Banks undertaking significant engagement with 140,000 customers currently on payment breaks

Customers who still require a payment break urged to contact their lender as soon as possible as European Banking Authority sets June 30th deadline for issuing of payment breaks

Banking & Payments Federation Ireland (BPFI) and their members have today published a new Guide on Payment Breaks as latest figures show that 140,000 payment breaks have been issued, with close to 80,000 of them for mortgages. The latest COVID-19 payment break figures show that over 140,000 payment breaks have been provided to mortgage, personal and SME customers, including 78,000 mortgage payment breaks and 35,800 SME loan breaks.

Speaking about the latest figures Brian Hayes, Chief Executive, BPFI said: “With the initial three-month payment breaks issued in mid-March lenders are now undertaking a significant process of engagement with those who have availed of a break and those customers are now being contacted about their options once the current payment break ends. These include the availability of a payment break extension of up to an additional three-month period for those that continue to be directly impacted by the fallout from the COVID-19 pandemic.”

Important advice on EBA June 30th deadline on issuing of payment breaks

He said:Today we have published an extensive Guide to the COVID-19 Payment Break to help those who have an existing break and want to know what options are open to them as they reach the end of their initial three-month break. It is also provides important advice for those who may need a payment break but have not yet taken one”.

“Significantly for those who have been directly impacted by COVID-19 and who have not yet sought a payment break but feel they may have difficulty managing their repayments, we are urging these customers to contact their lender as early as possible in June to ensure they can avail of a break. A deadline of 30th June has been set by the European Banking Authority (EBA) for lenders to process and grant COVID-19 related payment breaks and therefore it is essential that customers apply for a payment break as soon as possible if they feel they need one.”

Payment break extension

Brian Hayes said: “The BPFI guide covers a range of vital information for those who have an existing payment break, including the option of getting a payment break extension. It details the different repayment options for borrowers, including the provision of term extensions on mortgages. We readily acknowledge the very positive engagement with the Central Bank of Ireland on all these matters for our customers.

The new guide also provides important advice for those borrowers who believe their financial challenges may be longer term in nature and the gives clear guidance on the next steps to take. Our key message to customers is to engage with their lender as soon as possible, this is the first and most important thing they can do. Our members have well established support systems and dedicated teams in place so the earlier customers discuss their concerns with their lender, the sooner the lender can understand their circumstances and work through the most appropriate solution for them.”

BPFI’s Guide to the COVID-19 Payment Break & Repayments is available to download on BPFI’s website here.

 

Notes: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has some 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Head of Communications, 087 9016880 or jillian.heffernan@bpfi.ie

State guarantee needed for businesses that require liquidity – Brian Hayes

The economic, personal, and business challenges from the Covid 19 pandemic across Ireland and across the European Union are enormous. One fact highlights this. In the EU in the past eight weeks some 50 million people – about 10 per cent of the entire population – now rely on government-provided employment subsidies. Not only can this not continue from a Government financing perspective, but it is a crushing blow for people who cannot find work or face long-term unemployment.

We face many of the same problems that marked the great financial crisis 10 years ago. A decade ago, it was the doom loop of bad banking and sovereign indebtedness that collided to bring down our economies. Since then, the banking industry has gone through a total reset in terms of regulatory standards, EU-wide supervision, increased capital requirements and the de-risking of balance sheets through non-performing loans reduction.

Some 75 per cent of the Irish mortgage loan book is now based on macroprudential rules that make mortgage lending and borrowing much safer, and also greatly reduce the prospects of another housing bubble.

Investment

The Covid-19 crisis has precipitated an unprecedented shutdown affecting every sector of our economy. The challenge now, as we take the first tentative steps towards unlocking that shutdown, is to restart the economy and get investment going again. Banks in Ireland and across the EU still represent about 80 per cent of all lending to businesses, big and small. Banks are the crucial intermediaries in terms of providing capital to the real economy.

