Eighty20 has released its 2024 Q3 Credit Stress Report in collaboration with Xpert Decision Systems (XDS). The Credit Stress Report probes consumer credit behaviour and cites key events from quarter three that had an impact on the current economic landscape.

Quarter three 2024 CSR report outlines developments in the credit space as well as the economy overall.

As the festive season approaches, economic indicators in South Africa are shining brighter than in many years, signalling renewed consumer confidence and potential growth in retail spending. Improved economic trends such as declining inflation rates, and improved employment numbers have contributed to a more optimistic environment for businesses and consumers alike. Additionally, there have been two repo rate cuts, personal default rates continue to drop, and 260 days and counting with no rolling blackouts.  On top of that, the two-pot retirement system has put more than R35bn rand in people’s pockets.

Developments in quarter three were:

1. The number of credit-active individuals continued to rise year-on-year, increasing by 1.4%, alongside a modest 1% growth in credit products.
2. Total loan balances are at R2.47trn, up by roughly R47.6bn (nearly 2% YoY), with a notable 40% of that growth coming from credit card and retail credit balances.
3. Total overdue balances are sitting at R194bn (8% of the total outstanding debt), which has grown by a modest R4.7bn in the year.  Credit card and home loans are the only two loan products that showed significant growth in overdue loan balances YoY, with overdue balances on home loans up 23% on last year, credit cards up 9% on last year.
4. The significant growth in credit card and retail loans, alongside the increase in overdue balances, suggests these products are being extensively utilised by consumers to cope with financial challenges, such as rising prices and stagnant wages. The data underscores a growing dependence on high interest unsecured credit products in a challenging economic environment.
5. On the positive side, the percentage of people in credit default is down more than 8% in a year and has been dropping fairly consistently for 3 years.   Notably, the proportion of loans in good standing (64.5%) was higher this quarter than in 2020 Q1 (62.0%), before Covid-19.
6. The latest data highlights a growing concentration of credit value among a smaller group of individuals.  Total outstanding loan balances have experienced a compound annual growth rate (CAGR) of 5% since 2021, but only 1.4% CAGR in number of credit active individuals.  Home loan balances are growing at a rate nearly 50X that of home loan holders since 2021.  Credit card balances are growing at a rate that is 11X that of credit card holders.

While some economic indicators in South Africa are currently more positive than at any time in recent history, the period since the COVID-19 pandemic has seen many South Africans significantly increasing their credit holdings. This expansion of credit, combined with inflationary pressures and slower-than-expected wage growth, has created a precarious financial situation for many individuals. Debt levels have surged while disposable income has remained stagnant or even decreased for a large portion of the population​.