Seasonal credit usage trends evident

The National Credit Regulator (NCR) released its ‘Consumer Credit Market’ and ‘Credit Bureau Monitor’ reports, which are based on data submitted to the regulator by registered credit providers and credit bureaus. This edition covers credit market information from March 2010 up to March 2011.

Nomsa Motshegare, Acting CEO of the National Credit Regulator, said that the statistics indicate a 31.21% increase in consumer credit granted when compared to March 2010. The NCR drew attention to the rapid growth in unsecured lending which has seen a year-on-year growth of 66.88%.

From the information submitted by credit providers it is evident that the total value of new credit granted decreased from R83.53 billion for the quarter ended December 2010 to R80.75 billion for the quarter ended March 2011, a decrease of 3.33% when compared to the previous quarter, but 31.21% higher than a year ago. This decrease was due to seasonal factors.

The number of applications received for credit decreased by 917,558 from 6.72 million in December 2010 to 5.8 million in March 2011, a decrease of 13.66% (also a decrease of 3.93% when compared to the same period last year). The following were some of the most significant trends observed in the information reported by credit providers for the quarter ended March 2011 :

· The value of new mortgages granted decreased by 7.85% quarter-on-quarter from R26.87 billion to R24.76 billion;

· Secured credit, which is dominated by vehicle finance, also showed a decrease from R28.12 billion for December 2010 to R27.45 billion for March 2011 (a quarter-on-quarter decrease of 2.39%);

· Unsecured credit decreased from R16.83 billion for December 2010 to R16.69 billion for March 2011 (a quarter-on-quarter decrease of 0.84%);

· Credit facilities which mainly consists of credit cards, store cards and bank overdrafts increased by 1.81% quarter-on-quarter from R10.25 billion to R10.43 billion;

· Short term credit showed a quarter-on-quarter decrease of 2.85% from R1.46 billion to R1.42 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 March 2010 to March 2011.

As at March 2011, the total outstanding consumer credit balances (or gross debtors’ book) was R1.21 trillion representing a quarter on quarter growth of 1.86%. The breakdown was as follows: Mortgages accounted for R769.89 billion (63.58%); “Secured credit” was R226.35 billion (18.69%); Credit facilities were R133.03 billion (10.99%); Unsecured credit was R80.86 billion (6.68%) and Short-term credit was R697.48 million (0.06%).

The banks’ share of the total outstanding consumer credit as at March 2011 was R1.09 trillion (90.08%) with the retailers at R36.25 billion (2.99%), non-bank vehicle financiers at R40.15 billion (3.32%) and “other credit providers” at R43.71 billion (3.61%). Other credit providers consist primarily of pension-backed lenders, insurers, non-bank mortgage lenders and securitized debt.

The information submitted by the credit bureaus indicates that as at the end of March 2011:

Credit bureaus had records for 18.60 million credit-active consumers, an increase of 0.5% over the 18.51m of the previous quarter. Consumers classified in good standing increased by 0.1% to 9.97m. Even though the number of consumers with impaired records increased by 200 000 to 8.63m, from 8.61m in the previous quarter, the percentage of consumers with impaired records have dropped from 46.5% to 46.4% representing a drop of 0.1% for the same reporting period .

The number of accounts decreased from 64.28m in the previous quarter to 63.05m this quarter, a decrease of 1.9%, whilst the number of impaired accounts decreased by 107 000 to 16.26m, from 16.36m in the previous quarter. This is attributed by the reporting bureaus as due to both the market trends and data management exercises undertaken in this quarter.

A total of 199.26 million enquiries were made on consumer credit records, an increase of 12.8% quarter-on-quarter and 59.6% year-on-year. Enquiries initiated by consumers accounted for 11.07 million of all enquiries, a decrease of 5.2% quarter-on-quarter and an increase of 12.4% year-on-year. Of the total enquiries made on consumer records, enquiries from banks and other financial institutions accounted for 65.4%, enquiries from retailers accounted for 9.7% and enquiries from telecommunications providers accounted for 13.1%. Banks and other financial institutions’ enquiries increased by 36.1% from the previous quarter, retailers decreased by 26.7% and telecommunication providers decreased by 0.5%, compared to the last quarter.

The number of credit reports issued to consumers increased to 97,578. Of the total credit reports issued, 83.2% (81,179) were issued without charge, and the remaining 16.8% (16,399) were issued with charge.

There were 6,329 disputes lodged on information held pertaining to consumer credit records for the quarter ended March 2011, which was a decrease of 57.3% quarter-on-quarter and 49.5% year-on-year.

Comparisons in this release - ‘quarter-on-quarter’ refers to a comparison between the March 2011 and December 2010 quarters, and ‘year-on-year’ refers to a comparison between the March 2011 and March 2010 quarters.

To view the full reports go to: http://www.bullionpr.co.za/template.php?categoryid=116.00&categorymid=116.00