Consumers aged 30-39 projected to be biggest drivers of credit demand
SAN JOSE, CA, Oct. 9, 2013 /CNW/ - Consumers' appetite for credit will
continue to grow, according to the latest quarterly survey of U.S. and
Canadian bank risk professionals. In the survey from FICO NYSE: FICO, a leading predictive analytics and decision management software company, 46 percent of respondents
expect the amount of new credit requested by consumers to increase over
the next six months, while just 16 percent expect it to decrease.
The survey, conducted for FICO by the Professional Risk Managers'
International Association (PRMIA), also found that 46 percent of
bankers in the survey expect requests for credit-line increases to go
up, with 8 percent expecting such requests to go down. Regarding the
use of consumer credit, 53 percent of lenders polled expect credit card
balances to increase over the next six months, while 7 percent expect
balances to decrease.
"The theme of the economic recovery seems to be 'slow and steady'," said
Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO
Labs. "Both consumer spending and income ticked up slightly during the
summer. I'm sure that contributed to the feeling among our respondents
that consumer borrowing is poised to increase. It remains to be seen if
the government shutdown causes consumers to tighten their purse
"The survey found that in Canada the willingness to acquire credit
differs somewhat to that of our U.S. neighbour," said Cheryl Woodburn,
senior director of FICO Canada. "Despite recent warnings from the
federal government and the Bank of Canada regarding high household
debt-to-income ratios, our survey shows that 54 per cent of the
respondents believe Canadian consumers will request more credit in the
next six months, compared to the North American average of 46 per
Thirty-somethings to drive growth in lending
When asked about the anticipated growth in their lending portfolios,
half of all respondents (50 percent) said that borrowers in the 30-39
age range will drive the most growth. Nearly a quarter of respondents
(22 percent) expect borrowers aged 20-29 to be the largest source of
growth. Eighteen percent of respondents felt that growth in their
lending portfolios would be largest among borrowers aged 40 or older.
Credit supply to meet growing demand
Bankers also gave their projection for the anticipated supply of
consumer credit for multiple types of loans. More than 70 percent of
respondents expect supply to meet demand for new residential mortgages
and small business loans. Over 80 percent of respondents expect supply
to meet demand for mortgage refinancing, credit cards, auto loans, and
student loans. There were no loan types for which respondents expect
demand to exceed supply.
When it comes to risk, the concern centered on one loan type: student
loans. Nearly half of respondents (49 percent) expect an increase in
student loan delinquencies, while 15 percent expect a decrease. This is
the eighth consecutive quarter in which there was significant concern
about delinquencies on student loans.
Eleven percent of respondents expect the total number of consumer credit
delinquencies to decrease, the lowest number on record. Sixty-two
percent of respondents expect the total number of delinquencies to
Bankers overwhelmingly (72 percent) believe interest rates will rise in
the next six months. Less than one percent of respondents expect
interest rates for consumer credit to decrease, the lowest level in the
survey's three-year history.
A detailed report of FICO's quarterly survey is available at https://www.prmia.org/sites/default/files/references/PRMIAFICO3rdQuarterOct2013F.pdf. The survey included responses from 114 risk managers at banks
throughout the U.S. and Canada in September 2013. FICO and PRMIA extend
a special thanks to Columbia Business School's Center for Decision
Sciences for its assistance in analyzing the survey results.
The Professional Risk Managers' International Association (PRMIA) is a
higher standard for risk professionals, with 65 chapters and more than
90,000 members worldwide. A non-profit, member-led association, PRMIA
is dedicated to defining and implementing the best practices of risk
management through education, including the Professional Risk Manager
(PRM) designation and Associate PRM certificate; webinar, online,
classroom and in-house training; events; networking; and online
resources. More information can be found at www.PRMIA.org.
FICO (NYSE: FICO) is a leading analytics software company, helping
businesses in 80+ countries make better decisions that drive higher
levels of growth, profitability and customer satisfaction. The
company's groundbreaking use of Big Data and mathematical algorithms to
predict consumer behavior has transformed entire industries. FICO
provides analytics software and tools used across multiple industries
to manage risk, fight fraud, build more profitable customer
relationships, optimize operations and meet strict government
regulations. Many of our products reach industry-wide adoption — such
as the FICO® Score, the standard measure of consumer credit risk in the United
States. FICO solutions leverage open-source standards and cloud
computing to maximize flexibility, speed deployment and reduce costs.
The company also helps millions of people manage their personal credit
health. FICO: Make every decision count™. Learn more at www.fico.com.
For FICO news and media resources, visit www.fico.com/news.
Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements
contained in this news release that relate to FICO or its business are
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially, including the
success of the Company's Decision Management strategy and reengineering
plan, the maintenance of its existing relationships and ability to
create new relationships with customers and key alliance partners, its
ability to continue to develop new and enhanced products and services,
its ability to recruit and retain key technical and managerial
personnel, competition, regulatory changes applicable to the use of
consumer credit and other data, the failure to realize the anticipated
benefits of any acquisitions, continuing material adverse developments
in global economic conditions, and other risks described from time to
time in FICO's SEC reports, including its Annual Report on Form 10-K
for the year ended September 30, 2012 and its last quarterly report on
Form 10-Q for the period ended June 30, 2013. If any of these risks or
uncertainties materializes, FICO's results could differ materially from
its expectations. FICO disclaims any intent or obligation to update
these forward-looking statements.
FICO and "Make every decision count" are trademarks or registered
trademarks of Fair Isaac Corporation in the United States and in other
For further information:
Jean François Thibault
Kaiser Lachance Communications