest rates. The market saw consumer credit production rise by 1.5% in 2021 and 3.2% in 2022, while in France, total consumer loans reached €204 billion by September 2023, signaling a stabilization after consistent growth since 2015. Notably, the automotive sector, a significant consumer credit client, struggled with a 12% decrease in car registrations by 2022, thereby influencing the market. Additionally, household purchasing power has been challenged by inflation, affecting demand. The market is adapting to digital trends through the transformation of existing players and the emergence of FinTechs like Younited Credit. The sector also faces regulatory frameworks, such as the Lagarde Act and Neiertz Act, aimed at protecting consumers. Finally, the COVID-19 pandemic contributed to a dip in economic activity and purchasing power, further impacting market dynamics.

Trends in the Consumer Credit Market

The consumer credit market in the country under review has undergone significant fluctuations and is influenced by a myriad of factors, ranging from economic forces to legislation. Consumer credit itself is defined as a loan issued to individuals by financial institutions for personal, non-business usage, typically for the purchase of consumer goods. In recent times, this market has shown varying patterns of growth. At one point,, the market experienced a growth phase bolstered by declining interest rates. However, the trend has not been consistently upward. As of September 2023, outstanding consumer credit was recorded to be around 200 billion euros, indicative of a market that has somewhat stabilized, although the growth in credit production is not as robust as in previous years. Interest rates have risen, consequently leading to tightened market conditions. The sector is not just impacted by interest rate fluctuations but also by the performance of related sectors such as the automotive industry. A significant decline, in the range of 10-15%, in the registration of new cars in France by 2022, for example, has had a ripple effect on the consumer credit sector. The market is also characterized by digital transformation, which brings both challenges and opportunities. Established financial players are adapting to the digital era and new, tech-forward companies, commonly known as FinTechs, are gaining ground. Younited Credit's success is a testament to how digitalization is reshaping the sector. Across Europe, consumer credit production has varied, showing a modest increase between 1-4% in the years 2021 and 2022 despite a decline in 2020. Meanwhile, at the broader EU level, the overall outstanding consumer credit experienced an increase of around 5-7%, with the total amounting to over 1.2 trillion euros. This rise aligns with post-crisis economic growth in the region. In France, rising interest rates have posed challenges, and a decline of over 25% in personal loan production has been observed. This decline corresponds with an overall decrease in household engagement with consumer credit, as the proportion of households holding consumer credit in France diminished from 30% to just under 22% in 2022. Regulatory measures such as the Lagarde Act of 2010 and the Châtel law of 2005 have shaped the market by protecting consumer rights, such as the freedom to choose insurance providers, accelerating overindebtedness procedures, and introducing repayment options.

All players of the Consumer Credit Market

With a market rich in diversity and competition, the French consumer credit sector is heavily influenced by a variety of formidable entities that range from established network banks and specialized subsidiaries to innovative online institutions and retail-affiliated services. These influential players each bring unique strengths and strategies to the table, shaping the offerings available to consumers and the overall trajectory of the market.

Network Banks Leading the Charge

Undoubtedly, network banks such as **Crédit Agricole, LCL, Crédit Mutuel, BNP Paribas, La Banque Postale**, and **HSBC** stand as titans within the market. The fortitude of these well-established entities allows them to offer a wide array of consumer credit products, from personal loans to more specified financing solutions. They boast broad reach, solid reputations, and deep-rooted customer relationships that often span multiple generations. **Société Générale**, another major player, not only provides a traditional banking presence but also extends its hand in consumer credit through its vast network, offering personalized loan products to cater to an array of consumer needs.

Specialized Subsidiaries with Focused Expertise

Several banking groups have spun off specialized subsidiaries, fostering institutions that tailor their services to consumer credit. Among these are Cofidis known for its remote lending services, BNP Paribas Personal Finance which includes the well-known Cetelem brand that offers credit tailored for various consumer purchases, and Crédit Agricole Consumer Finance, the entity behind Sofinco, a significant nationally recognized credit brand. These specialized subsidiaries channel their market insights into creating adaptable and accessible credit solutions to a diverse clientele.

The Digital Pioneers: Online Banks and FinTechs

Not to be outdone by traditional banks, online entities such as Boursorama Banque, Axa Bank, BtoBnak, HelloBank!, My Money Bank, Younited Credit, Orange Bank, and Fidor Bank have carved out substantial niches in the consumer credit landscape. Younited Credit, in particular, has emerged as a significant figure in digital lending, streamlining the borrowing process through its technological platforms, and challenging the status quo with innovative, user-friendly services that cater to the modern digital consumer.

