The Credit Stress Report 2023 Q4 is out

Quarter four 2023 CSR report outlines developments in the credit space as well as the economy overall.

The 2023 Q3 Credit Stress Report spoke to some positive economic and credit news for the first time in some years in South Africa. Rather than building on this, Q4 presented a mixed set of indicators with the unemployment rate increasing slightly, inflation increasing, and consumer confidence dipping down again. While in the credit space, the percentage of loans in arrears dropped another full percentage point.

Developments in quarter four were:

1. This is the first quarter that average outstanding balances have decreased QoQ since 2020 Q1. Overdue balances have decreased by 0.7% QoQ.
2. Total loan balances for vehicle asset finance (VAF) have been dropping for the Middle Class for two years, with 100,000 fewer Middle Class people with VAF loans over that period.
3. The total value of home loans decreased for the first time since the Covid lockdown.
4. Retail sales surprised in December, rising by 2.7% YoY, but overall, 2023 was 1% down on 2022 (both in real terms), with 1.25m new retail loans this quarter.
5. The overall average instalment to net monthly income ratio for all South Africans stands at 47%. This means that nearly half of the average credit-active person’s income goes towards servicing debt. For the Middle Class, that figure is approaching 80%, up 14.5% in a year.