{"id":721966,"date":"2023-09-29T12:56:34","date_gmt":"2023-09-29T10:56:34","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=721966"},"modified":"2023-09-29T12:56:34","modified_gmt":"2023-09-29T10:56:34","slug":"south-africans-still-hungry-for-credit-cards","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/721966\/south-africans-still-hungry-for-credit-cards\/","title":{"rendered":"South Africans still hungry for credit cards"},"content":{"rendered":"\n

Households in South Africa are increasingly turning to credit cards despite the overall decline in credit extension across the country. <\/p>\n\n\n\n

According to Nedbank’s latest assessment of the broad money supply and credit extension in South Africa, household credit was severely impacted by weaker household finances, higher interest rates, delicate consumer confidence and cautious lenders. <\/p>\n\n\n\n

Household credit thus eased from 6.1% in July to 5.8% in August, with the vast majority of components seeing a drop. <\/p>\n\n\n\n

Personal loans saw the largest year-on-year decline, dropping from 6.4% in July to 5.6% in August. This was followed by overdrafts, which dropped from 3.3% to 2.8%. <\/p>\n\n\n\n

However, credit card usage climbed from 9% in July to 9.1% in August.<\/strong> <\/p>\n\n\n\n

Since November 2022 (7.6%), there has been a substantial rise in credit card usage in South Africa amidst the challenging economic environment. <\/p>\n\n\n

\n
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Source: Nedbank <\/figcaption><\/figure><\/div>\n\n\n

Expectations <\/strong><\/p>\n\n\n\n

Nedbank’s economists added that they expect credit growth to ease off a higher base and predicted the challenging economic environment for the rest of the year. This downward pressure will affect demand from both households and companies. <\/p>\n\n\n\n

“On the household side, the cumulative impact of the interest rate hikes will continue to filter through the economy, keeping debt service costs high and compelling households to be cautious of spending and incurring additional debt,” Nedbank said. <\/p>\n\n\n\n

“At the same time, banks will be cautious of extending loans given the rising payment defaults.” <\/p>\n\n\n\n

Renewable energy projects will continue to help corporate credit; however, demand will still be impacted by weak growth prospects, shrinking profits and increased operational costs, impacting the confidence in large capital expenditure plans. <\/p>\n\n\n\n

Bank credit growth is forecast to end the year at around 5.5%, with Nedbank expecting it to remain subdued for the rest of 2024. <\/p>\n\n\n\n

“Credit growth should start rising softly during the second half of next year as the interest
rates ease and the economy improves slightly,” the bank said. <\/p>\n\n\n\n

Tough climate <\/strong><\/p>\n\n\n\n

Several financial institutions have flagged The challenging economic environment in recent months, with credit impairments skyrocketing. <\/p>\n\n\n\n

In its latest interim results for the six months ended August 2023, Capitec<\/a> said that its credit impairments rose by 62% to R4.7 billion (August 2022: R2.9 billion).<\/p>\n\n\n\n

Nedbank<\/a> also saw a 57% rise in credit impairments in the first half of the year, which it blamed on high interest rates, increased inflation and record load shedding. <\/p>\n\n\n\n

Standard Bank’s<\/a> credit impairment charges rose across all its portfolios as its overall credit loss ratio reached the upper end of its through-the-cycle range of 70 to 100 basis points at 97 basis points. <\/p>\n\n\n\n

\n\n\n\n

Read<\/strong>: Hard times for South Africans as disposable income shrinks<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa households are increasingly turning to credit but there could be trouble on the way. <\/p>\n","protected":false},"author":95,"featured_media":707940,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,1799],"class_list":["post-721966","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline","tag-nedbank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/721966","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=721966"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/721966\/revisions"}],"predecessor-version":[{"id":722066,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/721966\/revisions\/722066"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/707940"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=721966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=721966"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=721966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}