Absa loans policy shows foresight

THE article on Absa, “Analysts refuse to buy Ramos’s spin” (August 4), presents an almost completely negative report on Absa’s policies by several analysts, many of whom are connected to rival banks and could therefore be expected to be critical.

One aspect of Absa’s current policy that is roundly condemned, in my opinion unjustifiably, is its decision not to participate in the unsecured loans market.

Should it take two or more years before the world economic situation starts improving, which is quite possible, many critics may change their viewpoints as more and more unsecured borrowers default.

I have always been opposed to personal loans (not home loans) — usually at high interest rates, hence the attraction for lenders — because if borrowers cannot come out on their current incomes, how much less likely are they to be able to do so when that income is further reduced by monthly loan repayments?

With every second store offering credit, South Africa, in common with other countries, is rapidly approaching a debt crisis.

I believe it is short-sighted to choose short-term high returns above the danger of an implosion if our people’s debt burden becomes unsustainable. Absa’s decision in this field could then be seen as astute foresight.

— Ron Gersbank, Hout Bay The editor reserves the right to edit letters. Correspondence must include your name, address and a phone number