Nội dung

Full report & Methodology • Quarter 1, 2012 © ING Direct UK Contents Introduction by ING Direct CEO Richard Doe 3 Key findings 4 Discussion 5 - Savings rise by record levels  5 - Debt levels remain historically low  5 - Restrained consumer spending  6 - Impact of PPI refunds - Boost to Consumer Confidence - The year ahead 6  7 8 Commentary by ING Senior Economist James Knightley 9 Methodology  10 Contacts  12 Full Report & Methodology • April 2012 2 Introduction Welcome to the latest ING Direct Consumer Savings Monitor, the first quarterly report of 2012. At the end of last year, consumers saw restoring their savings as their number one financial priority for 2012, but in the tough economic environment we were unsure whether they would be able to deliver on this. However, I’m pleased to report that reserves have risen significantly in the first three months of the year, with median savings balances growing by £284 to stand at £1,858 – the highest amount for nearly two years. This is also the first time since 2009 that we’ve been Richard Doe able to report a consecutive quarterly rise in CEO, ING Direct (UK) savings balances. This is also the first time since 2009 that we’ve been able to report a consecutive quarterly rise in savings balances. While this was unexpected, it was down to consumers continuing to be conservative with spending and borrowing in the first quarter of the year (as they were over Christmas). This behaviour may have played a part in recent negative GDP growth figures, but it seems that it has allowed the public to deliver on their resolve to restore savings. Some consumers also have the added boost of PPI compensation payments starting to come through. Using data from our regular survey of consumers within the monitor we estimate that around £5.6 billion is due to be paid out in PPI refunds this year to over two million people. The same data suggests that a third of such payments are destined for savings accounts which would equate to £480 million of PPI refunds being deposited into savings this quarter - rising to £1.9 billion by the end of this year. On top of this, the public still see savings as their number one financial priority, so it will be interesting to see in the next quarter the impact on Britons’ balance sheets and the effect this will have on the current economic situation in the UK. Why do we need the ING Direct Consumer Savings Monitor? While there is a wealth of industry data on spending, consumer confidence and house prices, there is a lack of information available on the amount of accessible savings people have available. While the ONS Household Savings Ratio is a comprehensive economic measure, it is unsuitable for our cause because it includes things that most people wouldn’t consider as saving. For example, the mortgage, the largest monthly bill, is partly counted as savings because it contributes to the pay-down of debt. Britain’s total ‘savings pot’ of households’ cash and deposits is monitored by the Bank of England. However, simply dividing this total by the adult UK population gives a result that is heavily skewed by the small number of people with very large savings balances. This problem also exists in a range of other survey-based measures. Full Report & Methodology • April 2012 3 Key findings The latest ING Direct Consumer Savings Monitor is based on tracking research conducted in Q1 2012 (January-March)1. It reveals the following key information: Figure 1 - Key Findings MEDIAN SAVINGS (Stock) CHANGE FROM PREVIOUS QUARTER MEDIAN MONTHLY INCOME (net) NUMBER OF MONTHS’ INCOME (savings cushion) Q1 2009 £2,020 - £1,240 1.63 Q2 £1,881 -£139 £1,268 1.48 Q3 £1,950 +69 £1,273 1.53 Q4 £2,055 +£105 £1,283 1.60 Q1 2010 £1,886 -£169 £1,307 1.44 Q2 £2,050 +£164 £1,305 1.57 Q3 £1,771 -£279 £1,304 1.36 Q4 £1,834 +£63 £1,299 1.41 Q1 2011 £1,783 -£51 £1,305 1.37 Q2 £1,684 -£99 £1,306 1.29 Q3 £1,501 -£183 £1,315 1.14 Q4 £1,574 +£73 £1,318 1.19 Q1 2012 £1,858 +£284 £1,319 1.41 MONTH Source: ING Direct Consumer Savings Monitor • The ordinary man or woman in the UK currently has and building societies • This is a rise of time last year £1,858 in readily accessible cash savings in banks £284 (+18%) since the previous quarter, and a £75 increase (+4.2%) compared to the same • This figure equates to just over 1.4 in savings (based on 30 day month) times average monthly take home pay, or 42 days’ worth of income • Levels of unsecured debt remained stable, with levels of borrowing on loans, credit cards and hire-purchase agreements experiencing an insignificant increase of just £18 (+0.8 per cent) to an average of £2,242 (see figure 3 on page 5). This is still just marginally off the lowest level recorded since tracking began in January 2009 Unless otherwise stated, all data in charts and tables are sourced from the ING Direct Consumer Savings Monitor. 