Consumer Credit in Japan

PROSPECTS

Card lending continues to dominate gross lending

Consumer credit is forecast to see continued growth at constant 2018 prices in both outstanding balance and gross lending between 2018 and 2023. Card lending, the largest consumer credit category in gross lending terms, is set to be the most dynamic category in both outstanding balance and gross lending over the forecast period.

Growth in home lending and durables lending

Home lending is expected to see growth in both gross lending and outstanding balance at constant 2018 prices over the forecast period. The issue of “vacant homes” rose to public attention in Japan following a government survey in 2013 revealed that more than 8.

Decline ahead for auto lending

Auto lending is set to see the steepest decline in consumer credit in both outstanding balance and gross lending over the forecast period. The contraction of the overall population is leading to a decline in the number of drivers.

COMPETITIVE LANDSCAPE

Banks focus on card lending

Not subject to the Amendment to the Money Lending Business Act of 2010, traditional banks have made significant efforts to move into the space left by money lending specialists and expand their card lending operations. In a negative interest market, banks focused on card lending without collateral and with restriction-free usage.

Education gross lending continues to grow

Education gross lending is expected to see positive growth during the forecast period. The largest education lender in Japan, Japan Student Service Organisation (JASSO), which controls the majority of overall education lending, has pointed out that tuition and admission fees remain high while the average family income is declining annually.

Lending specialists suffer new competition from banks

The implementation of the Amendment to the Money Lending Business Act in 2010 led to a sharp decline in the money lending specialist market, with some leading companies withdrawing from the market or merging after being exposed to increased competition from players such as banks. In an increasingly competitive environment, specialist lending companies such as Acom, Aiful and SMBC Consumer Finance are focusing on acquiring new customers rather than increasing gross lending to existing customers.

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