Consumer Credit in Spain

PROSPECTS

Growth of consumer credit to slow as the economy weakens

After a strong performance over the review period, growth in consumer credit gross lending slowed significantly in 2019, and is set to continue to decelerate over the forecast period. The expected slowdown of the Spanish economy will doubtless lead to weaker consumer confidence.

Digitalisation and new services designed to attract new customers

Financial institutions continued to increase consumer lending possibilities through digitalisation in 2019. Banks invested in fast credit, such as micro credits (up to EUR3,000.

Education and auto lending to continue to develop, despite lower growth going forward

Education lending is a relatively new concept in Spain, as education costs in the country are low; however, with the entry of more private universities and the increase in taxation on public institutes, Spanish households will likely continue to seek financial support to cover education expenses. Financial institutions, on the other hand, are anticipated to increase their offer of new special products in education lending, which are already offered by most Spanish banks such as Banco Bilbao Vizcaya Argentaria and Banco Santander.

COMPETITIVE LANDSCAPE

Domestic banks impose tougher requirements for consumer credit

With the rapid increase in consumer credit, the level of non-performing loans continued to increase in 2019. Even though consumer credit represents only 5% of banks’ operations in Spain (according to the Association of Banks in Spain), banks have implemented actions to impose tougher requirements when approving new consumer credit for consumers.

Financial services offered by retailers continue to gain ground

As banks continue to toughen their criteria for consumer credit, retailers offering financial services are gaining share in consumer credit in Spain, although banks continue to dominate. Carrefour and El Corte Inglés are among the established players within consumer lending in Spain.

Online consumer credit is developing

Banks are increasingly offering consumer credit online, increasing the lending possibilities through e-banking and mobile banking. This is especially popular for micro credits (up to EUR3,000.

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