The latest release of the South African Bank Lending Practices Survey, which measures credit lending sentiment of senior credit practitioners across the industry, can now be linked to measurable outcomes.
Of the estimated R205 billion growth in net new bank lending since the last survey, banks preference towards household credit was evident to the detriment of business enterprises, where credit was constricted further. Indexing the credit stance of banks from the first survey in 2017, the credit stance towards household lending remains positive and trending up, while sentiment towards business enterprises, remains negative and trending down.
The debt intervention bill, adopted in its current form by Parliament, has impacted bank sentiment negatively across all classes of household lending including unsecured credit, credit cards and overdrafts, albeit only to consumers in the lowest income category. Developmental credit often used to finance education and specifically excluded from the bill, was also impacted negatively.
The positive impact of the transition to the Ramaphosa presidency and the negative impact of factions within the ANC no longer influenced credit sentiment in the run up to the elections. However, there remained a lack of confidence in state institutions, with recent board appointments to, and the dire financial situation of state-owned entities etc. contributing materially to the tightening of their credit stance.