Demand for Consumer Credit Falls as South Africans Remain Cautious

• Consumer demand for credit fell, influenced by both consumer sentiment and ability to access finance

• Lenders continued to adjust their risk appetite and took a cautious approach to funding new credit

• Delinquencies continued to rise but were less pronounced for credit cards which have a greater perceived utility in COVID-19 times

TransUnion (NYSE: TRU), today released the findings of its Q3 2020 South Africa Industry Insights Report. The results show the ongoing impact of COVID-19 on the consumer credit market and the difficult decisions some consumers have to make to balance their household finances.

Although the latest data primarily relates to a period when COVID-19 measures were less stringent than during the initial lockdowns seen earlier in the year, there was still a fall in consumer demand. Application volumes (as measured by enquiries) declined as consumer confidence remained low, with a reduced appetite for new credit reflecting increased unemployment and high levels of financial hardship. In Q3 2020, year-on-year (YoY) enquiry volumes fell by double digits across all the major consumer lending categories. The decline was most pronounced for credit cards (down 49%) and non-bank personal loans (down 29%).

Originations (measured by new accounts opened) also fell by double digits YoY for all major consumer credit categories. In the most recent period (Q2 2020 for originations due to reporting lag), the decline in volume was most pronounced for clothing accounts (down 69.4%) and least pronounced for credit cards (down 23.1%).

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