2014 priorities similar at North American, European banks
TORONTO, Jan. 14, 2014 /CNW/ - As consumers continue to seek and receive
more credit, the latest quarterly survey of U.S. and Canadian bank risk
professionals found expectations for delinquencies on auto loans hit
their highest level since Q4 2012, and expectations for delinquencies
on credit cards reached their highest level in two years. In the survey
from FICO NYSE: FICO, a leading predictive analytics and decision management software company, 34 percent of respondents
expected delinquencies on auto loans to grow in the next six months,
while 28 percent expected delinquencies on credit cards to increase.
Despite those expectations, the survey, conducted for FICO by the
Professional Risk Managers' International Association (PRMIA), found
re-leveraging shows no signs of slowing. In the survey, 58 percent of
bankers expected average balances on credit cards to increase over the
next six months, with 9 percent expecting balances to go down. In
addition, 44 percent of bankers polled expected the amount of credit
extended to consumers to increase over the next six months, while 14
percent expected the amount of new credit to decrease.
"While the delinquency predictions in our survey aren't alarming,
lenders will be keeping a close eye on these trends," said Dr. Andrew
Jennings, chief analytics officer at FICO and head of FICO Labs. "Banks
are walking a fine line - trying to grow their lending portfolios
without taking excessive risks. But given that credit card
delinquencies are near their lowest level since the Fed began tracking
them in the 1990s, a small uptick is to be expected and shouldn't spook
lenders. A slight increase in delinquencies is normal when availability
of credit expands and borrowing increases."
"Our survey has found that 32 percent of Canadian respondents predict an
increase on credit card delinquencies in the next six months, which is
slightly higher than the North American average of 28 percent," says
Robin Findlay, senior director and head of FICO Canada. "As we head
into 2014, expectations from many Canadian banking professionals show
that as Canadians continue to take on more credit, the likelihood of
delinquencies will increase. While signs from the Bank of Canada are
that interest rates won't increase in the near-term, the worry is that
if and when interest rates begin to rise the level of delinquencies
Similar Priorities on Both Sides of the Atlantic
In this survey and a similar one executed at the same time among
European bank risk managers, respondents were asked about their
institutions' priorities in 2014. The top three answers were the same
in each survey - improving risk management systems, growing
profitability from existing customers, and improving the customer
"These results are consistent with the feedback we hear from bank
clients every day," said Mike Gordon, executive vice president for
sales, services and marketing at FICO. "Banks are trying to balance
risk and growth by focusing on the known quantity - their existing
customers. Banks are making big investments in creating more
personalized and relevant experiences for customers in an effort to
build loyalty and drive better financial performance."
Small Business Lending Appears Healthy
North American survey respondents were generally optimistic about small
business lending in the latest survey. Sixty-seven percent of those
polled said the supply credit for small businesses would satisfy demand
over the next six months. Moreover, 40 percent of respondents felt the
approval rate for small business loans would increase, compared to 12
percent who felt the rate would decrease.
In terms of actual credit extended to small business in the next six
months, 46 percent of bankers surveyed said the amount of new credit
made available to small businesses would increase, while 12 percent
said the amount would decrease.
A detailed report of FICO's quarterly survey is available at https://www.prmia.org/sites/default/files/references/Fico4thQuarterDec2013F.pdf. The survey included responses from 289 risk managers at banks
throughout the U.S. and Canada in November 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. These
include 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.
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