DIARIO DEL HUILA, CONTEXT
By: Rolando Monje Gómez
In 2020, there was a significant drop in new loans compared to 2019, as revealed by TransUnion in the most recent Credit Industry Trends Report.
According to the report, from the global information solutions company, “on average, from the first quarter of 2015 to the fourth quarter of 2019, 430,000 consumers per quarter acquired their first credit obligation and thus obtained their first credit score.”
“In 2020, this number dropped dramatically, with fewer than 300,000 consumers acquiring their first credit obligation each quarter. The lowest figure was observed in the second quarter of 2020, in which only 209 thousand new consumers entered the Colombian credit market ”.
Among all credit products, credit cards showed the largest drop in origination during the month of November 2020 (45%) compared to the levels of November 2019.
At the end of the previous year, and compared to the same period in 2019, a drop was observed in the number of consumers who have access to at least one credit product. This drop was observed for consumers with any type of credit product, with the exception of consumers with home credit and personal credit.
This drop was observed for consumers with any type of credit product, with the exception of customers with home credit (which increased 2.5% between 2019 and 2020) and personal credit (relatively stable with an annual growth of 0.7 %).
The annual decrease was especially significant for consumers with microcredit and vehicle credit, which decreased by 6.2% and 5.2% in the fourth quarter of 2020 compared to the fourth quarter of 2019, respectively.
The survey results showed that 87% of financially affected consumers expressed concern about their ability to pay obligations, and 38% expected to have a budget deficit in less than a month.
When analyzing the data for the third quarter and the November results of the Financial Hardship Survey that was developed since April, it was found that Colombian consumers continue to feel the financial impact of the pandemic.
While macroeconomic trends generally point to an economic recovery, research shows that consumers continue to experience financial difficulties and are beginning to show some deterioration in their credit performance.
In addition, the December results showed signs of improvement with respect to the financial impact of consumers, particularly in the younger age groups. Millennials and low-income households are the groups most financially affected by the coronavirus, and saw the biggest improvements in their financial outlook that month.
The two groups of respondents reported that their income was negatively affected and decreased by eight percentage points and nine percentage points, respectively, between November and December 2020.
The decrease in access to credit has been mainly driven by a drop in origination (new accounts opened) to consumers without credit history, which could indicate that the risk appetite of the entities remains low and they are less willing to grant new credit to consumers who have little or no credit experience.
TransUnion’s most recent Financial Hardship survey offers a broad view of the impact of Covid-19 on Colombian consumers and how people have adapted to changing economic conditions due to the pandemic.
In November, 78% of Colombians continued to indicate that they were being affected financially, an increase compared to the results of October that suggests a possible worsening of the economic situation of many consumers.
It is extremely important that entities identify opportunities in specific populations to grow with confidence without affecting their risk levels, which will allow them to maintain a healthy balance sheet for the rest of the year and well into 2021.
Late payment
NPLs at the consumer and balance level deteriorated in the fourth quarter of 2020, relative to both the prior quarter and the prior year, as relief programs ended for many consumers.
The report indicates that the serious delinquency rates at the consumer level of credit card and personal credit showed the greatest increases in the fourth quarter of 2020 in relation to the fourth quarter of 2019, of 136 and 115 basis points, respectively. Serious delinquency rates are considered 90 days or more for credit cards and 60 days or more for all other credit products.
The analysis also indicates that personal credit and cards are the loans that consumers are most concerned about when paying, with 36% and 34% of consumers expressing their concern, respectively.
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