Amidst the challenging economic environment, South Africans have grown their dependence on credit cards over the last year.

In its latest assessment of the broad money supply and credit extension in South Africa, growth in household finance extension has eased from 6.5% yoy in June to 6.1% in July.

Nedbank said that this was due to higher interest rates, weak consumer confidence, and cautious lenders.,

The slowdown in home loans – down from 5.8% in June to 5.3% in July – was the main driver of the overall drop in household finance extension.

Personal loans also moderated slightly from 7.3% in June to 6.4% in July.

Although credit card usage also moderated slightly from 9.2% in June to 9.0% in July, it should be noted that this is still far higher than the 6.4% recorded in September 2022.

In addition, instalment sales and leasing finance (7.6% to 7.7%) and overdraft (2.2% to 3.3%) also grew in July, the bank noted.


Nedbank’s economists noted that credit growth will likely decline throughout the rest of the year.

We expect credit growth to ease further off a higher base and due to an unfavourable economic environment in the coming months. The downward pressure will come from weakness in both households and companies’ demand,” the bank said.

“On the household side, the cumulative impact of the interest rate hikes since November 2021 will continue to filter through the economy, keeping debt service costs high and causing households to be cautious of incurring additional debt.”

Banks will also be more cautious when extending loans, given the growing likelihood of payment defaults.

Corporate credit will continue to benefit from renewable energy projects, and companies invest in alternative power sources.

“However, growth in corporate demand will be contained by subdued economic activity and weak business confidence, which will hurt profits and prompt companies to be weary of expanding capacity and embarking on large capital spending in the short term,” Nedbank said.

Credit issues for South Africa

Several financial services providers have noted a substantial increase in credit impairments, with Woolworths Financial Services being the latest to sound the alarm.

“The impairment rate for the 12 months ended 30 June 2023 was 7.3%, compared to 4.7% in the prior year, reflective of increased pressure on consumers in the current macroeconomic climate,” Woolworths said.

Nedbank also saw a rise in credit impairment of 57% in the first six months of 2023, which it said was due to higher interest rates, higher levels of inflation and record levels of load-shedding on clients, especially for retail customers.

Standard Bank also said that credit impairment charges were elevated across all its portfolios, with its overall credit loss ratio increasing to 97 basis points, at the upper end of the group’s through-the-cycle range of 70 to 100 basis points.