International Personal Finance Financial Inclusion and Wellbeing Report

1. International Personal FinanceFinancial Inclusion and Wellbeing Report Wave 3 Results April-May 2013

2. Contents Background & Method Economic Outlook Financial Holdings Use of Credit Services Standard of Living Conclusions & Recommendations

3. 1 Background & Method

4. IPF currently provides consumer credit to 2.5 million customers, across six international markets. The business offering is unique for the markets in which IPF operates. This project is designed to engage with IPF’s customer base, understand the issues they have and their feelings towards the society in which they live, and how they can be better represented in the political and commercial worlds. IPF wishes to use this research to enhance its unique position as a mouthpiece for the lower socio-economic demographic amongst key groups of decision-makers. This was the third wave to be run using the IPF panel Please note that any reference in commentary to ‘Czechs’ or ‘Hungarians’ specifically relates to IPF customers in those markets and not the population of the country as a whole Background Background & Method

5. Method The process was adjusted for this wave in order to invite new registrants as well as the existing panel Background & Method YES Take survey now Registration survey Invitation from IPF to register for the panel NO Take survey later Reminder to take survey No response Email invitation from YouGov to take Wave 3 Wave 2 survey Complete now Mexico only Happy to take survey Call from IPF inviting customer to take part in Computer Assisted Telephone Interview (CATI) Refused to take part IPF customers not previously invited IPF existing panellists IPF customers without email addresses

6. Provident Communities Background & Method

7. Weighting Background & Method For wave 3, we have formalised the weighting process so that the data contained in this report is reflective of IPF’s customer book1. IPF customer book is the split by country of the customer database2. Market-level weighting shows the weighting used in the individual country tables3. Overall-level weighting are the weights used in the overall tables to emphasise the importance of each group in the customer book as a whole

8. 2 Economic Outlook

9. Cost of living is of most concern to half of IPF customers Economic Outlook • Unemployment and crime are other elements that worry people • Concern over the cost of living increases with age from 38% of 18-24 year-olds to 59% of those 55+ Which of these is of most concern to you currently? Base: All (9,960)

10. A third of people cite increases in food prices as most responsible for the rise in the cost of living Economic Outlook • A significant group of others, particularly in Romania, believe that the rise in utility prices is the main cause • Women are significantly more likely than men to blame the rise on the increase of food costs (36% vs. 29% of men) • One in ten IPF customers blames increased transport costs Which of the following would you say is most responsible for the increase in the cost of living? Please select one answer only. Base: All (9,960), CZ (1,796), HU (4,835), MX (542), PL (915), RO (1,478), SK (394)

11. Two in three Czechs are most concerned about the cost of living Economic Outlook • Czechs in late teens/early 20s are those most concerned about losing their job • 5% of men claim to have no concerns compared to just 2% of women Which of these is of most concern to you currently? Base: All in Czech Republic (1,796)

12. 80% of Hungarians are concerned over the cost of living, the highest of all markets Economic Outlook • Contrasting to the IPF customer book as a whole, concern over the cost of living decreases with age • Loss of jobs and cost of health services are of very little concern comparatively Which of these is of most concern to you currently? Base: All in Hungary (4,835)

13. Mexico, out of trend with IPF’s European markets, is most concerned about local crime Economic Outlook • One in three worry about neighbourhood crime, compared to only one in ten in IPF’s overall customer book – this may be driven by one of the highest murder rates worldwide • Cost of living worries significantly more men than women Which of these is of most concern to you currently? Base: All in Mexico (542): Online (305) + CATI (237)

14. Concerns of Poles broadly reflect those of the IPF customer book Economic Outlook • Cost of living remains of most concern, with loss of job a worry for one in four people • This figure reflects an unemployment rate of 14% in Poland, which is gradually decreasing after a high of 20% in 2003* Which of these is of most concern to you currently? Base: All in Poland (915) * http://www.tradingeconomics.com/poland/unemployment-rate

15. Cost of living is most concerning for Romanians, increasing with age from half of 18-24s to two-thirds of those 55+ Economic Outlook • Loss of jobs follows a reverse trend and unsurprisingly decreases with age • Romanians are the nation most concerned with the cost of education Which of these is of most concern to you currently? Base: All in Romania (1,478)

