FICO Study of UK Card Data Shows Weakness in Student, Irish Cards

Surveys & Market Data
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LONDON—September 19, 2011—FICO (NYSE:FICO), the leading provider of analytics and decision management technology, today released Q2 card data showing that the steady performance of most UK cards is continuing, with a slight indication of increased risk. The data also shows the markedly weaker performance of student cards and of euro cards (issued in Ireland).

The figures are part of the data shared with subscribers of the FICO Benchmark Reporting Service, which compares overall market performance in the UK cards market with individual card issuers’ performance, along several metrics. The data sample studied represents 26 million accounts, or about half of all credit cards issued in the UK, and comes from client reports generated by the FICO™ TRIAD® Customer Manager solution in use by most UK card issuers.

Looking at the last year and a quarter of data, several patterns emerge:

  • Overall, card performance has been steady over the last two years. Balances remain steady, as do delinquent amounts.
  • The Q2 data indicates slightly more risk. Cash withdrawals as a percentage of total sales for all UK cards, having fallen from over 5 percent in summer 2009 to 3.1 percent in January, are slightly rising again and have hit 3.7 percent. Utilisation is also slightly rising.
  • Student cards and Irish cards are performing much weaker than cards overall. The percentage of accounts that are in current standing is rising for classic and premium cards, but the trend line is dropping for Irish and student cards compared with two years ago. Student and Irish cards show greater volatility in terms of delinquency patterns, including seasonal issues, and are markedly higher than classic and premium cards.
  • Student card data shows effects of poor economic conditions and rises in student costs. Student cards are much more likely to be overlimit, and are more volatile than most other UK cards. Overlimit accounts have risen from 5.5 percent of student cards to 6 percent, and this is the only group to rise; all other card types have lower levels of overlimit accounts than in 2009.
  • Cards issued by Irish and UK banks in Ireland are performing worse than the average of all cards, reflecting the economic crisis in Ireland. The percentage of UK cards that are current in their payments is between 92 and 94 percent throughout the period, but 86-87 percent for Irish cards. Twice as many Irish cards are 2-cycles delinquent than classic cards, and the seasonal volatility is much greater. In addition, the percentage of Irish cards that are overlimit is about twice the average for all cards.

“The data we compile from our FICO TRIAD clients represents a detailed snapshot of plastic performance in the UK,” said Mike Gordon, FICO vice president and managing director for Europe, the Middle East and Africa. “Our latest benchmark reports do indicate a slight tendency toward weaker performance, as the UK economy continued a rocky recovery with high unemployment. Clearly, the economy is causing more distress to students and to Irish citizens.”

FICO Benchmark Reporting Service subscribers receive a quarterly review of their portfolio vs. the industry, with 24 months’ worth of data. For greater insight, subscribers can drill into the data by vintage of accounts.


Chart 1
Source: FICO Benchmark Reporting Service.

Cash withdrawals, having fallen since summer 2009, are slightly rising again.

Chart 2
Source: FICO Benchmark Reporting Service.

The percentage of accounts that are two cycles delinquent is steady for most cards. However, student and Euro (Irish) cards show greater volatility in terms of delinquency patterns, and are markedly higher than classic and premium cards.

Source: FICO Benchmark Reporting Service.

Overlimits remain steady, with Euro (Irish) and student cards markedly higher and more volatile. The spike in April is due to fee assessments.

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