South Africans borrowing less, more in good standing – consumer credit report

Consumers are borrowing a little less and more are in good standing according to a consumer credit report from the National Credit Regulator for the second quarter of the year. But consumers still borrowed more than last year, while most credit applications were rejected.

The National Credit Regulator (NCR) Consumer Credit Market Report released on Wednesday shows that the total value of new credit granted decreased from R159.16 billion to R157.37 billion, a decrease of 1.13% when compared to the previous quarter, but an increase of 7.14% compared to the second quarter of 2021.

The number of credit applications increased from 13.10 million to 13.12 million in June 2022, an increase of 0.12%. This shows that more people applied for credit, but the rejection rate was 66.70%, a clear indication that people who need credit often do not qualify for it.

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Banks still own most consumer credit

The banks’ share of total credit granted was R130.16 billion (82.71%), retailers R6.46 billion (4.10%), non-bank financiers R9.99 billion (6.35%) and other credit providers R10.76 billion (6.84%). Other credit providers primarily consist of pension-backed, developmental, micro-loan and agricultural lenders, as well as insurers, non-bank mortgage lenders and securitised debt.

The fact that banks still own most of the credit shows that it is still mainly people who qualify for bank accounts that get credit, which raises the question of financial inclusion, with the majority of South Africans remaining unbanked.

The total outstanding consumer credit was R2.19 trillion, representing an increase of 1.13% compared to the first quarter. Mortgages accounted for R1.14 trillion (52.31%), secured credit agreements for R479.87 billion (21.96%), credit facilities for R286.65 billion (13.12%), unsecured credit for R216.31 billion (9.90%), developmental credit for R57.45 billion (2.63%) and short-term credit for R1.86 billion (0.09%).

The value of mortgages granted increased by 3.22% compared to the first quarter from R55.71 billion to R57.50 billion. Secured credit granted decreased from R47.41 billion in the first quarter to R45.14 billion, a decrease of 4.78%, but unsecured credit agreements increased from R26.69 billion in the first quarter to R26.98 billion, an increase of 1.10%.

Credit facilities that mainly consist of credit cards, store cards and bank overdrafts, decreased from R24.71 billion in the first quarter to R24.27 billion (a decrease of 1.79%). Short-term credit showed an increase of 9.87% from R1.99 billion in the first quarter to R2.19 billion.

Developmental credit decreased by 51.60% from R2.65 billion to R1.28 billion.

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Credit bureau data

According to the NCR Credit Bureau Monitor, credit bureaus held records for 26.52 million credit-active consumers, an increase of 0.15% compared to the 26.48 million in the previous quarter. Consumers classified in good standing increased by 197 993 to 16.63 million consumers, which is 62.73% of the total number of credit-active consumers.

The number of credit-active accounts increased from 84.73 million in the first quarter to 85.49 million, while the number of impaired accounts decreased from 19.59 million (23.12%) to 19.26 million (22.53%), a decrease of 327 075 compared to the first quarter and 598 021 compared to the second quarter of last year.

While 71.44% of accounts were classified as current, 6.03% missed one or two installments, 17.21% missed three or more installments, 4.39% had adverse listings and 0.93% had judgments or administration orders.