IIR Q1 2021 Results
Unsecured Credit Balances Increase as Consumers look to Bolster Household Finances
- Outstanding balances continued to increase for all major lending categories, while originations growth declined
- A generational divide has emerged, with younger consumers increasing their credit card balances more than their older peers
- Credit performance, a lagging indicator, continued to deteriorate with delinquencies for non-bank lenders accelerating the most
TransUnion’s (NYSE: TRU) Q1 2021 South Africa Industry Insights Report covers a period where economic headwinds prevailed, and consumer confidence continued to be negative.
The report shows how the ongoing uncertainty and financial hardship caused by COVID-19 have impacted the consumer credit market. Consumer and lender appetite for new credit remained subdued in the latest quarter, with originations—a measure of new accounts opened that is a function of both supply and demand—continuing to fall across all major consumer credit categories. Overall, the number of consumers participating in the credit market has reduced by 3% over the last year.
“The impact of COVID-19 on consumer finances remains the primary driver of credit-market trends. Lenders continue to focus on managing risk within existing customer portfolios rather than attracting and bringing on new borrowers as they implement tighter risk management policies. Consumers are very much polarised, with those experiencing financial hardship relying on existing sources of credit to help them through these difficult times. On the other hand, those who have maintained or improved their income still have significant purchasing power and capacity to borrow to finance home purchases.”
- Carmen Williams, director of research and consulting for TransUnion South Africa
Q1 2021 Metrics for Major Consumer Credit Products
About the TransUnion IIR Report
TransUnion’s South Africa Industry Insights Report is an in-depth, full population-based solution that provides statistical information every quarter from TransUnion’s national consumer credit database, aggregated across virtually every active credit file on record. Each file contains hundreds of credit variables that illustrate consumer credit usage and performance. By leveraging the Industry Insights Report, institutions across a variety of industries can analyse market dynamics over an entire business cycle, helping to understand consumer behaviour over time.
Businesses can access more details about and subscribe to the Industry Insights Report. The South Africa Industry Insights Report looks at major consumer lending categories: credit cards, personal loans, home loans, vehicle and asset finance (VAF), and clothing. The report primarily focuses on three dimensions across these categories: originations (new accounts opened), balances (outstanding total and average lending balances) and delinquencies (accounts in payment arears).