The Eighty20/XDS Credit Stress Report 2023 Q4 is now available.

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

The 2023 Q3 analysis brought a glimmer of hope to South Africa’s credit sector for the first time in years. This optimism was short-lived as Q4 highlighted a blend of both positive and negative indicators with the unemployment rate increasing slightly, inflation creeping up, and consumer confidence dipping down again. Despite this, there was a significant improvement within the credit sector as the percentage of loans in arrears decreased by a full percentage point.

Developments in quarter four were:

1. This was the first quarter since Q1 2020 where the average outstanding balances have seen a QoQ decrease. The decrease was 0.7% since the last quarter.
2. Over the past two years, total loan balances for vehicle asset finance (VAF) among the Middle Class have been declining, resulting in 100,000 fewer Middle-Class individuals holding VAF loans during that timeframe.
3. The total value of home loan balances experienced its first decrease since the onset of the Covid lockdown.
4. In December, retail sales delivered a surprise by increasing 2.7% year-on-year (YoY) before inflation. However, overall, 2023 saw a 1% decline compared to 2022 in real terms. During this quarter, there were 1.25 million new retail loans.
5. The average ratio of monthly instalments to net income for all South Africans is currently at 47%, indicating that nearly half of the income of the average credit-active individual is allocated to debt servicing. Among the Middle Class, this ratio is nearing 80%, marking a 14.5% increase over the year.