Credit growth slows further

Johannesburg, Mar 30 (I-Net Bridge) - Credit extension to the private sector (PSCE) grew at a rate of 11.05% year-on-year (y/y) in February from 11.85% in January, the South African Reserve Bank (Sarb) said on Monday.

The rate of growth of South Africa's broad M3 money supply measure rose by 13.17% in the year to end-February from a revised 13.92% (12.91%) in the year to end-January.

South Africa's total domestic credit extension had a growth rate of 13.93% y/y in February from a revised 14.64% (14.66%) in January.

Total loans and advances, which is PSCE excluding investments and bills discounted, recorded a 10.24% y/y increase from January's 11.44% rise.

The Sarb also indicated on Monday that its international liquidity position increased to $33.151bn in February from $33.097bn in January.

The rate of growth in credit extension was expected to have increased at 11.0% year-on-year (y/y), according to I-Net Bridge's Econometer.

South Africa's broad M3 money supply aggregate growth rate, meanwhile, was expected to have increased at 12.0% y/y.

Forecasts among the economists surveyed for PSCE ranged from 10.3% to 11.6%, while the range of forecasts for M3 was from 11.0% to 12.3% at the top of the range.

PSCE was at 20.8% a year ago, while M3 was at 20.9%, both providing a statistical high base.

Overall credit was at 22.3% in June 2006 when interest rates were first hiked by 50 basis points and the current number will be an important factor being monitored by the central bank for continuing signs of a lower trend after rates were cut for the first time in this cycle in early December and then again by 100 basis points in February and March.

- I-Net Bridge