South Africa Unsecured Credit Isn’t a Bubble, Credit Suisse Says

South Africa’s personal loans market isn’t a bubble because of the relatively high cost of funding and short duration of debt, according to Credit Suisse Group AG. (CSGN)

“Although some of the classic signs of a credit bubble are present, we do not believe the situation is unhealthy and that a credit bubble has not built up,” Johannesburg-based Credit Suisse analysts Mervin Naidoo and Dean Ginsberg wrote in a report today.

While South African consumers are under pressure from food prices and fuel costs, shoppers “appear to be moderating discretionary spend to balance consumption with disposable income,” according to the note.

Unsecured loans accounted for 9 percent of consumer credit at the end of March in Africa’s largest economy, up from 8 percent three months earlier, according to the National Credit Regulator.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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