TransUnion Q1 2020 Industry Insights Report (IIR)

TransUnion South Africa’s Industry Insights Report containing the latest consumer credit trends

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IIR Q1 2020 Results

Consumer Credit Delinquencies Forecast to Rise in Response to COVID-19 Impacts as South African Consumers Struggle to Manage their Finances

  • Study reveals impact of COVID-19 on consumer finances expected to carry on for a significant period of time
  • Delinquencies set to increase as South African consumers struggle to cope with changing economic environment
  • Originations (new accounts opened) set to fall across all major consumer credit categories

The newly released TransUnion (NYSE: TRU) Q1 2020 South Africa Industry Insights Report (IIR) highlighted some of the predictions from its forecast for the ongoing economic impact of COVID-19 on the consumer credit market. Between the two studies, the IIR and the COVID-19 forecast give an informed picture of the health of the market coming into the pandemic and the significant effect it will have on the nation’s personal finances in the months, and even years, to come.

The Q1 2020 IIR figures showed that outstanding balances continued to grow across all major consumer lending categories and was strongest for non-bank personal loans at 17.2% year-on-year (YOY). Although still growing, the annual rate of growth for most major credit products was less than the same time last year or the peak seen at the end of 2019 for credit cards and non-bank personal loans. Bank personal loans was the only category to maintain balance growth at a rate comparable to the highs of 2019

Carmen Williams

“Towards the end of 2019, the South African consumer credit market had already started to feel the impact of challenging economic conditions. This trend continued into Q1 2020 and began to accelerate as both consumers and lenders started to experience the impacts of COVID-19. With lockdown measures only taking hold towards the end of the first quarter, demand for consumer credit remained high. However, at the same time lenders were already responding to the challenging pre-pandemic conditions and had started to adjust their risk appetites accordingly and scale back on growth. This meant that overall, although there were still pockets of growth in some areas of the market, it was at a much-reduced rate.”

- Carmen Williams, Director of Research and Consulting

Q1 2020 Metrics for Major Consumer Credit Products

Product Q4 2019 YoY % Change in Originations(1) YoY % Change in Total Outstanding Balance Serious Delinquency Rate (2) YoY Basis Points (bps) Change in Delinquency Rate
Credit card 1.7% 8.4% 11.8% -80
Bank personal loans -0.5% 9.7% 21.0% -380
Non-bank personal loans 10.6% 17.2% 26.3% 200
Home loans 2.8% 11.3% 4.9% 90
Vehicle finance -0.1% 6.7% 7.5% 230
(1) Originations are viewed one quarter in arrears to account for reporting lag
(2) Account-level serious delinquency rate, measured as percentage of accounts three or more payments past due

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).

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Press Release

Consumer Credit Delinquencies Forecast to Rise in Response to COVID-19 Impacts as South African Consumers Struggle to Manage their Finances

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