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Sarb: Unsecured credit not a risk

Johannesburg - South Africa's unsecured credit levels are still too small to pose a risk to its banking industry, the deputy governor of the South African Reserve Bank said on Monday.

Unsecured loans - which are not backed by collateral and therefore riskier and more lucrative for banks - totalled R453bn in March 2013, an increase of 24% from a year earlier, Lesetja Kganyago said.

"Measured against the total banking assets of R3.6 trillion, bank exposure to unsecured lending still remains non-systemic and do not pose any threats to the stability of the banking system as a whole," Kganyago told reporters at a briefing.

Analysts and investors have been increasingly worried lenders, especially African Bank Investments [JSE:ABL] and Capitec Bank Holdings [JSE:CPI], could be hit by a wave of souring loans after years of rapid growth in consumer lending.

African Bank, which specialises in unsecured loans to low-income borrowers, posted a 26% drop in first-half profit this month, sparking a rout in its share amid concern the lending boom is starting to unravel.



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