IIR Q3 2019 Results
Record unemployment and falling consumer confidence reflected in rising delinquency rates
With the exception of bank personal loans, all other major consumer lending categories recorded YoY increases in serious delinquency rates.
The rise in delinquencies was particularly pronounced for non-bank personal loans, which recorded a 590 bps increase YoY in Q3 2019. This was the eighth consecutive quarter that non-bank personal loans recorded an increase in delinquency rates. The flat YoY growth in non-bank personal loan originations, in sharp contrast to rapid new account growth in the bank personal loan category, was likely driven by this delinquency rise, as lenders pulled back from issuing new accounts in order to manage their deteriorating portfolio quality. Home loans (90 bps), vehicle finance (60 bps) and credit cards (40 bps) all recorded more modest delinquency rate increases, but the overall trend in rising delinquencies has become more pronounced in recent quarters.
For credit cards, Q3 2019 was the second consecutive quarter of YoY increases in delinquencies and indicates that lower-risk borrowers, the primary market for credit card issuers, are also beginning to feel the pinch of difficult economic conditions as serious delinquency rates for the super prime and prime segments increased by 23.6% over the last year.
“As tough economic conditions continue to bite, there has been a rise in consumption lending – this is where consumers use credit to help with everyday living expenses. With the recent growth in bank personal loan originations, as well a sustained increase in outstanding balances for transactional lending products including credit cards, it is clear that many South African consumers are struggling to get by,” said Carmen Williams, director of research and consulting for TransUnion South Africa. “Given the importance to consumers of having ongoing access to credit, it is gratifying to see that lenders have continued to make credit available. At the same time, with delinquencies continuing to rise across most credit products, lenders need to be diligent in their underwriting and portfolio management strategies to ensure the ongoing health of their own balance sheets.”
- Carmen Williams, Director of Research and Consulting
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).