CRIF market barometer: in Austria, credit risk expected to increase in 2019

CRIF GmbH – a leading provider of business information and data-based technologies in Austria - once again surveyed Austrian banking experts on the development of credit risk, and provides a look back at 2018 in its market barometer as well as a forecast for 2019.

The result: the expectations of Austrian banking experts for 2018 have largely been confirmed. For 53% of them, the actual credit risk has remained the same as 2017, whereas 48% expected it in the last survey. While 17% expected the credit risk for 2018 to rise in the last survey, only 11% could confirm it. By contrast, the experts were less optimistic about the future: for 2019, 44% expect general credit risk to increase (2018: 17%) and only 8% believe that risk will fall (2018: 35%).

"The reason for this subdued forecast is that after a year of significant economic growth, this is likely to slow down again in 2019 and the years ahead. Banks are also becoming more cautious about lending - both to private individuals and to corporate clients," explained Jürgen Krenn, Head of Financial Sales at CRIF.

Increased credit risk also expected in the private and corporate customer sector

Looking at the retail banking segment, it turns out that 2018 was less positive than expected. While only 6% of the experts in the last survey expected risk levels to rise in 2018, credit risk actually increased according to 18% of the experts. According to forecasts for 2019, the overwhelming majority of experts expect a riskier year in the retail banking sector. 38% expect credit risk to increase - only 6% thought this was going to be the case in 2018 - and only 6% of experts predict that risk levels will fall in 2019 (2018: 39%).

In the corporate banking segment, the actual credit risk in 2018 turned out to be somewhat more positive than expected. In the previous year, 17% anticipated rising risk for 2018, but it only actually occurred for 11% of the experts. Opinions differ for 2019: 44% expect the risk level to remain unchanged, while 44% forecast an increase. 11% of the experts expect a decline in risk in the corporate segment in 2019.

Increase in the importance of internal and external data

In the survey, CRIF also surveyed the impact of using internal and external data sources for credit risk assessments. Experts who rely mainly on internal data for risk assessment were more risk averse in 2018 than those who mainly rely on external data sources. However, unlike previous years, according to the experts, in 2019 the importance of internal data for risk assessment will increase. The importance of external industry data also continues to increase: for 79% of respondents, the use of industry data for risk assessment is very important. In 2018, only 60% said so.

Rising investment intensions for 2019

CRIF also consulted banking experts on planned additional investments* in credit risk management. The result: in 2019, investments will increase significantly in all areas. 83% of the experts are planning additional investments in new technology this year (2018: 47%), 31% in employees (2018: 11%) and 21% in data (2018: 18%).

*multiple answers were possible