European Card Market Growth Continues to Rebound
Based on our analysis of recently released data from European central banks, First Annapolis estimates that European card market growth rates continued to rebound in 2012 from a low point in 2009, and credit card volumes had especially robust growth.
In Western Europe, nominal growth rates for card volumes are back to pre-crisis (2007) levels, and in 2012 credit volume grew at a faster rate than debit card volume. On a normalized basis (adjusting for growth in consumer expenditures), we estimate that both Western European debit and credit card volumes grew at a faster rate in 2012 than 2011.
In Central and Eastern Europe (“CEE”), we estimate that credit card volume growth rates were significantly higher in 2012 than 2011, while the rate of nominal debit volume growth declined. However, negative growth in CEE consumer expenditures in 2012 contributed however to higher normalized debit card volume growth in 2012 vs. 2011. In normalized terms (adjusted for the growth rate of consumer expenditures) both debit and credit card volume growth was significantly higher in CEE than in Western Europe: 17% normalized debit volume growth in CEE vs. 6% in Western Europe, and 13% normalized credit volume growth in CEE vs. 10% in Western Europe.
Although the number of ATM transactions in both Western Europe and CEE continued to grow slightly from 2011 to 2012, the long term shift away from ATM transactions continued, and has been especially pronounced in CEE: year over year ATM transaction growth declined from 11% in 2007 to 6% in 2012.
As may be expected, the performance of individual countries varied significantly. In recent years the Nordics saw both growth in consumer expenditures and an upward trend in debit and credit card spend, while several CEE markets (Poland, Romania, and Slovakia) had strong card growth but weaker consumer expenditure growth. Not surprisingly, the sharp economic downturn in Greece led to a worsening in cards markets over the past two years, especially in credit, where the country was among the worst performers in Europe (17% and 12% year over year decline in 2010 and 2011 respectively). Ireland also fared poorly in terms of card growth. Germany, viewed as an engine of economic growth, posted moderate growth in consumer expenditures (3% in 2011) but strong debit and credit card volume growth (both 11%). In the U.K., the largest cards market in Europe, normalized debit card volume growth slowed down to 7% in 2012, while credit card spend increased significantly to 13%. In general, card markets displayed high positive correlation with GDP and consumer expenditure growth patterns, with credit card growth more sensitive to economic swings than debit.
Our outlook for European cards market fundamentals is more positive in 2013 than it was in 2012. Despite economic volatility and regulatory headwinds, the continuing trend away from cash, increasing acceptance, increasing e-commerce volumes, and issuers’ renewed focus on marketing credit cards provide a foundation for at least modest growth.
Figure 1: Card Market Growth in Western Europe (EU Members)
Countries included: Austria, Belgium, Cyrpus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain, Sweden, U.K.
Sources: European Central Bank, Swedish Bankers Association, Federation of Finnish Financial Services, Rijksbank, DNB, National Bank of Belgium, Banca d’Italia, Banco de Espana, Banco de Portugal.
Figure 2: Card Market Growth in CEE (EU Members)
Countries included: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia.
Sources: European Central Bank, Magyar Nemzeti Bank, Czech Bankcard Association, Latvijas Banka, Lietuvos Bankas, Eesti Pank, National Bank of Poland, ZBK, Banca Nationala a Romaniei
Note: Normalized growth rates calculated by subtracting the growth rate of national consumer expenditures from the growth rates of national card volumes.
Figure 3: Growth of Number of Cards (EU Members)
Countries included: Austria, Belgium, Cyrpus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain, Sweden, U.K, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia.
Sources: European Central Bank, Swedish Bankers Association, Federation of Finnish Financial Services, Rijksbank, DNB, National Bank of Belgium, Banca d’Italia, Banco de Espana, Banco de Portugal, Magyar Nemzeti Bank, Czech Bankcard Association, Latvijas Banka, Lietuvos Bankas, Eesti Pank, National Bank of Poland, ZBK, Banca Nationala a Romaniei.
For more information, please contact Maria Popova, Associate specializing in Card Issuing, email@example.com; or Erik Howell, Senior Manager specializing in Card Issuing, firstname.lastname@example.org
To read the rest of this article, please subscribe to