However, the credit market remains constrained, while unsecured loans are growing and vehicle financing and home loans are under pressure.
South African consumers spend almost half of their income to pay off debt and are still credit stressed, although there has been significant improvement in the credit sector, giving rise to cautious optimism for the first time in years.
Despite this, there was a significant improvement in the credit sector as the percentage of loans in arrears decreased by a full percentage point. Over the past two years, total loan balances for vehicle asset finance were declining among the middle class, resulting in 100 000 fewer middle-class individuals having vehicle financing loans during that timeframe.
All major listed banks acknowledged the impact of credit impairments on their 2023 financial results, Fulton points out. “African Bank revealed it had to double its provisions to account for bad debt, while Standard Bank noted that while its credit impairment charges had decelerated, they remained at elevated levels.”
The data also shows that unsecured loans are growing, while larger secured loans are not, he says. “There were more than 600 000 net new loans in the fourth quarter, which reflected the trend of large loan products typically reserved for the middle class, heavy hitters and comfortable retirees shrinking significantly. Conversely, there was also robust growth across the retail and unsecured loan sectors.
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