Consumer wallets felt flighty in festive season

“A significant proportion of consumers did not heed the call to spend wisely and prioritise reducing or settling their debts during the festive period." (Image: Wikimedia Commons)

Nomsa Motshegare, CEO of the NCR, states that the total value of new credit granted increased from R110.18bn for the quarter ended September 2014 to R117.64bn for the quarter ended December 2014, a quarter-on-quarter increase of 6.77%. The number of applications received for credit increased by 1 887 000 from 9.64 million in September 2014 to 11.53 million in December 2014, a quarter-on-quarter increase of 19.58%.

Significant trends

• The value of new mortgages granted decreased by R611.22m (1.66%) quarter-on-quarter but increased by R1.56bn (4.50%) year-on-year.
• Secured credit, which is dominated by vehicle finance, increased by R5.17bn (14.19%) quarter-on-quarter and R1.03bn (2.54%) year-on-year.
• Unsecured credit increased by R468.34m (2.57%) quarter-on-quarter but decreased by R2.91bn (13.48%) year-on year.

As at December 2014, the total outstanding consumer credit balances (or gross debtor's book) was R1.59trn, representing a quarter-on-quarter increase of 1.27% and a year-on-year growth of 4.51%. The trends for outstanding balances for the quarter ended December 2014 were as follows

• Mortgages debtor's book increased by R6.85bn (0.82%) for the quarter ended December 2014, and R23.18bn (2.83%) on a year-on-year basis.
• Secured credit debtor's book increased by R6.87bn (2.02%) for the quarter ended December 2014. On a year-on-year basis, the book grew by R24.64bn (7.63%).
• Unsecured credit debtor's book decreased by R823.52m (0.49%) for the quarter ended December 2014. On a year-on-year basis the book decreased by R1.78bn (1.04%).

Too many people spend well and not wisely, and even small purchases can mount up and saddle a person with major debt. (Image: Rod Baker)

Credit bureaus held records for 22.84 million credit-active consumers, an increase of 1.5% when compared to the 22.50 million in the previous quarter. Consumers classified in good standing increased by 133,000, to 12.58 million consumers. As a percentage of the total number of credit-active consumers at 55.1%, this reflects a decrease of 0.2% quarter-on-quarter and an increase of 3.2% year-on-year.

Bad debt increases

The number of consumers with impaired record has increased by 211,000 from 10.05 million to 10.26 million. As a percentage of the total number of credit-active consumers at 44.9%, this reflects an increase of 0.2% quarter-on-quarter and a decrease of 3.2% year-on-year. The number of accounts increased from 81.18 million in the previous quarter to 82.13 million for the quarter ended December 2014. The number of impaired accounts increased from 21.64 million to 22.28 million when compared to the previous quarter, an increase of 648,000 quarter-on-quarter and 2.54 million year-on-year.

432.71 million enquiries were made on consumer credit records, an increase of 14.1% quarter-on-quarter and 24.1% year-on-year. Enquiries initiated by consumers accounted for 15.78 million of all enquiries, an increase of 5.5% quarter-on-quarter and 1.9% year-on-year. The number of credit reports issued to consumers increased to 145,923. Of the total credit reports issued, 69.3% (101,119) were issued without charge, and the remaining 30.7% (44,804) were issued with charge. There were 22,822 disputes lodged on information held on consumer credit records for the quarter ended December 2014, a decrease of 2.2% quarter-on-quarter and an increase of 16.1% year-on-year.

Unwise spending over festive season

"A significant proportion of consumers did not heed the call to spend wisely and prioritise reducing or settling their debts during the festive period. Consumers must learn to live within their financial means and borrow responsibly. Those experiencing financial distress must make arrangements with their credit providers or seek assistance from any debt counsellors before running into arrears," he says

Comparisons in this release- 'quarter-on-quarter' refers to a comparison between the September 2014 and December 2014 quarters, and 'year-on-year' refers to a comparison between the December 2013 and December 2014 quarters. For more information, go to www.ncr.org.za.