macroeconomic and market trends and global perspectives

©2015 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc.

Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.

Macroeconomic and market trends U.S. and global perspectives

©2015 Experian Information Solutions, Inc. All rights reserved. Experian Public. 2

Daren Blomquist RealtyTrac

Marc Gaudart Experian

Michele Raneri Experian

Introducing:

@ExperianVision | #vision2015

Follow us on Twitter:


Global economic

and credit trends

Marc Gaudart

Experian

4 ©2015 Experian Information Solutions, Inc. All rights reserved. Experian Public.

Lending to consumers has grown across all continents in 2014

$4.7 Trillion

$800 Billion

$1.7 Trillion

$3.9 Trillion

$357B

+6.2%

+11.6%

+8.8%

+17.3%

+5.4%

$389 Billion

+4.5%

+7.8%

$454 Billion

Euromonitor consumer credit worldwide 2014 - estimates

Global consumer credit 2014, and % change from 2013


What is going on today globally? Summary

2014 2015 forecast 2014 2015 forecast

U.S. 2.4 3.6 6.2 5.4

U.K. 2.6 2.7 6.3 5.5

Euro area 0.8 1.2 11.6 11.2

Em. and dev.

Europe 2.7 2.9 - -

Russia 0.6 -3.0 5.2 6.3

Latin America 1.2 1.3 - -

Mexico 2.1 3.2 4.8 4.5

Brazil 0.1 0.3 4.8 5.7

Japan 0.1 0.6 3.6 3.5

China 7.4 6.8 4.1 4.1

India 5.8 6.3 - -

GDP Growth (%) Unemployment (%)

Source: IMF - World Economic Outlook Projections, Consensus Economics, Focus Economics. The Economist


The main influencers to the world economic outlook

Low oil prices U.S. recovery China deceleration in growth

Russia and CIS political situation

Eurozone QE program


Key additional influencers in the European Union

What? Who? Why?

Anti-austerity movements

Greece

Spain

Italy

Questioning the relevance of

austerity measures and the

“financial and economic rules

of the game”

Nationalists movements

U.K.

France

Netherlands

Austria

Questioning the whole

“European project”

Both movements are gaining significant political traction with voters and could

significantly alter the future structure, organization and make up of Europe

The U.K. general elections in May 2015 will be the next big test


Who will be the strong and weak performers in 2015?

Strong

Weak

U.S.

Mexico

Japan

U.K.

India

Germany

Spain

France

Italy

China

Brazil

Venezuela

Argentina

Colombia

Chile

Peru

Developing Asia Turkey

Russia

Canada

Greece


ECB started a long time after the Fed and the Bank of England

ECB to buy one trillion euros in bonds in QE program ̶ % of bonds by European country

Could delay Fed’s plans to start increasing interest rates

Dollar appreciates against the Euro, leading to weaker inflationary pressures

Could this increase further U.S. consumer confidence?

Direct trade impact somewhat negative, but U.S. exports only account for 15% of U.S. GDP, and U.S. exports to Europe account for only 15% of total U.S. exports

Impact of the European Central Bank QE on U.S. economy

…and take advantage

of a weak Euro to

visit Europe


Basel regulations are being adopted globally by committee members…

Basel II Basel 2.5 Basel III

Argentina

Australia

Brazil

Canada

Hong Kong

India

Indonesia

Japan

Korea

Mexico

Russia

Saudi Arabia

Singapore

South Africa

Switzerland

Turkey

United States

European Union

Source: BIS – Progress report on adoption of Basel regulatory framework – October 2014 Adoption completed Adoption in progress


…as well as countries who are not committee members

Foundation Advanced

Bahrein

Bermuda

Taiwan

Egypt

Iceland

Liechtenstein

Malaysia

Morocco

New Zealand

Norway

Peru

Serbia

Thailand

Zimbabwe

Basel II Pillar I Credit Risk Internal Ratings Based approach

Source: BIS – Financial Stability Institute Survey – July 2013 Adoption completed Adoption in progress


Stress testing approaches U.S., U.K. and European Union

Scenarios - Baseline

- Adverse

- Severely adverse

- Baseline

- Adverse

- Baseline

- Adverse

Key factors influencing

scenarios

US economy and Global

for 6 “global market

shock participants”

Europe, with global

impact increased in 2015

stress test

28 EU countries, some

global

Number of firms tested 30 (2014)

31 (2015)

8 (2014)

7 (2015)

123 (2014)

Number of failures 1 (conditional)+2 2*+1 (2014) 10*+14

Frequency of stress

tests

Annual Annual Varied

* Revised capital plans were approved at the time where the results where announced by the regulator

Note: Santander, RBS and HSBC are subject to the 3 regulators and the 3 stress test approaches

Federal Reserve Bank of England

European Banking

Authority


Key global themes for the financial services industry

Regulation (e.g., Basel and stress testing)

Understanding affordability

Collections

Digital

Treating customers fairly

Fraud


U.S. economic

and trends

Michele Raneri

Experian


Preparing for

near future by

understanding the

current environment


Confidence improving year-over-year

0

20

40

60

80

100

120

140

160

Recession

January: 102.9

Source: The Conference Board

Consumer confidence index

Up 23%

YoY

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

February: 18,140.44 Dow Jones Industrial Average

Up 14%

YoY


-9.0

-6.0

-3.0

0.0

3.0

6.0

9.0

12.0

15.0

Real Gross Domestic Product (percent change from preceding period) 4Q14 =2.5%

Real GDP change

Source: Bureau of Economic Analysis, Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents, 2014

