South African banks exercised caution in extending credit, but improved sentiment in the second half of the year should drive credit growth. According to Nedbank’s latest assessment of the broad money supply and credit, with household credit growing at 4.1% in February 2024, the lowest since March 2021. Home Loans remained subdued with a steady YoY growth of 3.3%, while personal loans slowed to 1.1%. Credit card usage stayed robust at 9.6%, indicating reliance on credit for essential spending. Although credit growth is expected to remain subdued in the first half of the year due to higher debt servicing costs and weak consumer confidence, an improvement is anticipated in the second half as interest rates decline and the economy sees a slight recovery. Despite this, concerns persist regarding stretched household finances and policy uncertainties surrounding the national elections, impacting banks’ willingness to accelerate credit extension.
