Of the 21.71 million credit active consumers,55.8 % were in good standing an increase of of 1.4 million consumers .Photo by Simphiwe Mbokazi

Johannesburg - The slowdown in the unsecured lending environment had been attributed to amendments to the National Credit Act accompanied by the initiatives of banks and retailers to tighten their own credit-granting criteria, industry players said yesterday.

Of the 21.71 million credit-active consumers, 55.8 percent were now in good standing, which represented an increase of 1.4 million consumers over the past four years, the National Credit Regulator (NCR) said in its latest report.

In its Credit Bureau Monitor report for the quarter to March, the NCR recorded a 3.9 percent quarter-on-quarter increase in the number of credit-active consumers.

It said the number of consumers with impaired records decreased by 329 000 to 9.60 million, from 9.93 million in the previous quarter, and 32.4 percent of consumers were three months or more in arrears.

The number of accounts rose from 73.18 million in the previous quarter to 77.18 million.

The regulator also found that the number of impaired accounts decreased. Of the accounts on record, 57.9 million were classified as being in good standing.

About 58.9 percent of credit applications were rejected, “a sign that there was still an appetite for credit, however, retailers and banks had been in fact turning the applications down”, an economist who wished not to be named said.

Nomsa Matshegare, the chief executive of the NCR, said the latest statistics indicated a seasonal decline in the value of new credit extended to consumers. She also encouraged consumers to use credit responsibly and “to live within their means”.

The NCR’s Consumer Credit Market Report showed that new unsecured credit agreements decreased from R21.61 billion in the quarter to December last year to R18.8bn in the March quarter. This was the first decline in years in new unsecured credit agreements, said Deborah Solomon of the Debt Counselling Industry.

“The decrease in this part of the credit industry tells us that the ‘bubble’ has now been taken into account and its effects have been felt by the economy,” Solomon said.

She added that South Africa was likely to see a further declines in unsecured lending for another 36 months.

Trade and Industry Minister Rob Davies was praised by Solomon, who said he was instrumental in making sure that the National Credit Amendment Act was passed.

“This bill will prevent banks from self-regulation when it comes to granting credit and with industry consultation, the department will make new guidelines. These are some of the few crucial amendments.”

However, the slowdown in unsecured credit has caused harm for most credit retailers, especially in the clothing and furniture sectors.

A number of credit-dependent clothing retailers and furniture retailers have seen a decline in credit applications, as well as in credit sales.

The Consumer Credit Market Report also indicated that the total value of new credit granted decreased to R105bn in the quarter to March from R118.6bn. The number of applications for credit decreased from 10.7 million in the December quarter to 9.7 million in March. The rejection rate increased to 58.96 percent.

The regulator said banks accounted for R84.7bn of the total credit granted to consumers, while retailers accounted for R3.8bn and non-bank financiers R6.51bn.

The total outstanding gross debtors book of consumer credit for the quarter stood at R1.55 trillion, with mortgages contributing 53 percent.

The regulator said one of the most significant trends observed for the quarter included a decrease in the number of mortgages granted. - Business Report