1 Full details of methodology included in Appendix Full Report & Methodology • April 2012 4 Discussion Savings rise by record levels The first quarter of 2012 has seen strong growth in the savings levels of ordinary Britons, with median savings balance rising by £284 (18%) to £1,858 – the highest level for nearly two years. Figure 2 - Quarterly variation in savings levels since 2009 £2,100 £2,000 £1,900 £1,800 £1,700 £1,600 £1,500 £1,400 £1,300 £1,200 2012 Q1 2009 2011 Q1 Q4 Q3 Q2 Q2 Q3 Q4 Q1 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q4 Q3 Q2 2010 Q1 Q4 This is the first consecutive quarterly increase in savings since Q2-4 2009, and also marks a 4.2% (£75) rise compared Q3 Q2 to the same time last year. This is a significant turn around from savings figures recorded throughout 2011, 2009 Q1 which indicates savers’ determination to re-build their savings balances following a difficult year. Debt levels remain historically low As well as increasing savings, consumers remain dedicated to keeping debt in check, with levels of unsecured debt remaining near the lowest we’ve seen since 2009. While average borrowing on credit cards, hire purchase agreements and personal loans rose insignificantly in Q1 2012 by 0.8 per cent (+£18) to rest at an average of £2,242 (see fig. 3 below), overall levels of debt are 20 per cent lower (£564) than this time last year. Figure 3 - Levels of unsecured debt Month UK Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 £2,950 £2,737 £2,680 £2,812 £2,806 £2,513 £2,629 £2,224 £2,242 As a result, when looking at combined savings and debt compared to this time last year, the average Briton is £639 better off, and while still in a net deficit when taking debt from savings, consumers are taking positive steps to rectify this. Full Report & Methodology • April 2012 5 Discussion continued Restrained consumer spending One of the main factors that has allowed for this growth in savings has been careful spending by consumers. During the lead up to Christmas last year, Britons adopted a more conservative attitude towards spending and borrowing, resulting in fewer post-Christmas debts to pay-off and leaving them with more money to save at the start of the year. And consumers have continued this behaviour into the new year, with official industry figures reflecting this by reporting subdued levels of retail spending in the first three months of 2012. (see figure 4 below). Figure 4 - Savings and Spending Month Savings Retail sales January +6.2% -0.3% February +1.6% -0.3% March +9.3% +1.3% Impact of PPI refunds We also asked respondents a number of questions regarding PPI payouts, establishing that these refunds look set to play a key role in assisting the savings recovery. Our survey findings showed that 4.3 per cent of Britons had received or expected to receive a payout this year – equivalent to over two million UK adults. With average refunds of around £2,600, according to the findings, Britons can expect to receive £5.6 billion in refunds this year. One third of these payouts are destined for savings accounts – the equivalent of £480 million channelled into savings in the first quarter of the year (on a pro rata assumption), or £1.9 billion by the end of 2012. Consumers also plan to use their PPI payouts to reduce debts, with the payment of unsecured debt being the most common use of a PPI refund (42 per cent). The billions of pounds in PPI refunds also looks set to help the high street, with £1.15 billion (20 per cent) set to be spent on consumer goods (see fig. 5 below). Figure 5 - Impact of PPI refunds How PPI will be used Channelled into savings 34% Pay off unsecured debt 42% Spend 20% Other 4% Full Report & Methodology • April 2012 6 Discussion continued Boost to Consumer Confidence The improving situation for savers at the start of this year combined with the unexpected boost that Britons are receiving from PPI refunds is being reflected in consumer confidence levels, which have increased across all measures as people begin the year with a more positive outlook towards their household income, job security and spending power (see figure 6 below). And with PPI refunds continuing to be paid out to consumers throughout the year more people should begin to feel the financial benefits over the coming months, which should allow these recipients to continue to increase their savings, boost 60% their spending, and further pay down debt. 60% 50% 60% Figure 6 - Rising Consumer Confidence levels 50% 60% 40% 50% 40% 50% 30% 40% 30% 40% 20% 30% Household Income Job Security 20% 30% 10% 20% 10% 20% 0% 10% Q1 2009 Q2 Q3 Q4 Q1 2010 Q1 Q2 2009 0% 10% -10% Q1 2009 0% Q1 2009 -10% 0% -20% -10% Q1 2009 Q4 2010 Q2 Q3 Q2 2009 Q3 2009 Q2 Q3 Q3 Q4 Q4 Q4 Q1 2010 Q1 2010 Q1 2010 Q1 Q1 Q2 Q2 2010 2010 Q1 Q2 2009 Q3 Q3 Q3 Q4 Q4 Q2 Q1 2011 Q1 Q1 Q2 Q3 Q2 2011 Q3 2011 Q4 2010 Q3 Q2 Q4 2012 Q4 Q4 Q3 Q4 2011 Q1 Q1 Spending Power Q1 Q1 2012 2012 Q1 2012 -20% -10% -20% -20% £2,250 £2,200 £2,250 £2,250 £2,150 £2,200 £2,200 £2,100 £2,250 £2,150 £2,150 £2,050 £2,200 £2,100 £2,100 £2,000 £2,150 £2,050 £2,050 £1,950 £2,100 £2,000 £2,000 £1,900 £2,050 £1,950 £1,950 £2,000 £1,900 £1,900 £1,950 Q1 2009 Q2 Q3 Q4 Q1 2010 Q1 2009 Q1 2009 Q2 Q2 Q3 Q3 Q4 Q4 Q1 2010 Q1 2010 Q1 2009 Q2 Q3 Q4 Q1 2010 £1,900 Full Report & Methodology • April 2012 7 Discussion continued The Year Ahead The outlook for savers this year looks positive based on figures from the first quarter of 2012, considering that more PPI payouts are due as the year continues. And the determination people have to restock their savings does not appear to be waning, as consumers still rank savings as their top financial priority (see figures 7 below), suggesting that consumers will maintain their efforts to restore reserves. Figure 7 - Top financial priorities Q1 2011 Q2 Q3 Q4 Q1 2012 Saving