The banking industry in Ireland, like other parts of the economy, is coming under significant pressures, as evidenced in the first-quarter trading statements to the market by the leading retail banks in Ireland. Banking is not immune from the crisis – it’s a commercial industry like any other that must be run on a commercial basis.

SMEs play a major role in most economies. According to data from the Central Statistics Office, SMEs accounted for 99.8 per cent of the total number of enterprises in Ireland in 2017 and more than 68 per cent of employment in the business economy while generating nearly half of total turnover in the business economy.

Even under normal trading conditions, SMEs can find access to credit challenging due to various factors.

In times of significant economic downturns credit-guarantee schemes are widely used as a policy tool to support lending to SMEs. However, their use has been significantly enhanced during the current economic crisis, because traditional policy tools do not effectively address business support needs in a fast and efficient way.

In addition, the normal criteria used by financial institutions to evaluate loan proposals is unlikely to work in the current economic climate, due to the risks attached to such lending. For example, the UK and German guarantee schemes which have been in existence for a number of years were updated to 100 per cent state guarantees in order to move money quickly into the hands of businesses.

The impact of the Covid-19 pandemic on Irish SMEs has been severe in the extreme and is evident in the number of business closures, reduced turnover, falling profits and, most of all, in terms of the numbers of unemployed arising from the rapid decline in economic activity. While there are different forecasts as to the economy-wide effects of Covid-19 in Ireland in 2020, all predict a serious reduction in GDP.

At the heart of Irish SMEs survival and their capacity to withstand the current challenges is the central issue of liquidity. It is the most fundamental element in the survival plans for Irish businesses and without liquidity support, businesses will quite simply struggle, if not find it impossible, to survive.

In addition to unemployment-related support measures, the Government recently announced a loan guarantee scheme, among several new initiatives, with €2 billion budgeted for bank lending to SMEs. The commitment of all bank chief executives, who recently met the Taoiseach, is to work closely with businesses and the Government to make sure that we get the loan guarantee scheme right. Delivering funding quickly to those businesses when the scheme is enacted through legislation and ensuring that the structure underlying the guarantee allows new lending decisions to happen at pace are vital given the urgency of what we face.

But as CBI researchers noted recently, a balance must be struck “between limiting the cost of finance to SMEs and ensuring that banks and the government providing the guarantee do not make substantial losses”.

We also need to look at what other European countries are doing and deliver instruments that maximise the time we have before the EU state-aid rules are reintroduced .

In that regard, we cannot be an outlier in the range of supports we offer our businesses. We cannot have our SMEs at a competitive disadvantage to others in terms of emergency credit measures. But the banking industry fully accepts its responsibility in making viable schemes work for business and new lending opportunities.

Deleveraging

Many smaller businesses will not want to take on new debt. In fact, about 50 per cent of all SMEs have no debt at all and went through a period of deleveraging their debts following the last financial crisis.

Some of the most exposed sectors have seen a dramatic reduction in overall SME indebtedness in recent years. And irrespective of new credit demands, banks, the State and its agencies cannot lend recklessly and must have regard for the viability of business proposals – a point that was recently highlighted by the governor of the Central Bank of Ireland.

In all the challenges ahead, lenders have a unique relationship with businesses across the country. They have significant sectoral knowledge that can be deployed for the benefit of business. Banks are also very conscious of their day-to-day relationship with Ireland’s SMEs and their responsibility to support the national effort in getting Ireland back to work.

In the past two months banks have delivered more than 120,000 SME, mortgage and personal loan breaks to their customers. This has helped cash flow with businesses and families and given much-needed breathing space during this crisis.

What is needed now is a business guarantee that works quickly for those businesses that need liquidity.

 

Brian Hayes is chief executive of the Banking & Payments Federation Ireland

COVID-19 fast-tracks shift from cash to digital payments and accelerates move from branch to online banking

  • 76% of consumers use contactless payments at least weekly

  • 77% of bank customers using online/mobile banking to access accounts at least weekly versus 12% who do so in branch

  • 64% of bank customers use branches less than once a month or never

The COVID-19 pandemic is fast-tracking the shift from cash to digital payments as well as accelerating the move from branch to online banking according to the latest payments research published today by Banking & Payments Federation Ireland (BPFI).

