Credit growth quickens to 9.07%

Oct 29 2012 08:17

Related Articles

August credit growth slows


Johannesburg - Growth in credit demand by the private sector accelerated to 9.07% year-on-year in September compared with 7.93% rise in August, central bank data showed on Monday.

Growth in the broadly defined M3 measure of money supply however slowed to 7.54% year-on-year in September after rising by 7.78% the previous month.

Economists surveyed by Reuters forecast year-on-year private sector credit growth of 8.3% in September while M3 was seen expanding by 7.8%.

Said Absa Capital economist Ilke van Zyl: “We did have a low base last year September but it doesn’t  solely justify the increase to 9.07% year-on-year we saw this morning. Given the weak economic circumstances we must then assume that the rate cut in July must have had some or other effect on borrowing on the margin.”

“It’s definitely something the South African Reserve Bank will look at and consider (during next month’s policy meeting) but I think the headline inflation print we had last week will carry much more weight.

“Couple this with the widening current account deficit, and I think the Sarb will be more wary of the imbalances that a low interest rate can create in an economy. So all in all I think this very much supports our view that interest rates will remain on hold until late 2014.”

The rand was little changed at R8.6650 against the dollar at 06:29 GMT from R8.67 before the data was released at 06:00 GMT. The yield on the 2015 bond was steady at 5.49% as was that for the 14-year bond at 7.785%.

Credit demand growth has been in positive territory since May 2010, although its recovery has been somewhat constrained by high unemployment and an uncertain outlook for companies.

The ratio of household debt to disposable income remains extremely high at more than 76% while unemployment remains around 25%.

The Reserve Bank’s benchmark repo rate is at a four decade low of 5.0% after the central bank cut it by 50 basis points in July.

credit growth



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The SARB’s Monetary Policy Committee will decide on the next move in interest rates tomorrow will they?

Previous results · Suggest a vote