Consumer appetite for credit continued to rise for the quarter ended December 2010

Nomsa Motshegare, Acting CEO of the National Credit Regulator (NCR), said that NCR statistics indicate a 31.97% increase in consumer credit granted when compared to December 2009. The NCR drew attention to the rapid growth in unsecured lending which has seen a year-on-year growth of 59.78%.
The National Credit Regulator released its ‘Consumer Credit Market Report’, which is based on data submitted to it by registered credit providers. This edition covers credit market information from December 2009 up to December 2010.
The total value of new credit granted increased from R75.14 billion for the quarter ended September 2010 to R83.53 billion for the quarter ended December 2010, an increase of 11.17% when compared to the previous quarter, but 31.97% higher than a year ago.
The number of applications received for credit decreased by 156,671 from 6.87 million in September 2010 to 6.72 million in December 2010 representing a decrease of 2.28% (but an increase of 4.06% when compared to the same period last year). The following were some of the most significant trends observed for the quarter ended December 2010:
• The value of new mortgages granted increased by 2% quarter-on-quarter from R26.34 billion to R26.87 billion;
• Secured credit, which is dominated by vehicle finance, showed an increase from R25.20 billion for September 2010 to R28.12 billion for December 2010 (a quarter-on-quarter increase of 11.60%);
• Unsecured credit increased from R13.38 billion for September 2010 to R16.83 billion for December 2010 (a quarter-on-quarter increase of 25.77 %);
• Credit facilities which mainly consists of credit cards, store cards and bank overdrafts increased by 16.25% quarter-on-quarter from R8.81 billion to R10.25 billion;
• Short term credit showed a quarter-on-quarter increase of 4.56% from R1.40 billion to R1.46 billion;
• Individuals who earn gross monthly income of more than R15,000 per month received on average 82% of the number of mortgages granted over the period December 2009 to December 2010.
As at December 2010, the total outstanding consumer credit balances (or gross debtors’ book) was R1.19 trillion representing a quarter on quarter growth of 1.84%. The breakdown was as follows: Mortgages accounted for R760.68 billion (63.99%); “Secured credit” was R221.72 billion (18.65%); Credit facilities were R131.86 billion (11.09%); Unsecured credit was R73.80 billion (6.21%) and Short-term credit was R728.57 million (0.06%).
The banks’ share of the total outstanding consumer credit as at December 2010 was R1.07 trillion (90.06%) with the retailers at R36.80 billion (3.10%), non-bank vehicle financiers at R39.35 billion (3.31%) and “Other credit providers” at R42.03 billion (3.54%). Other credit providers consist primarily of pension-backed lenders, insurers, non-bank mortgage lenders and securitized debt.