more 32% 39% 39% 41% 40% Paying off credit cards/loans 28% 30% 28% 30% 29% Paying more off mortgage 14% 12% 12% 11% 11% Other 26% 19% 22% 18% 20% Full Report & Methodology • April 2012 8 Economist Commentary It is quite clear that the Global Financial Crisis and associated UK recession had a depressing impact on UK household finances. Around three quarters of a million people lost their jobs and those that held onto work saw their take-home pay significantly eroded by high inflation. Indeed, wages failed to keep pace with the cost of living for four consecutive years. With individuals less able and less inclined to borrow households had to dip into their savings in an effort to maintain the lifestyles they wanted. Thankfully, evidence from this study suggests that this may be coming to an end with savings balances now on the rise. PPI compensation payments have the potential to significantly boost savings levels for many households, but there should also be favourable developments on the income side. This should allow both an increase in saving while also allowing households to James Knightley ING Senior Economist increase their spending, which would boost UK economic activity. Indeed, we have seen a significant increase in the tax free allowance for the working population, which will increase again next year, while pension and many benefit payments increased by 5.2% from April. Additionally, with surveys suggesting corporate hiring intentions are rising – note also the 55,000 rise in employment in the past three months as well – this should boost household cash flows. We then have to consider the strong probability that inflation will remain on a downward path (it has fallen from 5.2% to 3.5% currently). The combination of these factors should allow real household after-tax incomes to increase for the first time in three years. This suggests to us that there is a growing probability that households will finally be able to follow through with their strong intentions of boosting their savings levels. There are of course risks, such as rising petrol prices and the Eurozone sovereign debt crisis derailing the UK economy’s recovery prospects, but recent data flow has suggested that the outlook may finally be brightening. Full Report & Methodology • April 2012 9 Appendix: Methodology In order to establish an accurate and up-to-date profile for ordinary UK adults and reflect trends in the profile of UK adults through 2009-11, researchers drew upon a range of sources including the British Household Panel Study, the DWP Financial Resources Survey (FRS), and the HM Revenue & Customs Marketable Wealth data. Based on this profile, a sample of 1,300 people deemed to be fully representative of UK adult population, up to and including the 95th percentile of savings wealth, is selected on a monthly basis by PureProfile, a leading online quantitative research panel. This sample includes approximately 1,000 savers (approximately 27 per cent of UK population do not have savings). In order to prevent any time discrepancy, the sample is interviewed over the same seven day period beginning in the last week of every calendar month. The sample is asked an identical standard series of tracking questions every month. These tracking questions commenced in January 2009 and are run on a monthly basis. Quotas are continually monitored and adjusted to take account of any changes in the profile of UK savers, using FRS and the quarterly nationally representative waves of the ING Consumer Savings Monitor research. The figures are published quarterly and are based upon ‘three month’ rolling averages. Monthly and quarterly figures are centred on the first day of the final month in that quarter in question (e.g. Our March, or Q1 figures, are ‘centred’ on March 1st - an average of samples collected January 27th to February 4th, February 25th to March 4th, and March 27th to April 4th). • Median figures In order to define as accurately as possible what the ‘ordinary’ Briton has set aside, our study uses median figures throughout. Our research partners have also used independent data to create a model for the UK savings distribution at the top end of the scale, which represent the wealthiest five per cent of the population who are systematically under-represented in all ‘nationally representative’ polling. This allows us to maintain the consistency and accuracy of the survey sample in order to find the true ‘man in the middle’. For comprehensibility and given the fact that non-experts may not understand the word ‘median’ alone, we take the word ‘average’ to refer to median figure - both with respect to income and saving levels. In practice, our focus on the median average UK adult delivers figures on average savings that are around four to eight times lower than mean averages. This is because mean averages are skewed hugely towards the wealthier end of the savings scale (figure 10). Our focus on the median UK saver thus delivers a far more accurate view of the savings levels of ‘the man in the middle’. Figure 10 - Model of savings distribution across UK population £180,000 £160,000 £140,000 Typical savings £120,000 £100,000 £80,000 £60,000 £40,000 £20,000 £0 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 Percentile of population Source: FDS International Full Report & Methodology • April 2012 10