Retail's Financial Arms: Extending Beyond Shopping Carts

Most of the large Retail companies have established their own consumer credit specialized subsidiaries

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  • Number of pages : 30 pages
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  • Last update : 11/11/2023
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Summary and extracts

1 Market overview

1.1 Definition and scope of the study

A consumer credit is a loan granted by a financial institution, directly or through a merchant, to a private individual acting for non-business purposes. Worth between €200 and €75,000, it is used to finance the purchase of consumer goods (furniture, computers, cars, etc.) with the exception of real estate.

There are several forms of consumer credit. They operate on two principles:

  • the credit can be allocated to the purchase of an item determined at the time the contract is taken out (car, household appliances, travel, etc.). In this case, the credit obtained must be used solely to pay for the good in question;
  • the credit may be unrestricted. In this case, you can use the sum borrowed as you wish, whether to purchase a consumer good or any other service. Personal loans and revolving credit fall into this category.

The French consumer credit market is growing

After significant growth since 2015, boosted by falling interest rates, the sector is going through a difficult period in 2023 due to rising interest rates. Outstanding consumer credit stabilized at 204 billion euros in September 2023, but growth rates in consumer credit production have fallen considerably. The problems faced by the automotive sector, one of the main customers of consumer credit, are exacerbated by a 12% drop in the number of cars registered in France by 2022, contributing to the challenges facing the sector. Falling household purchasing power due to inflation is having a negative impact on demand in an already struggling market.

The market is characterized by accelerating digitalization, manifested not only by the digital transformation of existing players, but also by the emergence of a growing number of FinTechs. The success of Younited Credit is indicative of this transformation of the sector.

1.2 Growth in the European market

Consumer credit markets are not uniform across Europe. The use and forms of loans are determined and evolve by socio-economic factors that can differ from country to country. For example, Germany is known for its debt-averse consumers, while in the UK or Turkey, it is more acceptable to hold large revolving ...

1.3 The French market: in difficulty as interest rates rise

In September ****, total consumer loans amounted to *** billion euros . This sum has risen steadily since ****, although growth has slowed in recent years. Outstanding consumer credit refers to the total amount of credit issued by financial institutions on a given date and not repaid. It is therefore a stock. Outstanding consumer loans France, ...

1.4 The Covid-19 effect

Decline in purchasing power

In the second quarter of ****, real gross domestic product (***).

As a result, consumer credit production plummeted in ****, peaking in May with a **% drop in consumer credit production by specialist institutions. However, a recovery seems to have begun in August, with a *.*% rise in loan production by specialist ...

2 Demand analysis

2.1 Borrower profile

According to a **** survey, it appears that **% of borrowers are consumers with a comfortable standard of living, who wish to indulge themselves and are adept at "coup de coeur" purchases. Rational consumers represent **% of those surveyed, and are those who wish to benefit from financial assistance for large, well-considered purchases. In ...

2.2 Microeconomic determinants of demand

The graph shows the evolution of the reasons for using consumer loans for different categories of goods between **** and ****. Here are some observations: *. Household equipment (***): - A downward trend has been observed since ****, indicating a gradual decline in the use of the loan for the purchase of home equipment goods. The ...

2.3 Macroeconomic determinants of demand

Purchasing power, consumption and savings rates Changes in household purchasing power have a major influence on household consumption, and therefore on their willingness to take out consumer credit. Since the **** crisis, purchasing power has evolved slowly, and growth has slowed. In particular, the sharp rise in the proportion of pre-committed expenditure ...

3 Market structure

3.1 The value chain

There are several stages in the consumer credit production process:

Design and marketing involve identifying targets, defining offers and developing sales networks. Granting and risk policy involves establishing selection criteria, assessing risk and segmenting the profiles of potential borrowers. The underwriting and acceptance stage involves creating the file, validating it and ...

3.2 The main players

The players in the consumer credit market are therefore highly diversified. The main players include

Network banks: Crédit Agricole, LCL, Crédit Mutuel, BNP Paribas, La Banque Postale, HSBC, Société Générale Online banks: Boursorama Banque, Axa Bank, BtoBnak, HelloBank!, My Money Bank, Younited Credit, Orange Bank, Fidor ...

3.3 Digitizing the market

According to a study by Roland Berger, one of the biggest challenges so far is digital transformation issues such as Big Data, digital contracts or new identification technologies. Over **% of those surveyed believe that digitalization will be the most important technological trend in the years to come.

