Filomena Scalise

The rate of growth in credit extension to the private sector (PSCE) in SA is expected to have registered a 6.92% year-on-year (y/y) growth in January from a 6.21% y/y growth in December, according to a survey by I-Net Bridge.

Forecasts among nine leading economists ranged from 6.27% to 7.6% growth in PSCE.

SA's broad M3 money supply aggregate growth rate, meanwhile, was expected to have registered 8.6% y/y in January from 8.21% before.

Gina Schoeman, Absa Capital economist, said they expected PSCE to grow 7.1%.

“We will be keeping a close watch on unsecured lending, personal loans mostly, as this item - while making up only about 3% of overall private sector credit extension - has been growing in excess of 20% y/y over recent months,” said Schoeman.

Meanwhile, Standard Bank research strategist Thabi Leoka said they expected a moderate increase in PSCE. Credit growth was expected to have increased, propped up by growth in other loans and advances, Leoka said. The other loans and advances category accounted for about 33% of total PSCE.

“Growth in this category is often used as a proxy for corporate credit demand,” she said.

Total credit extension to households was also expected to pick up, reflecting seasonal spending patterns, according to Standard Bank.

Leoka said, however, that the contraction in residential buildings completed and building plans passed had remained sluggish throughout 2011, pointing to a fragile residential property sector.

“This also impacts on growth in mortgage advances, which has remained uninspiring in 2011,” she noted.

The SA Reserve Bank will release the latest M3 and PSCE data at 08:00 on Wednesday, February 29. - I-Net Bridge