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Figures show R2bn drop in unsecured credit

Impact of African Bank collapse evident.

JOHANNESBURG – There’s been a near R2 billion reduction in unsecured credit granted between the second quarter of 2015 and the second quarter of 2014, highlighting the impact of African Bank’s collapse on the volume and value of personal loans floating around South Africa.

Unsecured credit granted between the first and second quarters of this year increased by R44.5 million (0.26%) to R17.4 billion, but decreased by R1.9 billion year-on-year, the National Credit Regulator’s (NCR) Credit Bureau Monitor (CBM) shows.

The growth reported between quarters is also at a much slower pace than previous years. For instance, between the first and second quarters of last year, unsecured credit grew by 2.64% to R19.3 billion.

Total outstanding unsecured loans decreased by R9.5 billion between the quarter ending June 2014 and the quarter ending June 2015 – a year-on-year fall of 5.53%.

Between March 2015 and June 2015 outstanding unsecured loans fell by 2.38% (some R4 billion), compared with a mere 0.45% reduction between the same quarters last year.

Clearly, credit taps have been turned off. The collapse of African Bank between the reporting periods – which had a loan book in the region of R60 billion at March 2014 – has undoubtedly impacted these numbers.

In the wake of the unsecured lender’s collapse and curatorship, most lenders adopted even more conservative credit granting policies than what they had begun applying, arguably, many months before African Bank’s spectacular losses were made public.

Capitec CEO Gerrie Fourie said on Tuesday that in the wake of platinum sector strikes and African Bank’s demise, the Stellenbosch-based bank made a deliberate decision to grant short-term loans. “I think it was the right call. We are looking now to opening up slightly in the longer term, so we’ve seen opportunities and we have already opened up in certain areas,” Fourie said.

Long-term loans are classified as having terms of between 48 and 84 months. Capitec grants maximum loans of R250 000. “The biggest need in South Africa is the housing market. Up to R500 000 is where you need to be,” Fourie added.

The NCR’s CBM recorded a R1.1 billion drop (2.92%) in secured credit – excluding mortgages and dominated by vehicle finance – between March 2015 and June 2015. This category increased R627 million year-on-year.

The value of new mortgages granted in the second quarter of 2015 showed a year-on-year increase of R3.1 billion (9.37%).

Get your free credit report, says NCR

At June 2015, credit bureaus held records for 23.37 million credit-active consumers.

Consumers classified in good standing – i.e. having not missed more than one or two instalments and having no adverse listings or judgements – increased by 139 000 to 12.84 million consumers.

As a percentage of credit active consumers, this is a very slight decrease on the previous year.

While the number of consumers with impaired records increased by 124 000 from to 10.53 million over the quarter, the number of impaired accounts decreased from to 21.71 million – a decrease of 670 000 quarter-on-quarter and 429 000 year-on-year.

An impaired account is one which is three or more payments in arrears, or which has an adverse listing, judgement or administration order.

Thirteen percent more consumers made enquiries on their credit reports compared with the same period last year, but this accounts for just 13 million of the 413 million enquiries made on consumer credit records. “Consumers are entitled to one free credit report annually from the bureaus. If they need more reports within the same year, they can pay an amount that does not exceed R20 excluding VAT,” said NCR CEO, Nomsa Motshegare.

To access your free credit report, visit any of the following websites: www.transunion.co.za; www.experian.co.za; www.compuscan.co.za; www.xds.co.za.

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