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European lenders rank profit-building measures

With European banks under pressure on capital, fees, margins and just about everything else, lenders are considering a number of options for improving profitability. In the second European Credit Risk Survey, conducted by FICO and Efma, lenders put the likely options in this order. The figures show the percentage of respondents who said they are either doing this tactic now or are likely to in the near future:

Targeting higher-income customers                                          91%
Offering new credit products                                                    85%
Targeting lower-risk customers                                                77%
Selling off unprofitable portfolios                                              66%     
Charging new fees or raising fees on credit/ debit cards             63%
Charging new or raising fees on current accounts                      62%
Reducing rewards programs                                                    51%
Restricting or eliminating auto lending                                      51%
Restricting or eliminating credit card offers                               39%
Restricting or eliminating mortgage lending                              36%

Clearly, the top strategies involve going after a safer customer base (thought that may be a challenge unto itself, given the heavy competition for these customers) and innovation. In fact, 16% of respondents said that they are already offering new products into the marketplace to try to improve profitability. This innovation may, in the long run, be the brightest note of optimism sounded in the current survey, as new products can reignite customer demand and create new opportunities for growth.

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