The survey questioned senior ...

4 Offer analysis

4.1 Offer typology

There are many different types of consumer credit. The table below gives an overview of the main offers and their characteristics.

Source: ****

In addition, offers differ from one consumer credit issuer to another, for example :

Cetelem offers an APR starting at *.**%, for a loan of €**,*** over ** months Sofinco offers a fixed ...

4.2 Breakdown of credits by category

Amortizable loans are the most widespread form of consumer credit, accounting for almost **% of outstanding loans in ****. They enable borrowers to spread the repayment of capital and interest over a long period. They are followed by revolving credit (***).

Breakdown of outstanding consumer credit by type of credit France, ****, in Source: ****

Leasing, ...

4.3 Consumer credit interest rates

Aftera period of steadily falling interest rates between **** and January ****, there was a sharp rise in **** and ****, as shown in the graph below. Consumer credit interest rates have risen significantly over this period. Interest rates on revolving loans rose by *.* points between January **** and September ****, while those on amortizable loans increased ...

5 Regulations

5.1 Regulations

In France, a number of laws aim to achieve a better balance of power between professionals and consumers, and guarantee certain rights for consumers: the right to information, the right of withdrawal, the right to early repayment, the right to suspend repayments, etc. [***]

The Lagarde Act of July *, **** comprises several ...

List of charts

  • Annual growth in consumer loans to households
  • Outstanding consumer loans
  • Growth in household consumer credit
  • Percentage of households with consumer credit
  • Breakdown of outstanding consumer credit by type of loan
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Latest news

Damart back in the red - 05/09/2023
  • Damartex sales fell by 9.5% in fiscal 2022-2023, to 650.4 million euros.
  • Net income for the same period was negative, at -32.6 million euros.
  • The Afibel brand, owned by Damartex since 2010, is put up for sale.
  • It employs nearly 400 people and generates sales of 65 million euros.
Holosis Europe's largest solar panel factory to be set up in Moselle - 16/05/2023
  • Investment of 710 million euros to create a photovoltaic cell and module factory.
  • Creation of 1,700 jobs in Hambach, Moselle.
  • The plant is scheduled to come on stream in 2025.
  • Annual plant capacity: 5 gigawatts peak per year.
  • European Holosolis consortium, comprising Siemens, CEA and several universities.
  • Holosolis targets the rooftop solar panel market.
Damart gives itself a facelift | Damart rejuvenates - 16/05/2023
  • Damart's winter sales increase due to soaring energy prices and the lowering of office temperatures to 19°.
  • Damart founded in 1953.
  • Thermolactyl warming garment accounts for 20% of sales
  • Damart products used by professionals such as the French Ski School (ESF), Patrouille de France pilots, Belgian police and SNCB agents.
  • Damart focuses on senior customers.
  • The company has enjoyed steady growth over the past decade, thanks in particular to its women's sheathing pants and comfort shoes.
  • Damart is maintaining its distance-selling catalog business, although this segment is declining
  • Increased adoption of e-commerce by 55-65 year-old customers.
  • Damart's technical component sets it apart (like K-Way or Aigle).
  • Damartex has diversified into home healthcare, a sector with promising margins as the population ages.
Sofinco - 16/05/2023
  • Sofinco is a Crédit Agricole subsidiary specializing in consumer credit.
  • Sofinco has reduced its number of physical branches from 125 in France to just 15 today
  • . Team of 2,500 employees.
  • Crédit Agricole Consumer Finance (CACF) has invested 60 million euros in consumer credit in Spain.
A good first half at Cafom - 16/05/2023
  • Revenues from stores in French overseas territories: 61% of sales
  • Opening of three new Nature & Découvertes stores.
  • Opening of the vente-unique.com e-commerce platform in France.
Anjou agritech Aptimiz raises €3 million | Aptimiz raises €3 million in Anjou - 16/05/2023
  • Year Aptimiz was founded: 2018
  • 3 founders: Matthieu Carpentier, Armand Sachot and Simon Denonnain
  • Team size: 12 people
  • Number of end users in France: 1,500

Companies quoted in this study

This study contains a complete overview of the companies in the market, with the latest figures and news for each company. :

Younited Credit
Société Générale
Cetelem
Crédit Agricole Consumer Finance
Carrefour Banque
RCI Bank (Groupe Renault)
Alma
Sofinco (Credit Agricole Consumer Finance)
Cafom
Aptimiz
Holosis
Damartex group

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