African Bank Investments Ltd. (ABL), South Africa’s largest provider of unsecured loans, said lending slowed for the first time since a 2009 recession as it tightened standards amid rising consumer debt.
Total credit disbursements for the fiscal first quarter ended Dec. 31 were “flat” at 7.43 billion rand ($823 million) from a year earlier, the Johannesburg-based lender said in a statement today. African Bank tightened lending standards even amid “a slowdown in customers’ appetite and capacity for credit,” with loan applications falling 7 percent, it said.
South Africa’s unsecured lending market, which grew faster than any other type of credit in the past two years, started to slow in the third quarter of last year, according to the National Credit Regulator. Finance Minister Pravin Gordhan and the banking regulator had signaled concern that loan growth could lead to a bubble without any measures taken.
The lender rose 1.3 percent to 31.8 rand in Johannesburg trading today.
South Africa’s economic growth has slowed and “this, together with the growth in the supply of credit over the past few years, will continue to exert pressure on customers,” African Bank said. “The group continues to maintain a strong capital and liquidity position and will look to further diversify its sources of cost-effective funding.”
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