New data from consumer credit reporting agency TransUnion shows that credit originations continue to rebound amid a tough economic climate in South Africa.
New credit activity grew, despite overall consumer sentiment indicating a cutback on spend. Credit card origination volumes—the measure for new accounts opened—increased by 37.9% YoY in Q1, in stark contrast to the 42.7% YoY decrease in originations seen at the same point in 2021, the group said.
From an age perspective, 74% of all card originations came from Gen Z and Millennial consumers, indicating higher demand for credit from younger consumers and a willingness by lenders to extend credit to these borrowers. Average new credit lines declined by 5.2% YoY, potentially due to higher origination volumes from below-prime borrowers. Account attrition remains a concern, as the total number of activeOutstanding balances are down 3.8% YoY, primarily due to the six consecutive quarters of negative new business volumes between Q1 2020 and Q2 2021.
The pace of origination growth recovery for personal bank loans continues for the fourth consecutive quarter. Origination volumes are up 6.8% YoY, to 908K in Q1 2022. At current levels, origination volumes remain 23.4% below pre-pandemic levels. “The need for personal loan products may continue to rise through the strenuous macroeconomic environment consumers find themselves in, as these products provide borrowers with an additional source of liquidity to assist with servicing day-to-day expenses.”Origination volumes continued to recover, recording growth for the fourth consecutive quarter and closing the gap to pre-pandemic levels to single digits.
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