CREDIT EXTENSION TO PRIVATE SECTOR WANES
CREDIT extended to the private sector slowed to 6.1 percent year-onyear in December, from 6.6 percent in November, as a deterioration in consumer credit standing continued to constrict households’ capacity to take up more credit. The South African Reserve Bank said yesterday that the deceleration was more pronounced in the corporate sector, with the December outrun registering 6 percent year-onyear from 6.6 percent in the previous month. Household credit extension, on the other hand, moderated to 6.3 percent year-on-year from 6.6 percent in the previous month. Economists said consumers ability to obtain credit could wane even further this year due to their weak finances while depressed business confidence would restrict companies from granting credit easily. FNB’s senior economist Siphamandla Mkhwanazi said this was the lowest print since the May 2019 elections. “We attribute this to consumers’ worsening credit profile amid a challenging macroeconomic environment that has seen lenders turning more risk averse,” Mkhwanazi said. “Over the medium term we expect credit extension to continue growing, albeit at a slower pace.” Mortgage advances, however, remained steady at 5 percent year-on-year and continued to outpace average house price growth of 3.5 percent year-on-year in December. Mkhwanazi said this was mainly driven by intensified competition among financial institutions in a thin volume market. “Property registrations data shows that this upsurge in mortgages has been more concentrated in the middle- to upper-price segments, while lending to the lower end remains relatively conservative,” he said. “Over the medium term we expect credit extension to continue growing, albeit at a slower pace.” Investec economist Kamilla Kaplan said a further rise in private sector credit extension growth in 2020 was expected to occur only at a continued modest rate, despite the lower borrowing costs. “Households’ ability to take up credit will likely be constrained by slower labour income growth, weak disposable income growth, high unemployment and depressed consumer confidence. “Similarly, depressed business confidence and low rates of private investment should restrict corporate credit growth.”
HENNES & Mauritz (H&M) appointed Helena Helmersson as the first female chief executive of the fast-fashion pioneer, taking over from founding family scion Karl-Johan Persson, who struggled to contain competition from cheaper rivals and online platforms that revolutionised shopping. Helmersson was previously head of operations, and Persson moves to the supervisory board after more than a decade, where he succeeds his father, Stefan Persson, as chairperson. Stockholm-based H&M announced the changes as it reported quarterly earnings that beat analyst estimates, pushing the shares to their biggest gain in more than seven months. The stock move is a much-needed boost for investors who have watched H&M shares gain just 10 percent during Persson’s tenure, while rival Inditex, the owner of Zara, has surged almost fourfold in the period. Long the go-to place for Scandi-inspired, welldesigned staples like blouses and jeans, H&M has ceded its pacemaker role to the likes of Primark that undercut it in price, or Internet specialists like Asos and Zalando that promised shoppers more instant gratification. Inditex also pioneered the concept of branching out into sub-brands for different tastes and budgets. H&M has emulated the idea with units including COS or Arket, which aim at a wide-ranging shopping experience, selling everything from clothing to make-up. | Bloomberg