Outlining the key takeaways from the findings, BPFI Chief Executive Brian Hayes explained: “The transformation in the banking and payments landscape that was already underway is being accelerated by Covid-19 as consumers fast change their behaviour towards technology and move away from traditional banking and payments activities Our latest payments research which was conducted at the end of April during the lockdown period shows that the current pandemic is undoubtedly fuelling a change in consumers behaviour toward digital payments and online banking and away from branches.”

Adoptions rates of digital payments and banking across the generations

“A total of 92% of all adults have now used contactless payments and 76% of consumers say they are using it on at least a weekly basis. Payments through smartphones are a fast-growing feature of shopping in Ireland particularly among 18-24 year olds who are the biggest adopters of this technology. A total of 43% of consumers are using their smartphones in shops at least weekly, while 44% of consumers are making payments via online/mobile banking with the same frequency. These are significant numbers and interestingly we are seeing the increase in adoption rates right across the generations. And while in the current environment some of this behaviour is being driven by hygiene concerns in terms of using contactless, and by necessity in terms of paying online, it ultimately means that we can expect an acceleration in the rate of adoption of these technologies as we move into a post-COVID landscape.”

Cash withdrawals down 56%

With the increased emphasis on contact-free and online payments due to COVID there has been a sharp drop in cash withdrawals which are less than half of normal levels. And while cash is still a preferred choice for many consumers it is being out performed by card, contactless and smartphone payments. The research shows that when shopping for groceries 63% of consumers preferred to use a card with a pin or a contactless card compared to 27% who preferred to use cash. And while 47% of people said they preferred to pay in cash when at a café/coffee shop, 50% expressed a preference for a card, smartphone or mobile payment option.

Bank branches on the decline as online banking grows

Changes in how we bank post-COVID are also evident from the research which shows that up to 17% of people expect to use their bank branch less once the COVID restrictions have been lifted. This is underlined by the increasing gap illustrated in the research between online and branch banking with up to 77% of bank customers using online and mobile banking to access their account on at least a weekly basis compared to 12% who do so in their branch. A total of 64% of those surveyed said they used their branch less than once or month or never to access their bank account.

Evaluating the trends demonstrated by the research Mr Hayes added: “The impact of COVID-19 has accelerated trends that we have been seeing emerge for many years with a significant uplift in the use of digital channels and electronic payments.  While many consumers had already embraced new and innovative electronic payment methods, COVID-19 has resulted in a societal shift towards electronic payment options.  As COVID-19 is likely to be with us for some time to come it is likely that the changes in consumer behaviour will remain and drive long-lasting reduction in the volumes of paper based options such as cash and cheque. However, the choice will always remain with the consumer.  It will certainly be interesting to watch the trends further evolve as economies start to reopen.”

 

Editor’s Note: BPFI commissioned Coyne Research to survey a nationally representative sample of 1,000 Irish adults online between the 22nd – 28th April 2020. Cash withdrawals data is based on BPFI analysis of Central Bank of Ireland data on card usage.

Notes: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has some 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Head of Communications, 087 9016880 or jillian.heffernan@bpfi.ie

Consumers more likely to continue shopping online for clothes, electronic goods and books after Covid restrictions are lifted

Consumers are more likely to continue shopping online for clothes, toys and electronic goods after Covid restrictions have been lifted according to new national survey conducted by Banking & Payment Federation Ireland (BPFI). The survey, which looks at consumer’s current online shopping habits and how these might change post restrictions also found that Irish adults shopping for groceries, hardware and DIY products as well as newspapers and magazines are less likely to do so online once the restrictions are eased.