16. Slovakians tend to have the same concerns as their Czech neighbours Economic Outlook • However, they are slightly more concerned about crime in their neighbourhood • Cost of living is also of most concern in Slovakia, although levels are the same amongst young and old, with the exception of those aged 45-54 Which of these is of most concern to you currently? Base: All in Slovakia (394)

17. Just under half of IPF customers believe their national economic situation will deteriorate in the next 12 months Economic Outlook • A further three in ten foresee stability in their countries • Poles (57%) and Slovakians (54%) are the customers whose outlook is most negative • Romanians (34%) and Mexican (23%) stand out as people who are quite positive about the immediate future Thinking of the next twelve months, do you expect the economy in your country to get better or worse? Base: All (9,960), CZ (1,796), HU (4,835), MX (542), PL (915), RO (1,478), SK (394)

18. Two in five IPF customers hope that their household financial position will improve in the next 12 months Economic Outlook • This contrasts with the feeling that national economies will not improve in the opinion of the majority • Positivity is driven by increased earnings, new jobs and changing personal situations • Of the one in five who think their household will get worse, 72% put this down to living costs Thinking now of the financial position of your own household, over the next twelve months, do you think your financial position will get better or worse? You say that you think your financial position will get better/worse, which of these could explain why things will change? Base: All (9,960); Better (3,126); Worse (2,448)

19. Over half of Mexicans feel that their household economic situation will get better in the next 12 months Economic Outlook • All other markets fall below the IPF customer average • Czechs and Hungarians are those most negative about the next 12 months, and this feeling is most driven by increases in the cost of living Thinking now of the financial position of your own household, over the next twelve months, do you think your financial position will get better or worse? You say that you think your financial position will get better/worse, which of these could explain why things will change? Base: All (9,960), CZ (1,796), HU (4,835), MX (542), PL (915), RO (1,478), SK (394)

20. Household economic situation summary Economic Outlook Almost half of people believe their country’s economic situation will decline in the next 12 months Thecost of living is the predominant worry of IPF customers, who foresee this driving national economic deterioration Primary concerns in driving this are the price rises in food, utilities and transport Other concerns for people are crime in local area(particularly Mexico) and unemployment Women are more likely than men to highlight the rise of food prices as a key contributor to increased living costs Levels of positivity are driven by prospective increases in earnings

21. 3 Financial Holdings

22. Almost half of IPF customers do not have a bank account. Only 9% would want one given the opportunity Financial Holdings • One in five have no retirement savings plan, while insurance is also not high on list of financial products IPF customers own • Life insurance is the product most sought-after for those who do not have it Which of these products do you have? Choose as many as apply. Which additional financial products would you choose to have if your financial situation allowed it? Choose as many as apply. Base: All (9,960)

23. Two-fifths of Czechs have retirement savings plans in place, double the average for IPF customers worldwide Financial Holdings • Seven in ten Czechs have a bank account but only one in ten have savings accounts • ASU insurance tops the list of most-desired financial products Which of these products do you have? Choose as many as apply. Which additional financial products would you choose to have if your financial situation allowed it? Choose as many as apply. Base: CZ (1,796)

24. More than three in four Hungarians have bank accounts; only 4% have a savings account Financial Holdings • Home ownership seems to be relatively high in Hungary with two in five owning a mortgage and just under half holding home contents insurance Which of these products do you have? Choose as many as apply. Which additional financial products would you choose to have if your financial situation allowed it? Choose as many as apply. Base: HU (4,835)

25. Bank account ownership is very low in Mexico, with fewer than one in five holding the product Financial Holdings • Very few would actually take an account if given the opportunity • Life and ASU insurances are products that Mexicans aspire to have, as are savings accounts Which of these products do you have? Choose as many as apply. Which additional financial products would you choose to have if your financial situation allowed it? Choose as many as apply. Base: MX (542)

26. Almost half of Poles have life insurance in place, the highest figure of all IPF markets Financial Holdings • A further quarter would like to have life insurance if they were able to • Three in four have a bank account and a quarter hold a savings account Which of these products do you have? Choose as many as apply. Which additional financial products would you choose to have if your financial situation allowed it? Choose as many as apply. Base: PL (915)

