The sudden economic downturn resulting from the COVID-19 pandemic led to an abrupt decline in demand for consumer credit in Austria. As a result of the challenging economic environment, consumer credit suffered from a significant drop in consumer confidence and a consequent reduction in appetite for purchases of big-ticket items via loans.
Although still at a relatively low level when compared with other Western European countries, gross card lending recorded strong growth over the review period. Despite the recent crisis, this trend is expected to continue, with card lending thus set to be the best performing category in consumer credit over the forecast period.
Austrian consumers in need of a loan tend to still go to their traditional family bank and talk to a trusted adviser first, often not even comparing credit terms and conditions with other lenders. Consequently, the four major retail banks - UniCredit Bank Austria, Erste Bank der oesterreichischen Sparkassen, Raiffeisen Bank International and BAWAG PSK - continue to lead consumer credit in Austria.
The development of consumer credit over the forecast period will depend heavily on the rate of economic recovery and government programmes. Despite the severity of the recession, strong government support in response to the economic fallout of the pandemic will help to safeguard jobs and boost demand.
Demand for consumer credit in Austria is expected to be increasingly curbed by the decline in auto lending due to decreasing car sales. The main reason for this is urbanisation and huge investment by the government in improving public transport and sharing services in order to reduced car traffic and fight climate change.
Durables lending is expected to benefit from the fact that Austrian consumers are increasingly open to the idea of using consumer credit for a wider array of purposes over the forecast period, largely due to the offering of instalment plans.
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This report originates from Passport, our Consumer Credit research and analysis database.
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