Compuscan, one of South Africa’s leading credit bureaus, has released the latest information on consumers’ credit behaviour in Q4 2014. This data forms part of a detailed synopsis submitted to the National Credit Regulator (NCR).
Each quarter, the NCR releases its Credit Bureau Monitor – a comprehensive overview of South African consumers’ credit behaviour, based on data received from all registered credit bureaus.
Director at Compuscan, Frank Lenisa, highlights areas of interest as well as concern, based on Compuscan’s data. He comments: “What is most notable is that, since the removal of adverse consumer credit information in April 2014, there has been a steep increase in the number of consumers with an account that has reached adverse-enforcement status. This is indicative of consumers not managing their expenditure wisely and struggling to stay on top of the escalating cost of living.”
Prior to the removal of adverse information, as at the end of Q1 2014, there were approximately 3 million consumers whose worst position was an adverse-enforcement status code. This includes accounts that have been enforced as handed over, assets repossessed, account written off or facilities / credit card revoked. In less than a year, the number of consumers whose worst position was this status on an account increased from 0 at the end of Q1 2014, when the removal of adverse information took effect, to 2 011 239 as at the end of Q4 2014.
This means that a large percentage of individuals who had adverse listings which were removed by the regulations, have an adverse again and points to the need to improve repayment behaviour rather than removing credit information.
See table below for further details:
|Persons whose worst position is an adverse-enforcement status code||Q4 2014||Q3 2014||Q2 2014||Q1 2014||Q4 2013||Q3 2013||Q2 2013||Q1 2013|
|2 011 239||1 359 756||744 556||0||2 937 813||2 728 856||2 614 495||2 517 652|
- Each quarter’s figure reflects the total number of consumers, who have adverses listed on the bureau, including accounts listed before the quarter. Hence, the Q4 2014 statistic reflects the total amount of consumers with this status since last year April.
- The consumers whose worst position is an adverse-enforcement status code is at zero in Q1 2014 as the removal of adverse consumer credit information took effect in April 2014 and the information was removed before the above calculation was done.
Credit Market Activity
At the end of Q3 2014 there were 2 015 276 accounts listed as handed over, assets repossessed, account written off or facilities / credit card revoked. There are now 3 139 687 such accounts, which means that there was a 56% increase in adverse account listings in one quarter.
According to Compuscan’s data, the number of consumers that have a judgment on their report as the worst of their negative information is 1 075 143, while the number of consumers that have an admin order as the worst of their negative information is 73 197.
Lenisa continues: “Although a fair amount of the data points to the fact that consumers are not carefully managing their credit obligations, it has also revealed positive trends in consumers’ credit behaviour.” He elaborates: “Of all accounts in retention on the bureau, 76,59% were listed as zero months in arrears or closed. In other words, this reflects the percentage of current accounts. Despite the fact that we saw accounts with adverse enforcement codes increase by 56% from quarter to quarter, this classification only makes up 4,51% of all updated accounts in retention on the bureau.”
Furthermore, on a positive note, the data shows an 81% increase in accounts that have a paid-up default status in Q4 2014 compared to the previous quarter, indicating that some consumers are making efforts to better manage their debt.
Credit Product Activity
Yet another interesting trend that has been revealed is an increase in revolving loans. From Q3 2014 to Q4 2014, there was a 22% increase in this type of loan. More significantly, there was an increase of 134% in revolving loans specifically between R 8 001 and R 15 000 and a 77% increase thereof between R15 001 – R25 000.
Lenisa concludes: “While our bureau data provides an overview of consumers’ credit habits, I must stress that it is essential for all credit-active consumers to keep a close eye on their credit reports so as to monitor their own borrowing and spending habits. By registering with www.mycreditcheck.co.za, consumers with valid South African ID numbers can easily stay up to date with their financial standing.”
Additional information of interest:
Vehicle and asset finance for Q4 2014
|Less than or up to R50 000||3%|
|R50 001 – R100 000||11%|
|R100 001 – R250 000||51%|
|R250 001 – R400 000||21%|
|R400 001 – R999 999||14%|
|Total no. of VAF loans in retention on the bureau||2 314 462|
Credit cards for Q4 2014
|Less than or up to R5000||21%|
|R5 001 – R15 000||28%|
|R15 001 – R25 000||16%|
|R25 001 to R40 000||16%|
|R40 001 plus||19%|
|Total no. of credit cards in retention on the bureau||6 094 966|
Store cards for Q4 2014
|Less than or up to R5000||57%|
|R5 001 – R15 000||36%|
|R15 001 – R25 000||6%|
|R25 001 to R40 000||1%|
|R40 001 plus||0%|
|Total no. of store cards in retention on the bureau||16 494 066|