Credit Growth Expected to Slow in SA This Year

February 4 - Rating agency, Fitch, issued a report showing that credit growth in South Africa is expected to slow in 2011.

The main reason for this is that South Africans are still suffering under high levels of debt.

One of the biggest fears is that interest rates are expected to be increased later this year, increasing the debt strain.

"We believe rates will be increased by 50 basis points in September and this is going to make matters worse for consumers," said an economist with Efficient Group, Merina Willemse.

Speaking about credit growth for 2010, the senior director of Fitch, Anthony Walker said that this was expected to slow as South African consumers continue to focus their attention on reducing debt.

He said: "The country's household debt to income ration was 78.5% in the third quarter of last year. The last time this ratio was satisfactory was in 2005, when it stood at 67.8%."

"Since then," added Willemse, "it has been more than 70%."

"Lower interest rates have made a huge difference in local consumer's lives. But our concern is that rates are going to be raised and this is not going to be good for the consumer as it will increase the debt strain."

According to Standard Bank, non performing loans stood at 6.24% in the six months leading up to June 2010.

Also, Absa's credit impairment charges slipped in the six months leading to June.

2/4/2011 9:52:17 AM