Business in borrowing binge
November 20, 2007
By Ethel Hazelhurst
A breakdown of September credit figures shows companies are the big borrowers in South Africa.
They are borrowing more and at a faster rate than individuals, according to a Reserve Bank analysis of the DI 900s - monthly returns, submitted by the banks to the central bank's banking supervision department.
Nico Kelder, an economist at Efficient Group, said: "The recent shift in the economy, away from consumer spending towards the production side of the economy, is becoming evident in the credit data."
He highlighted the trend in a research note yesterday.
In the 12 months to September, individuals borrowed 37.5 percent more on their credit cards. But companies outdid them, "piling their debt 40 percent higher", Kelder said.
Individuals' overdrafts rose only 22.4 percent while company overdrafts rose 34.2 percent. In the category "other loans and advances", which is made up of personal loans, bridging finance, student loans and the like, individuals borrowed 26 percent more over 12 months while companies borrowed 31 percent more.
Mortgage loans to individuals grew 24 percent in the period; mortgage loans to other borrowers rose 32.5 percent.
According to Kelder, growth in mortgages was driven mainly by companies, which accounted for only 23.3 percent of the mortgage market in February last year but nearly doubled their mortgage debt to achieve a share of 29.6 percent by September.
Leasing finance grew more slowly.
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