IIR Q4 2020 Results
South Africa Consumer Credit Market Remains Subdued as Pandemic Continues to Impact Household Finances
- Lenders remain cautious and target lower risk borrowers
- Two-speed credit market emerging, with marked difference in demand/supply characteristics of secured and unsecured lending products
- Delinquencies increase overall but show mixed picture, reflecting consumer payment preferences
TransUnion’s Q4 2020 South Africa Industry Insights Report (IIR) covers a period when unemployment in South Africa hit a new record and GDP fell. These macroeconomic drivers are reflected in the key consumer credit market indicators.
During the latest period, enquiries—a measure of consumer demand—and originations—a function of both supply and demand—both fell across all major consumer credit categories. At the same time, delinquencies continued to climb for most products with the exception of credit cards, which saw a marginal improvement. The increase in missed payments also contributed, in part, to an increase in outstanding balances across most product categories.
“Challenging economic conditions mean household finances remain stretched, and both consumers and lenders continue to take a cautious approach to credit as a result. Like many other markets around the world, consumers are having to make difficult decisions about which debts to prioritise. Although annual trends indicate a challenging credit market, when we measured the recent quarters, we see a road to recovery. However, there is still significant uncertainty around the vaccine rollout, general easing of restrictions, and the rebound in macroeconomic conditions, and as such it is too soon to expect a sustained recovery in key credit metrics.”
- Carmen Williams, director of research and consulting for TransUnion South Africa
Q4 2020 Metrics for Major Consumer Credit Products
|Product||YoY % Change in Enquiries||YoY % Change in Originations (1)||YoY % Change in Total Outstanding Balances||Serious Delinquency Rate (2)||YoY Basis Points (bps) Change in Delinquency Rate|
|Bank personal loans||-2.3%||-39.6%||5.9%||23.5%||+130|
|Non-bank personal loans||-15.1%||-26.0%||2.7%||32.5%||+640|
(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).