IIR Q1 2022 Results
Mixed Road to Recovery for South Africa Consumer Credit Market
- New unsecured credit demand and supply showed positive signs of recovery
- Secured lending experienced significant balance reductions as consumers took a cautious approach to larger financial commitments
- Lenders increased risk appetite in search of portfolio growth
Johannesburg, June 28, 2022 – TransUnion (NYSE: TRU) today released the findings of its Q1 2022 South Africa Industry Insights Report. Our analysis shows that with rising stagflation risks on the horizon, characterised by high inflation combined with high unemployment* and stagnant demand, the consumer credit industry is facing new challenges to return back to pre-pandemic norms of activity.
TransUnion’s latest report showed there were notable increases in unsecured lending originations—which measure new accounts opened and is a function of both consumer demand and lender willingness to advance credit—indicating a positive sentiment to fuel credit activity growth. However, outstanding credit balances declined across all major consumer lending categories year-on-year (YoY) in Q1 2022, with the exception of non-bank unsecured personal loans, which recorded a modest increase of 0.9%. Outstanding balances are often a reflection of consumer sentiment and related willingness to spend, and these findings were further supported by the results of TransUnion’s Q1 Consumer Pulse Study** during the same period. This study showed that almost a third of consumers (32%) experienced a decrease in household income. Looking forward to the next three months, more than half (53%) said they plan to decrease discretionary spending.
“We’re still seeing a mixed picture of recovery. The South African consumer credit market was still trending back to pre-pandemic levels of activity when the shock of inflationary pressures associated with the conflict in Eastern Europe hit. Although some sectors of our economy, such as mining, have benefited from increased demand, overall consumer sentiment and household disposable incomes have been negatively impacted. Based on our latest insights, it’s clear that the South African consumer credit market recovery will be elongated and remains volatile.” - Lee Naik, CEO of TransUnion Africa
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 arrears).