On average, the survey found that, Irish adults shop online 44 times a year with over one in three (35%) Irish adults claiming to shop online on at least a weekly basis. The survey shows that men shop online more frequently than women (50 times a year vs. 38 times a year), and Millennials (25-37 year olds) shop online more than any other age group.

Looking at how consumers who have shopped online expect their shopping habits to change after the current Covid restrictions have been lifted, some 31% are more likely to continue to shop online for clothing/sports goods and 26% are more likely to shop online for toys/games or films/music/books after the restrictions are lifted. By contrast, more than one in five of those who have shopped online for groceries, hardware/DIY or newspapers/magazines are less likely to shop online for these products.

The survey highlights that while both men and women claim they are more likely to continue to shop online for clothes, a higher proportion of men than women are more likely to shop online for games and films/books/music post restrictions.

Looking at behaviours across the various age groups, Millennials (25-37 year olds) and Gen X (38-53 year olds) are much more likely to continue to shop online for clothes and electronic goods post restrictions.

By contrast, those over 54 years of age (Baby Boomers) are less likely to shop online in most categories with the exception of clothing/sports goods and films/books/music. However, even in those categories, no more than one in five Baby Boomers are likely to shop more online.

Regional and generational differences

With further analysis from the survey highlighting that 69% of Irish adults shop online at least once a month, in line with salary payments, it also shows that the proportion of those shopping online drops as consumers get older and varies significantly by region – 76% in Dublin vs 64% in Connacht/Ulster.

Speaking about today’s findings BPFI Chief Executive, Brian Hayes said: “Online shopping has seen rapid growth in recent years, with almost €5.8 billion in e-commerce sales on credit and debit cards in Q1 2020 alone according to the Central Bank of Ireland. The scale of this is further demonstrated when you consider that e-commerce accounted for 41.8% of card spend in that quarter, up from 31.3% only five years earlier. Traditional ways of purchasing are changing rapidly, and our findings today emphasize that the shift to online shopping will be further fuelled by the current pandemic which will have a lasting impact in terms of reshaping consumers shopping habits and preferences.”

 

Editor’s Note: BPFI commissioned Coyne Research to survey a nationally representative sample of 1,000 Irish adults online between the 22nd – 28th April 2020.

Notes: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has some 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Head of Communications, 087 9016880 or jillian.heffernan@bpfi.ie

Statement by Banking and Payments Federation Ireland (BPFI) following meeting with An Taoiseach, Leo Varadkar

The CEOs of the five retail banks (AIB, Bank of Ireland, KBC, Permanent TSB and Ulster Bank DAC) and their representative body (BPFI) met with An Taoiseach Leo Varadkar this afternoon, along with the Minister for Finance and Public Expenditure, Paschal Donohoe, and the Minister for Business, Enterprise and Innovation, Heather Humphreys.

Speaking after the meeting BPFI CEO Brian Hayes said: “We very much welcome the discussions with An Taoiseach across a broad range of banking issues this afternoon. There was extremely constructive engagement with An Taoiseach and Ministers Donohoe and Humphreys, with much focus on the important role of banks in supporting mortgage holders and businesses through the immediate economic challenges.”

Mr Hayes said: “Banks will play a key role in assisting SMEs through the economic recovery period and will continue to work closely with the Department of An Taoiseach, the Department of Finance and the Department of Business, Enterprise and Innovation in providing that support, especially on the key issue of liquidity.”

Concluding he said: “Our collective efforts are focused on ensuring Irish SMEs and their employees have the support they require and that they are in a position to trade and rebuild their businesses as Irish and global economies re-open in the months ahead.”

 

Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Head of Communications, jillian.heffernan@bpfi.ie 087 9016880

More challenging period ahead as mortgage market activity looks set to be impacted by Covid-19 crisis

Mortgage approvals already tapering over the past 12 months due to affordability issues

Banking & Payments Federation Ireland (BPFI) has today published the latest figures from the BPFI Mortgage Drawdowns Report for Q1 2020 and BPFI Mortgage Approvals Report for March 2020.