FOMC forecast

4Q15f: +2.8%

4Q16f: +2.75%

4Q17f: +2.4% 4Q08 = -8.3%


0%

2%

4%

6%

8%

10%

12%Unemployment rate

Unemployment rates come down

Source: Bureau of Labor Statistics; Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents

FOMC forecast

2015f: 5.2-5.3.%

2016f: 5.0-5.2%

2017f: 4.9-5.3%

-1,000

-800

-600

-400

-200

0

200

400

600

Th

ou

sa

nd

s

1-Month Net Change


Interest rates

0

1

2

3

4

5

6

7

8

9

10

0%

1%

2%

3%

4%

5%

6%

7%

8%

Recession Mortgage rate Home sales

Jan 2015 Data:

Mortgage: 3.67%

Home sales: 4.82M

Millions Interest rate


$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

U.S. gas price (regular all formulations) February $2.274/gal

Drivers of gasoline prices

Source: U.S. Energy Information Administration

Feb 2015 Data:

YOY: -33%

10Yr: +20%


U.S. credit trends

Michele Raneri

Experian


Average VantageScore® Bankcard inquiries and originations

600

650

700

750

800

Bankcard inquiries Originations

Spread between inquiries and originations

61 32 34 52 60 49 54 70 85 66 61 67 86 58 51 67 57 45 54 59 52 46 46 54 48 44 41 51 40

2Q14:

40-point spread

Recession timeframe


0%

10%

20%

30%

40%

50%

60%

70%

80%

2011 Q 4 2012 Q 4 2013 Q 4 2014 Q 4

Distribution of bankcard loan originations By VantageScore® band

A B C D F

$-

$20

$40

$60

$80

$100

$120

1Q

07

4Q

07

3Q

08

2Q

09

1Q

10

4Q

10

3Q

11

2Q

12

1Q

13

4Q

13

3Q

14

4Q14:

$89.72 BN


Bankcard late stage delinquency rates

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

60-89 DPD 90-180 DPD

Percent balances

4Q14 Data:

60-89: 0.52%

90-180: 1.26%


4Q14

Bankcard delinquency rates By state

High Low

Best/worst five states* 4Q14 national bankcard

60-89 DPD

1. Alaska 0.25%

2. Wyoming 0.32%

3. North Dakota 0.33%

4. Washington 0.37%

5. Vermont 0.40%

...

47. Alabama 0.63%

48. Florida 0.63%

49. Arizona 0.64%

50. Arkansas 0.66%

51. Mississippi 0.70% *Includes District of Columbia

Source: Experian IntelliViewSM


Bankcard trades and utilization

0

100

200

300

400

500

600

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

Outstanding accounts 4Q14: 406.93M

0%

5%

10%

15%

20%

25%

30%

35%

40%Utilization 4Q14: 20.79%


$-

$3

$6

$9

$12

$15

$18

$21

$24

$27

$30

1Q

07

3Q

07

1Q

08

3Q

08

1Q

09

3Q

09

1Q

10

3Q

10

1Q

11

3Q

11

1Q

12

3Q

12

1Q

13

3Q

13

1Q

14

3Q

14

Billio

ns

4Q14:

$27.53 BN

0%

10%

20%

30%

40%

50%

60%

Q411 Q412 Q413 Q414

Distribution of retail originations By VantageScore® band


Retail late stage delinquency rates

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

60-89 DPD 90-180 DPD

4Q14 Data:

60-89: 0.96%

90-180: 2.17%


4Q14

Retail delinquency rates By state

High Low

Best/worst five states* 4Q14 national retail

60-89 DPD

1. Alaska 0.50%

2. Wyoming 0.58%

3. Montana 0.64%

4. North Dakota 0.66%

5. Nebraska 0.72%

…

47. Alabama 1.10%

48. Arizona 1.10%

49. Louisiana 1.11%

50. Mississippi 1.13%

51. Arkansas 1.14%

*Includes District of Columbia

Source: Experian IntelliViewSM


Retail trades and utilization

0

100

200

300

400

500

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

Outstanding accounts 4Q14: 221.94M

0%

5%

10%

15%

20%

25%

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

Utilization 4Q14: 16.12%


Real estate

Market overview

Daren Blomquist

RealtyTrac


U.S. home sales


U.S. home prices


Cash buyers


Institutional investors


Mortgage trends


U.S. foreclosure activity


Home equity


Affordability


Resetting HELOCs


[email protected]

@MLRaneri

For additional information,

please contact:

@ExperianVision | #vision2015

Follow us on Twitter:


Share your thoughts about Vision 2015!

Please take the time now to give us your feedback about this session. You can complete the survey in the mobile app or request a paper survey.

Select the breakout

session you attended

Select the Survey

button and complete 1 2

macroeconomic and market trends and global perspectives

Documents

experian public

global consumer credit

growth russia

economic rules

european project

global perspectives

mexico japan

european union