Mon. Apr 15th, 2024

South African’s appetite for credit softened toward the end of last year amid high interest rates, weak economic conditions and muted consumer spending.

Data in the South African Reserve Bank’s March quarterly bulletin released on Thursday showed loan demand growth for companies slowing to 3.3% year-on-year in January from 9.7% in the same period the year before. Loan growth to households declined to 4.1% from 8.0%.

“The broad-based moderation in credit extension occurred amid the higher interest rates and a tightening of lending standards by banks that coincided with weak domestic economic activity and weaker consumer spending,” the central bank said. “Constrained household finances impacted borrowing and spending activity.”

Seasonally adjusted and annualized growth in total loans slowed sharply to 4% in the fourth quarter from 7.4% in the first quarter of 2023.

The central bank on Wednesday held interest rates at a 15-year of 8.25% amid concerns that inflation remains above the midpoint of its 3% to 6% target range and will likely cool at a slower-than-expected pace.

By Joy

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