South Africa's credit growth in December slows to 6.14% year-on-year
JOHANNESBURG - Growth in private sector credit in South Africa in December slowed to 6.14% year-on-year from 6.60% in the previous month, central bank data showed on Thursday.
Expansion in the broadly defined M3 measure of money supply also slowed, to 6.19% in December from 7.35% in November.
Siphamandla Mkhwanazi, senior economist at FNB, said, "While households’ appetite for credit remains relatively intact, uptake of consumption credit (unsecured credit) continues to decelerate and registered 9.7% y/y from 10.8% in the previous month. This is the lowest print since the May 2019 elections. We attribute this to consumers’ worsening credit profile amid a challenging macroeconomic environment that has seen lenders turning more risk averse. Nevertheless, growth in unsecured credit uptake remains relatively strong, with general loans and credit card advances registering 11.2% y/y and 9.5% y/y respectively in December (from 11% and 12.3% in November)."
Mkhwanazi added, " Mortgage advances remained steady at 5.0% y/y and continued to outpace average house price growth (3.5% y/y in December). This is mainly driven by intensified competition among financial institutions in a thin volume market. Property registrations data shows that this upsurge in mortgages has been more concentrated in the middle- to upper-price segments, while lending to the lower end remains relatively conservative."
"Over the medium term we expect credit extension to continue growing, albeit at a slower pace. The rising unemployment, weak income growth and deterioration in consumer credit standing will constrict households’ capacity to take up more credit. Nevertheless, auxiliary support will come in the form of lower borrowing costs," Mkhwanazi concluded.
BUSINESS REPORT ONLINE / REUTERS