European Consumer Credit Market Rebounded in First Half of 2021

Rebounds in new credit granted were observed across all consumer credit categories.

European consumer credit providers represented through Eurofinas1 granted new loans worth €215 billion in the first half of 2021 with growth of 19.0% compared to the same period in 20202 according to the results of the Eurofinas Biannual Survey 2021. Total new consumer credit lending3, which accounts for the majority of new Eurofinas lending (67%), experienced an increase of 13.9%.

Rebounds in new credit granted were observed in all personal consumption categories. Personal loans enjoyed the highest growth of 16.2% compared to the first semester of last year. Non-automotive credit at the point of sale expanded by 10.0%, followed by revolving credit growing by only 2.1%.

The consumer car lending market recovered strongly in the first semester of 2021, increasing by 26.2%. Loans for new and used consumer vehicles rose by 25.2% and 27.2% respectively. While recovery in consumer vehicle finance can be seen across markets, with most experiencing double-digit growth, Germany was the only significant market that suffered a loss (-4.0%). Regarding business car finance, new cars outperformed used cars in the first half of this year. The former grew by 75.9% compared to the same period last year, while the latter increased by 12.6%.

The aggregate figures reflected that business recovery was widespread across Eurofinas Members’ national markets except for Portugal, Denmark and Germany, which showed losses of between -11% and -3% in new consumer credit lending. By comparison, the Czech Republic, Spain, the UK and Belgium enjoyed moderate growth of below 20%, while the others experienced more than 20% increases. Compared to H1 2019, however, almost all of the markets still struggled to regain their pre-pandemic level of new credit granted, with the exception of Morocco and Turkey.

For the rest of the year, private consumption is expected to strengthen on the back of an improved labour market and reduced record-high savings from the lockdown periods. However, consumer credit providers will likely continue to experience some headwinds going forward as the rise of new Covid-19 variants may trigger further economic uncertainty.