A new report shows notable increases in unsecured lending originations – which measure new accounts opened and is a function of both consumer demand and lender willingness to advance credit- indicating a renewed demand for credit by consumers.
Consumer credit reporting agency TransUnion has published the findings of its Q1 2022 South Africa Industry Insights Report showing that with rising stagflation risks on the horizon, characterised by high inflation combined with high unemployment and stagnant demand, the consumer credit industry is facing new challenges to return back to pre-pandemic norms of activity.
In the secured lending categories both originations and balances were down. “Here the drivers for the declines in outstanding balances were different from the declines in unsecured lending balances, the credit agency said. Lee Naik, CEO of TransUnion Africa, said: “We’re still seeing a mixed picture of recovery. The South African consumer credit market was still trending back to pre-pandemic levels of activity when the shock of inflationary pressures associated with the conflict in Eastern Europe hit.
The reduction in the number of accounts , outstanding balances , and average balances was due to multiple factors: A decline in business from new vehicle sales resulting from supply shortages.
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