Credit demand growth slows
SA private credit demand grew for the 11th consecutive month, but expansion is at the softest pace since February.
The Reserve Bank said on Thursday that SA’S private sector credit grew by 5.34% year on year in May 2022.
This was below market expectations of 5.7% — after a downwardly revised 5.87% — and also lower than the 5.6% year-on-year median estimate forecast by a Bloomberg survey, suggesting that credit demand is still burdened by low business confidence and uncertainty over the strength of the economic recovery.
Nedbank forecast that private sector credit extension would grow by 5.7%, driven largely by firm demand by both households and companies.
Growth in private sector credit extension ticked up marginally to 6.0% year on year in April, from 5.9% in March, and 3.6% in February.
This was due to faster-paced credit uptake by households, while credit extended to the corporate sector decelerated marginally.
According to the Reserve Bank quarterly bulletin released on Tuesday, demand for credit increased in most of the economic sectors from the third quarter of 2021 to the first quarter of 2022 as economic activity recovered.
The Bank said credit extension to households, and to the wholesale and retail trade sectors increased notably as consumption expenditure increased amid the easing of Covid-19 restrictions.
The Bank said growth in credit extension to the household sector continued to expand at a steady pace of about 5.6% in the second half of 2021 before accelerating to 6.3% in April 2022.
Credit extension to companies was mainly driven by general loans and the utilisation of overdraft facilities for operational activities in the early months of 2022, said the Reserve Bank.