Welcome to the Impact of COVID-19 in the Affordable Credit sector: - - PowerPoint PPT Presentation

Welcome to the Impact of COVID-19 in the Affordable Credit sector: Rapid Response Survey.

Your co hosts Prof Karl Dayson (Salford University) and Very Rev Dr John Chalmers (Carnegie UK Trust, Affordable Credit Action Group Chair) will start the webinar shortly.

Health and economic crisis 8.4m furloughed workers 16% mortgage holders taken payment breaks (average £755 / month) 1.5m credit card and personal loan payment breaks 2.5m new, individual Universal Credit claims (1/3/20 to 12/5/20) Median decline in income -30% Consumption down 40% to 50% Disproportionately impacting lower income households All lenders braced for arrears Resilience grants and loans for some Danger; liquidity becoming solvency crisis

Fear and loaning!

“You only fjnd “You only fjnd

• ut who’s been
• ut who’s been

swimming naked swimming naked when the tide when the tide goes out” goes out”

Warren Bufget Ceo, Berkshire Hathaway February 2008

Survey participants

Size of loan book

£5m to £10m 12.7%

63 Lenders (58 Credit Unions and 5 CDFIs) Established (25yo avg) organisations > 700 employees Equal GB representation c20% > £495m loan portfolio > 200,000 borrowers > £733m members savings 130 branches 20+ interviews held

“If we don’t “If we don’t get any money get any money

• ut; we’re not
• ut; we’re not

going to get going to get any money in” any money in”

Over £10m 44.4% Up to £2m 34.9% £2m to £5m 7.9%

Immediate COVID impacts

Payment Payment breaks breaks increased increased 128% 128% 32% 32%

• f stafg
• f stafg

furloughed furloughed

Request for payment breaks?

Are you concerned at payment break requests?

Have you furloughed stafg?

Yes 55.6% Yes 64.9% No 44.4% No 35.1%

Those who furloughed had average 3 branches Those who hadn’t average 1 branch

Increased 93.5% No Change 4.8% Decreased 1.6%

Overall saving Increased by 14% …and 5 are restricting deposit levels

¾ CUs

have seen increase in saving deposits One in three CUs are concerned at savings trend

What has happened to savings? Are you concerned?

Decreased 21.4% Increased 78.6% Yes 32.1% No 67.9%

Savings

Lending

Loans values dropped 70% from £23.3m to £7m

April 19–April 20

c.£3.2m interest income lost

April 20

Year on year growth in lending

20% 0%

• 20%
• 40%
• 60%
• 80%

February March April

Loan applications Number of loans Value of loans

Confidence levels

Will you breach loan covenants or regulatory ratios?

Yes 17.7% No 82.3%

Can you meet short term fjnancial costs?

Don’t know 17.7% No 17.7% Yes 64.5% Don’t know 4.8% Not at all confident 1.6% Not very confident 4.8% Fairly confident 34.9% Very confident 54.0%

Confjdence in trading in April 2021

Summary

78%

CUs have seen increase in saving deposits

14%

• verall

savings increased

56%

• f lenders

have furloughed

128%

payment breaks Increase

65%

say they can meet short term costs

70%

drop in value

• f loans issued

April 19–April 20

c.£3.2m

interest income lost

April 20

54%

very confjdent

• f trading in

April 2021