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.
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