PSCE Update image

28 Mar 2018

PSCE update: Private credit extension growth lifts in February, on the back of an uptick in both corporate and household credit growth

Annabel Bishop

Chief Economist

Figure 1: Household and corporate credit growth
  • Private sector credit extension lifted to 5.7% y/y in February 2018, from 5.5% y/y in January, on the back of growth in both the corporate and household categories. Credit extension to corporates grew by 7.3% y/y in February versus growth of 7.1%y/y in January, while credit to households grew to 3.9% y/y in February from 3.7% y/y the previous month.
  • The key drivers of the small acceleration in corporate credit growth were the rise in the mortgage advances and general loans and advances categories, which together make up 70% of total corporate credit extension. Mortgage advances rose to 7.9% y/y in February from 7.0% in January and the general loans and advances grouping jumped to 3.7% y/y in February versus a lift of 1.6% y/y in January.
  • Looking at a disaggregation of the household data, unsecured credit growth was responsible for the lift in this category. It constitutes nearly 23% of household credit extended and grew by 4.1% y/y in February versus 3.0% y/y in January.
  • Modest rates of household credit growth have been a restraining factor on household consumption expenditure. However recent positive developments including a fiscal friendly budget, the avoidance of a sovereign credit rating downgrade by Moody’s and specifically a 25bp interest cut, announced yesterday by the SARB should see credit demand pick up going forward.
Figure 2: Growth in the components of PSCE
Figure 4: Household debt to disposable income ratio
Figure 5: Credit standards for approving loans