Sarb: No sign of credit bubble

2012-10-31 07:58

Pretoria - There are no signs of a credit bubble in South Africa despite a rise in unsecured lending, Reserve Bank deputy governor Lesetja Kganyago said on Tuesday.

"Credit that grows at an average of around 7% when inflation is at 5.5% cannot by any measure be seen as bubble. Unsecured lending is such a small component of overall credit," Kganyago said in response to a question at a monetary policy forum.

Unsecured loans in South Africa surged by 21% to $43bn in the year to June, central bank statistics show, but are still about a tenth of overall lending.


  • SarelJBotha - 2012-10-31 08:15

    There might be a big bomb coming!! THE BIG CASE: There is one MAJOR case in Cape Town, where 3 weeks ago, a judgement went against First National Bank – in favour of the defendant who will remain nameless until this Friday. This has now turned into the most sensitive case in SA history regarding banking. This is the straw that will break the camel’s back and allow all of our cases to be argued and won, by arguing legal precedent. It will also spread like a virus worldwide very quickly from here. Jeanette Traverso, has taken the file into her chambers for safekeeping to avoid anyone tampering with it. That is what she claims according to our information. What needs to be pointed out is that Judge Traverso has been involved as a judge in many liquidation cases where majority of the judgements she handed down have gone in favour of the banks. The case we are referring to here is now a matter of public domain and is of extreme interest and should be disclosed and exposed for all to see immediately, instead of being hidden and protected by the Acting Judge President in her chambers!

  • napolita.kio - 2012-10-31 08:39

    Well, maybe it's not a "bubble", however, it is CERTAINLY a problem. The reason for the above claim is on basis that the debtors are already +70% (relative to their income) in the hole. "Unsecured lending is such a small component of overall credit," - Indeed that is so given that the overall credit includes companies who are in no need to borrow; for that matter they have positive cash balances. On the other hand, it is only/mainly individuals and not companies who are involved in unsecured borrowing; so to suggest that unsecured lending is not a bubble/problem in this case is not a sound conclusion to reach. The point is that you need to look at the debtors financial position to figure out whether the market they are involved in is in a bubble. Here's a fact, for the majority of the debtors, with only one pay-check missing then none of the creditors will get paid. Dare I say, I slight move up on the interest rates, then the creditors (in the unsecured lending market) will be bust!

      denny.cray - 2012-10-31 09:05

      I agree with you. It tends to make me a bit worried when a deputy (maybe read scapegoat?) comes out with a statement like this. Also, how well can they actually track our more "informal" lending practices where I suspect the risk is at its highest? Just because I'm paranoid doesn't mean I'm wrong!

  • denis.dendrinos - 2012-10-31 12:36

    until it bursts.....

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