Credit Unions Pray Auto, Home Loans Will Fuel Growth In 2013

Approximately 2 in 3 credit union executives see loan growth as the critical business issue facing their industry, and more than half of credit union leaders are pinning their hopes for growth on auto loans in 2013.
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According to a TransUnion survey among credit union executives at the CUNA Governmental Affairs Conference in February 2013, auto loans represent the biggest opportunity this year.

Over two-thirds of credit union leaders (68%) said loan growth was the biggest critical issue they were facing this year, 11% noted that regulation was their main concern. Technology/operation efficiencies (7%) and membership growth (6%) were also cited as major issues for 2013.

Credit union respondents said their biggest challenges to meeting loan growth goals are competition from large banks and captives (40%), regulation (27%) and the lack of prospects (17%).

Nearly all respondents were C-level managers and board members.

While the overwhelming majority of respondents believed auto loans will be the key to growth in 2013, the survey also revealed that 18% of credit union executives think mortgages represent the best opportunities for loan growth, and another 13% are focused on small business loans.

“Technology and analytics must be fully leveraged to help in acquisition efforts and to know how to best maximize members’ wallets at the right time in the customer lifecycle.”
— David Dodson, VP/TransUnion

“Loan growth is traditionally the biggest concern for credit unions, but it is interesting to see regulatory scrutiny and operational efficiencies called out as critical issues by some credit unions,” said David Dodson, VP of TransUnion’s credit union unit. “Credit unions realize that to effectively compete and grow in today’s market, technology and analytics must be fully leveraged to help in acquisition efforts and to know how to best maximize members’ wallets at the right time in the customer lifecycle.”

“Many credit unions are seeing that auto loans will offer great revenue opportunities, particularly since delinquencies continue to stay near historic lows,” Dodson added.

TransUnion’s latest auto loan Trend Data report found that 60-day auto loan delinquencies stand at 0.41% as of Q4 2012 and will likely remain around 0.40% at the end of 2013. Bank auto debt per borrower has risen for seven straight quarters, and it is expected to rise from $13,747 in Q4 2012 to well over $14,000 by the conclusion of this year.

TransUnion projects auto loan delinquencies to continue to remain low with balances rising for the remainder of the year, suggesting more new and used auto sales.

TransUnion also believes 60-day mortgage loan delinquencies will experience a double-digit percentage drop in 2013.

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