27. Perhaps worryingly, Romanians have more credit cards than any other financial products Financial Holdings • Romanians would like to be more financially secure, with people wanting savings accounts, life insurance and retirement savings plans Which of these products do you have? Choose as many as apply. Which additional financial products would you choose to have if your financial situation allowed it? Choose as many as apply. Base: RO (1,478)

28. Slovakians have the highest level of bank account ownership of all IPF markets Financial Holdings • Life insurance and retirement savings plans are also owned by at least one in three Slovakians Which of these products do you have? Choose as many as apply. Which additional financial products would you choose to have if your financial situation allowed it? Choose as many as apply. Base: SK (394)

29. Only one in ten Czechs have savings; 70% of people have Kč30,000 or more in debts Financial Holdings • 85% are repaying Kč1,500 or more each month and only 2% are certain they have nothing to pay each month Cash savings Total debt Repayments Do you have any cash savings? If so how much? Thinking now of all your borrowings, which of the following ranges would your total debt fall into? How much do you spend each month on repaying credit and loans? Base: All in Czech Republic (1,796)

30. Only 3% of Hungarians have savings, with almost half having 400k Forints or more in debts Financial Holdings • Only 4% have no debts • Three quarters of Hungarians are repaying 20,000+ Forints each month Cash savings Total debt Repayments Do you have any cash savings? If so how much? Thinking now of all your borrowings, which of the following ranges would your total debt fall into? How much do you spend each month on repaying credit and loans? Base: All in Hungary (4,835)

31. Four in five Poles are repaying more than 200 Zloty per month Financial Holdings • This is understandable in a market where only 4% of IPF customers have no debts • 13% of Poles have savings Cash savings Total debt Repayments Do you have any cash savings? If so how much? Thinking now of all your borrowings, which of the following ranges would your total debt fall into? How much do you spend each month on repaying credit and loans? Base: All in Poland (915)

32. Two-thirds of Romanians have no savings, the lowest of all IPF markets Financial Holdings • Half have debts between one and five thousand lei with two thirds repaying more than 250 lei each month Cash savings Total debt Repayments Do you have any cash savings? If so how much? Thinking now of all your borrowings, which of the following ranges would your total debt fall into? How much do you spend each month on repaying credit and loans? Base: All in Romania (1,478)

33. Half of Slovakians hold debts of over €1,000; only 3% have no debts Financial Holdings • Over half of people need to repay between €60 and €300 each month • Two-thirds do not hold savings Cash savings Total debt Repayments Do you have any cash savings? If so how much? Thinking now of all your borrowings, which of the following ranges would your total debt fall into? How much do you spend each month on repaying credit and loans? Base: All in Slovakia (394)

34. Financial Holdings summary Financial Holdings BANK Only 54% of IPF customers actually hold a bank account 1234 1234 1234 1234 Mr Smith Credit card ownership is higher than any form of savings Levels of savings are generally lowacross all European markets and very few people are debt-free Despite this, repayments for the majority appear to be at an affordable level There are positive levels of aspiration towards savings, long-term investments and retirement planning, provided the circumstances are correct People are also aspiring to protect themselves against the economic situation with both Life and ASU insurance

35. 4 Use of credit services

36. More than half of IPF customers believe that it has become more difficult to attain credit in the last few years Use of credit services • Hungarians and Romanians are the people who claim the process has become more difficult than any others • A quarter of Slovakians and Mexicans assert that getting credit has become easier • Those most worried about the cost of living are most likely to believe that attaining credit has become more difficult Would you say that it has become easier or more difficult to get credit in the last two to three years? Base: All (9,960), CZ (1,796), HU (4,835), MX (542), PL (915), RO (1,478), SK (394)

37. Six in ten IPF customers believe that they would have trouble trying to borrow money from a mainstream bank or lender Use of credit services • However, a quarter think they would be able to, especially those in Slovakia • Hungarians feel they would be least likely to attain credit in this way • Females and those aged 55+ are the most likely to believe they would struggle How easy do you think it would be for you to borrow [local currency] from a mainstream bank or lender? Base: All (9,960), CZ (1,796), HU (4,835), MX (542), PL (915), RO (1,478), SK (394)

