Sarb: Unsecured lending on the rise

2013-06-28 14:45
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Johannesburg - Unsecured lending by South Africa's six commercial banks is increasing, the SA Reserve Bank (Sarb) said on Friday.

In the Sarb's financial report for the year ended March 31, it said unsecured lending by the six banks increased from R321.36bn in December 2011, to R441.27bn in December 2012.

The six banks are Capitec Bank Holdings [JSE:CPI], African Bank Investments [JSE:ABL], Absa Group [JSE:ASA], FNB , Nedbank Group [JSE:NED], and Standard Bank Group [JSE:SBK]. Unsecured lending to retail markets included credit cards, personal loans, and overdrafts.

The Sarb said growth in unsecured loans appeared to be "moderating somewhat" and would continue to be under supervision in the next financial year.

In her statement in the report, governor Gill Marcus said the past financial year had been challenging, as the global recovery was "hesitant and fragile".

She said the US economy showed signs of recovery, but the outlook was initially overshadowed by the possibility of a severe fiscal contraction which had the potential to derail the recovery.

Another factor in the global economic recovery was that the sovereign debt crisis in the eurozone had come close to a break-up of the monetary union.

"But strong intervention by the European Central Bank (ECB) was successful in reducing these risks," Marcus said.

The domestic economy also had its share of problems.

"Widespread labour disputes and strikes reduced output and exports, and undermined investor and business confidence," she said.

Consumer confidence weakened and the economy grew at a rate of 2.5% in 2012.

"The outlook is poor following the 0.9% annualised growth rate in the first quarter of 2013."

Marcus said that during the reporting period, the bank's monetary policy remained the same, apart from a 50 basis point reduction in the repo rate in June 2012 to 5%.

She said the period was characterised by a weak global economy with volatile financial markets.

"These upside risks constrained the scope for monetary policy to provide further accommodation."

Inflation was expected to average 5.8%n 2013, and 5.2% in 2014.

The bank was able to conduct its domestic money-market liquidity management operations in "an orderly manner".

The actual daily liquidity requirement was R23.2bn on March 31 this year, compared with R21.2bn at the end of March 2012.

Official gross gold and foreign-exchange reserves declined marginally from $50.7bn (R505.9bn) on March 31, 2012, to $50bn (R499bn) on March 31, 2013.

This decline reflected adjustments emanating from the appreciation of the US dollar against other major currencies, a decrease in the market price of gold, and foreign payments on behalf of government departments.

On November 6, 2012, the bank unveiled new banknotes in honour of former president Nelson Mandela.

The Sarb said the value of banknotes in circulation reached a peak of R109.6bn on December 28, 2012 as compared to a maximum value of R99.2bn on December 28, 2011.

The value of coins in circulation increased from R4.5bn at the end of March 2012 to an estimated R4.7bn as at January 31, 2013.

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