The following are the key figures from the Mortgage Drawdowns Report for Q1 2020:

  • 8,728 new mortgages to the value of €1,996 million were drawn down by borrowers during the first quarter of 2020.
  • This represents an increase 1.8% in volume and 6% in value on the corresponding first quarter of 2019.
  • A comparison with the previous quarter (Q4 2019) shows a fall of 28.8% in volume and 27.9% in value but it should be noted that Q1 is typically the weakest quarter in any year and Q4 is the strongest.
  • First-time buyers (FTBs) remained the single largest segment by volume (50.4%) and by value (50.8%).

 

In addition, BPFI also published today the latest figures from the BPFI Mortgage Approvals Report for March 2020 The following are the key elements:

  • A total of 3,733 mortgages were approved in March 2020 – some 1,946 were for FTBs (52.1% of total volume) while mover purchasers accounted for 970 (26%).
  • The number of mortgages approved rose by 6.2% month-on-month but fell by 9.9% compared with the same period last year.
  • Mortgages approved in March 2020 were valued at €879 million – of which FTBs accounted for €463 million (52.7%) and €260 million by mover purchasers (29.5%).
  • The value of mortgage approvals rose by 6.5% month-on-month but fell by 4.5% year-on-year.

Speaking on the publication of the data, Brian Hayes, Chief Executive, BPFI said: “The latest figures from BPFI’s mortgage approvals and drawdown reports are broadly in line with what we would have expected to see in a pre-Covid landscape with the approvals figures in particular reflecting a tapering off in the mortgage market over the past 12 months due to the growing affordability challenge we have seen for buyers.”

“Looking ahead, there is no doubt that the period ahead is going to be challenging for the mortgage market and the housing market as a whole, given the changing conditions in the economy and its direct impact on incomes and employment.”

The BPFI Chief Executive said: “We expect to see the first effects of Covid-19 on the mortgage market coming through in April’s mortgage approvals figures which will be published at the end of May. The change in individuals’ financial and employment circumstances will have an impact on mortgage approvals, with banks taking a pragmatic and responsible assessment of all applications from both a borrower and lender perspective. Taking out a mortgage is a major undertaking for borrowers, and no lender wants to see a borrower under distress or difficulty, especially in these highly uncertain times.”

“As we navigate our way through these unprecedented times it will be necessary for both lenders and borrowers to take a realistic and pragmatic approach until such time as we have more clarity on the wider impact of the pandemic as a whole”, added Mr. Hayes

Commenting on the drawdown figures, Mr. Hayes said: “The drawdown data for the first quarter of 2020 shows an increase in both volume and value on the same period last year. The fall that has been recorded on a quarter-on-quarter basis is not surprising and reflects the seasonal nature we generally see at this time of year with Q1 typically the weakest quarter in any year and Q4 the strongest. This accounts for the fall in value and volume recorded in Q1 this year compared to the fourth quarter of 2019.”

The BPFI Mortgage Drawdowns and Mortgage Approvals reports can be viewed on the BPFI website here.

 

Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Head of Communications, jillian.heffernan@bpfi.ie 087 9016880

BPFI Comment on State supports for businesses

Commenting on the Government’s announcement of a suite of measures to further support small, medium and larger business that are negatively impacted by Covid-19 BPFI Chief Executive Brian Hayes said:

“A €2 billion COVID-19 Credit Guarantee Scheme is an important step in improving the serious liquidity challenges facing SMEs. Banks will immediately start working with relevant stakeholders including Government Departments and trade bodies with to view to ensuring that the operation of the scheme is as efficient as possible given the urgency of the liquidity situation. BPFI have already identified some of the key criteria which will be key to the operational efficiency of the scheme as part of our Economic Recovery Plan for SMEs published earlier this week and we will be focusing on those issues immediately.”

 

For further information please contact:
Olivia Buckley
Public Affairs Director
Tel: 087-6298113