SA not at risk from unsecure credit

The South African Reserve bank has issued a statement saying unsecure credit poses no threat yet.

Reserve Bank Governor Gill Marcus. Picture: AFP.

JOHANNESBURG - South Africa's unsecured credit levels are still too small to pose a risk to its banking industry, the deputy governor of the South African Reserve Bank said on Monday.

Unsecured loans which are not backed by collateral and therefore riskier and more lucrative for banks totalled R453 billion in March 2013, an increase of 24% from a year earlier, Lesetja Kganyago said.

"Measured against the total banking assets of R3.6 trillion, bank exposure to unsecured lending still remains non-systemic and do not pose any threats to the stability of the banking system as a whole," Kganyago told reporters at a briefing.

Analysts and investors have been increasingly worried lenders, especially African Bank Investments and Capitec Bank Holdings, could be hit by a wave of souring loans after years of rapid growth in consumer lending.

African Bank, which specialises in unsecured loans to low-income borrowers, posted a 26% drop in first-half profit this month, sparking a rout in its share amid concern the lending boom is starting to unravel.