© 2004 CRIF Group

The role of credit information to support consumers and lenders

ITALYResults of research

2004 Annual General Meeting and Conference3rd and 4th June 2004, Brussels

Enrico Lodi - CRIF

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In 2003 CRIF commissioned the economic research company Nomisma to study:

THE RELATIONSHIP BETWEEN CONSUMER CREDIT AND NATIONAL ECONOMIC SYSTEM

• Structural aspects• Trends• Direct and indirect economic relationships between consumer credit and consumption

SECTOR EVOLUTION SCENARIOS• Change factor identification• Economic impact evaluation of scenarios

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6,9 12,6

19,4

23,3

1995 1998 2000 2002

Trend of consumer credit flowsBillion euros, current values

CONSUMER CREDIT IN ITALY

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CONSUMER CREDIT IN ITALY

1,25% 1,96%2,73%

3,07%

1995 1998 2000 2002

Trend of consumer credit impact on consumption

% values

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CONSUMER CREDIT AND CONSUMPTION

An anti-cyclical tool

-25,00%

-20,00%

-15,00%

-10,00%

-5,00%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

1996 1997 1998 1999 2000 2001 2002-2,50%

-2,00%

-1,50%

-1,00%

-0,50%

0,00%

0,50%

1,00%

1,50%

2,00%

2,50%

Consumer Credit Flows

Family Consumption

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CONSUMER CREDIT AND SALES

-13,48

-7,75

-11,80

-20,90

0,00

-5,00

-10,00

-15,00

-20,00

-25,00

Cars and motor-bikes

Electronics andElectrical appliance

Furniture Total

Growth of the incidence on sales

Sales reduction in absence of consumer credit

16,8

1,0

7,5 8,4

22,0

9,5 11,014,2

34,8

11,5

16,520,9

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

Cars and motor-bikes

Electronics andElectrical appliance

Furniture Total

1998 2000 2002

%

%

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CREDIT AND PROPENSITY TO CONSUME

Consumer Credit % Var

(0; -1,44)

(8,95; 0)

y = -1,44+0,16x

-4,5

-3,0

-1,5

0,0

1,5

3,0

4,5

0 5 10 15 20

PM

C %

Var

It is necessary a nearly 9% growth of Consumer Credit to produce a positive impact on consumption

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Forecastbased on evolution trends

BASIC TRENDS

PRUDENTaverage 2000-

2002

OPTIMISTICaverage 1995-

2002

Consumer creditannual growth

+10,49% +15,70%

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Impact on Italian economy

+0,3% +1,11%

PRUDENTaverage 2000-

2002

OPTIMISTICaverage 1995-

2002

GNP growth induced by consumer

credit

BASIC TRENDS

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The role of information

POSSIBLE VARIABLES

• Credit granted growth• More equal credit access• System risk reduction and consequently

reduction of credit access costs (interest rates)• Competition growth in the credit market

The information system supporting consumer credit in ITALY collects:- both negative and positive data- both open and closed contracts

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Negative

Positive

Definition of active policies

Reduction of information used to

support the consumer credit granting

POSSIBLE VARIABLES

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Medium Restriction:Removal from the present information patrimony of positive credit registries of all the information regarding client behaviour whose contracts are closed

Total Restriction: Removal from the present information patrimony of positive credit registries of all positive information (only usage of information regarding negative behaviour)

Development Policy: Economic policies to support sector development (ex. tax reductions, structural actions on offer)

SCENARIOS

1.

2.

3.

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Basic Trends (prudent) +0,3%

Scenario 1Medium Restriction -0,73%

Scenario 2Total Restriction -1,59%

Scenario 3Development Policy +2,02%

GLOBAL IMPACTS

GNP % Variation induced by Consumer Credit

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Negative

Removal from the present information patrimony of positive credit registries of all the information regarding client behaviour whose contracts are closed:-0,7% GNP

Removal from the present information patrimony of positive credit registries of all positive information (only usage of

information regarding negative behaviour):-1,6% GNP

Reduction of information

used to support the consumer

credit granting

GNP % variation induced by Consumer Credit “as is”: +0,3%

POSSIBLE VARIABLES

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Thank you and goodbye!