Welcome to the Impact of COVID-19 in the Affordable Credit sector: Rapid Response Survey. Your co hosts Prof Karl Dayson (Salford University) and Very Rev Dr John Chalmers (Carnegie UK Trust, Affordable Credit Action Group Chair) will start the webinar shortly.
Fear and loaning! Health and economic crisis “You only fjnd “You only fjnd 8.4m furloughed workers out who’s been out who’s been 16% mortgage holders taken payment breaks swimming naked swimming naked (average £755 / month) when the tide when the tide 1.5m credit card and personal loan payment breaks goes out” goes out” 2.5m new, individual Universal Credit claims Warren Bufget Ceo, Berkshire Hathaway (1/3/20 to 12/5/20) February 2008 Median decline in income -30% Consumption down 40% to 50% Disproportionately impacting lower income households All lenders braced for arrears Resilience grants and loans for some Danger; liquidity becoming solvency crisis
Survey participants Up to £2m 34.9% 63 Lenders (58 Credit Unions and 5 CDFIs) Over £10m 44.4% Established (25yo avg) organisations > 700 employees Equal GB representation c20% Size of > £495m loan portfolio loan book > 200,000 borrowers “If we don’t “If we don’t get any money get any money > £733m members savings out; we’re not out; we’re not going to get going to get 130 branches any money in” any money in” £2m to £5m 7.9% 20+ interviews held £5m to £10m 12.7%
Immediate COVID impacts No 44.4% Those who furloughed 32% 32% Yes 55.6% had average 3 branches of stafg of stafg Have you furloughed furloughed furloughed Those who hadn’t stafg? average 1 branch Decreased 1.6% No 35.1% Increased 93.5% No Change 4.8% Yes 64.9% Are you Payment Payment concerned Request breaks breaks at payment for payment increased increased break breaks? requests? 128% 128%
Savings Decreased 21.4% Increased 78.6% ¾ CUs Overall have seen What has saving increase in happened to Increased saving savings? by 14% deposits No 67.9% Yes 32.1% One in three …and 5 are CUs are Are you restricting concerned at deposit concerned? savings trend levels
Lending Year on year growth in lending 20% Loans values dropped 70% from £23.3m 0% to £7m April 19–April 20 -20% -40% c.£3.2m -60% interest income lost April 20 -80% February March April Loan applications Number of loans Value of loans
Confidence levels Confjdence in trading in April 2021 Yes 17.7% No 82.3% Will you Don’t know breach loan 4.8% covenants or regulatory Not at all confident ratios? 1.6% Don’t know 17.7% Not very confident 4.8% Can No 17.7% Yes 64.5 % you meet Fairly confident short term 34.9% fjnancial costs? Very confident 54.0%
Summary 78% 14% 56% 128% CUs have overall of lenders payment seen increase savings have breaks in saving increased furloughed Increase deposits 65% 70% c.£3.2m 54% interest say they can drop in value very confjdent of loans issued income lost meet short of trading in April 20 term costs April 19–April 20 April 2021
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