{"id":789113,"date":"2024-09-02T15:45:36","date_gmt":"2024-09-02T13:45:36","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=789113"},"modified":"2024-09-02T15:45:41","modified_gmt":"2024-09-02T13:45:41","slug":"the-worst-is-probably-over-for-loans-in-south-africa-nedbank","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/789113\/the-worst-is-probably-over-for-loans-in-south-africa-nedbank\/","title":{"rendered":"The worst is probably over for loans in South Africa: Nedbank"},"content":{"rendered":"\n

Credit demand in South Africa is down, but the Nedbank Group Economic Unit believes that the worst is over. <\/p>\n\n\n\n

According to Nedbank’s latest assessment of the\u00a0broad money supply\u00a0and credit, credit demand weakened further in July. Growth in private sector credit extension (PSCE) dropped from 4.3% in June to a five-month low of 3.5% in July, below Nedbank’s forecast of 4.3%.<\/p>\n\n\n\n

Although the weakness was across almost all subcategories, the most significant drag was the \u2018investment and bills\u2019 category, which dropped by 1.1% month-on-month (mom), dragging the annual growth rate to 0.4% from 1.4%.<\/p>\n\n\n\n

Growth in instalment sales and leasing finance also dropped to 7.7% from 9.3%, highlighting the weakness in the vehicle sales market. <\/p>\n\n\n\n

Other loans and advances, such as unsecured credit to households and companies, also moderated, while annual mortgage growth was steady at 2.9% yoy for the third straight month.<\/p>\n\n\n\n

Growth in loans and loans (i.e. bank credit excluding bills and investments) also decelerated from 4.5% to 3.8%. <\/p>\n\n\n\n

Although household and company credit moderated, corporate credit’s weakness was more profound, dropping by 1.4% of mothers. This brought the growth rate down from 5.7% to 4.3%. <\/p>\n\n\n\n

Every subcategory, except commercial mortgages, weakened. <\/p>\n\n\n\n

Growth in general loans, usually used to finance capital spending, also came in at 4.8%, down from 6.3%. Overdrafts also contracted by 2.4% after two straight months of growth. <\/p>\n\n\n\n

Commercial mortgages, however, grew by 3.7% – the fastest growth in half a year.<\/p>\n\n\n\n

“Household credit continued its gradual deceleration, with the yoy growth rate easing to 3.2%, the weakest since November 2020, reflecting the impact of higher interest rates, weak consumer confidence, strained household finances and tighter lending standards among commercial banks.” <\/p>\n\n\n\n

Amid the increase in credit impairments due to 15-year high interest rates, banks in South Africa have introduced stricter lending criteria to minimise bad debts. <\/p>\n\n\n\n

The weakness in household credit was across the board, with the subcategories either contracting
or growing slower.<\/p>\n\n\n\n

Growth in home loans dropped to a four-month low of 2.5% as personal loans contracted for the fifth straight month, down by 0.9%. <\/p>\n\n\n\n

Instalment sales & leasing finance and overdrafts also moderated in July. <\/p>\n\n\n\n

Credit card usage, however, stayed robust, growing 10.6% yoy.<\/p>\n\n\n

\n
\"\"<\/a>
*Jun-24 on the far right should say Jul-24<\/figcaption><\/figure><\/div>\n\n\n

Although the outlook for credit growth remains subdued, Nedbank’s economists said that the worst is probably over. <\/p>\n\n\n\n

“Lower inflation will boost disposable income, while the SARB will start cutting interest rates in September. <\/p>\n\n\n\n

“The two-pot system will kick in on 1 September, giving households access to a portion of their retirement funds. These will somewhat ease the strain on household finances, boosting consumer confidence and spending, while lower interest rates will boost appetite for credit.”<\/p>\n\n\n\n

“Corporate credit demand will also likely remain firm due to last year\u2019s lower base and increased activity in the renewable energy sector.” <\/p>\n\n\n\n

“Business confidence will also be boosted by the optimism of structural reforms, which will probably encourage the private sector to increase capital investment spending.”<\/p>\n\n\n\n

Nedbank expects credit growth to start bottoming out in August. <\/p>\n\n\n\n

It should increase softly towards the end of the year and will accelerate to 6% in 2025. <\/p>\n\n\n\n

\n\n\n\n

Read<\/strong>: The two-pot system is here \u2013 fund members in South Africa beware<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Credit demand in South Africa has come in lower than expected, but households should benefit from lower inflation and interest rate cuts. <\/p>\n","protected":false},"author":95,"featured_media":727036,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,1799],"class_list":["post-789113","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\/789113","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=789113"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/789113\/revisions"}],"predecessor-version":[{"id":789174,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/789113\/revisions\/789174"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/727036"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=789113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=789113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=789113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}