South African lenders offering unsecured credit fell after African Bank Investments Ltd., the nation’s largest provider of loans not backed by assets, said its first-half profit will decline.
ABIL plunged as much as 17 percent, the most in almost 13 years, while Capitec Bank Holdings Ltd., the second-largest unsecured lender, decreased the most this year. JD Group Ltd. dropped to the lowest in four years.
“Consumers are already over-indebted and banks have been finding ways still to lend to that consumer,” Lisa Haakman, an analyst at NOAH Capital Markets Ltd., said by phone today from Cape Town.
ABIL was down 16 percent at 24.51 rand, the most since June 2000 at 11:46 a.m. in Johannesburg. Earnings per share in the six months through March slipped 25 percent to 28 percent, the Johannesburg-based lender said in a statement yesterday after the market closed. Capitec, based in Stellenbosch near Cape town, declined 3.9 percent to 210.50 rand while JD Group, South Africa’s largest publicly traded furniture retailer, fell 6.9 percent to 30.95 rand.
South African lenders offer flexible terms, longer tenures, loan consolidation and delayed payments, which make loans appear more affordable than they are, Haakman said.
“Most of this is at the lower end of market where inflation is dictated largely by electricity, food and fuel, which have gone up considerably more than the consumer price index,” she said. “Life is not a bowl of cherries for a large majority of South Africans at the moment.”