38. Nine in ten IPF customers would be prepared to take a loan; half of these would do so in order to pay for unexpected costs Use of credit services • Housing costs and purchase of household appliances are also items people would take a loan to pay for, even given greater consideration than health costs • Only 4% of 18-24s would not take a loan compared to 12% of those aged 55+ Would you consider taking a loan for the following? Choose as many as apply. Base: All (9,960)

39. A third of Czechs would use loans to purchase household appliances; significantly higher amongst women than men Use of credit services • Unexpected costs are still the expenses that most would consider taking a loan for • Consideration for taking a loan for housing costs decreases with age in line with life stage Would you consider taking a loan for the following? Choose as many as apply. Base: CZ (1,796)

40. A quarter of Hungarians would not take a loan for any costs outside of the essential Use of credit services • Unexpected costs and housing costs are those Hungarians would be most prepared to take loans for • 12% of men would be prepared to take a loan for the purchase of electrical devices, compared to only 7% of women Would you consider taking a loan for the following? Choose as many as apply. Base: HU (4,835)

41. Mexicans would be significantly more likely than their European counterparts to take out loans to pay for education or healthcare Use of credit services • Half of 18-24 year-olds would do so in order to pay education fees • 39% of women would take a loan for healthcare compared to only 33% of men Would you consider taking a loan for the following? Choose as many as apply. Base: MX (542)

42. Poles are the European group most likely to take a loan in order to pay for food Use of credit services • Men are significantly more likely than women to take a loan for unexpected costs (49% vs. 38% respectively) • A third of Poles would use a loan for housing costs or purchase of household appliances Would you consider taking a loan for the following? Choose as many as apply. Base: PL (915)

43. For Romanians, purchase of household appliances is almost as likely as unexpected costs to warrant taking a loan Use of credit services • Men and young people would prioritise unexpected costs, while women are more likely to use a loan for household appliances Would you consider taking a loan for the following? Choose as many as apply. Base: RO (1,478)

44. Slovakians are the group most likely to take a loan in order to pay for unexpected costs Use of credit services • A quarter of individuals would use a loan for housing costs: 22% of men compared to 30% of women • Preparedness to use a loan to pay for healthcare increases with age Would you consider taking a loan for the following? Choose as many as apply. Base: SK (394)

45. The overwhelming majority of IPF customers claim to use credit in a sensible way, borrowing only when necessary Use of credit services • This is manifested by 93% thinking before they borrow, 87% only using credit in emergencies and 84% not borrowing unless they know they can afford repayments • Comfort in affording credit repayments appears to decrease with age Please indicate whether you agree of disagree with each of the following statements… Base: All (9,960)

46. One in five Czechs tend to use credit on impulse, significantly higher than the 16% of IPF customers as a whole Use of credit services • 69% of men claim they can comfortably afford credit repayments compared to only 63% of women Please indicate whether you agree of disagree with each of the following statements… Base: All in Czech Republic (1,796)

47. Only four in ten Hungarians can comfortably afford to repay their credit loans Use of credit services • This compares to seven in ten of the overall IPF customer book • Impulsive credit use is significantly higher amongst men compared to their female counterparts, who tend to prefer emergency credit use only Please indicate whether you agree of disagree with each of the following statements… Base: All in Hungary (4,835)

48. 86% of Mexicans can comfortably afford their credit repayments Use of credit services • Only one in ten use credit on impulse, a more restrained proportion than all European markets • Only 14% will usually borrow as much as the lender will allow, compared to 34% of IPF customers worldwide Please indicate whether you agree of disagree with each of the following statements… Base: All in Mexico (542): Online (305) + CATI (237)

49. Just a quarter of Poles use credit as part of the way they manage their budget Use of credit services • However, 20% tend to use credit on impulse, more than most other markets • 45% will borrow as much as the lender will give them, significantly higher than the IPF average Please indicate whether you agree of disagree with each of the following statements… Base: All in Poland (915)

50. Romanians seemingly treat credit differently to most of their counterparts in other IPF markets Use of credit services • This is demonstrated by almost half of Romanians using credit as part of their budget management • Nine in ten do not borrow more than they can repay (91% vs. 84% of IPF average) Please indicate whether you agree of disagree with each of the following statements… Base: All in Romania (1,478)