Nedbank defaults up as higher rates press consumers
NEDBANK’s total defaults rose more than 10% in the half year to June as distressed consumers, unable to keep up with a cumulative 200 basis point increase in interest rates, skipped payments to stay afloat.A new Reserve Bank rule on restructured loans also contributed to the increase.The banking group reported R18.4bn in total defaulted advances at the end of June, as retail consumers focused on more urgent items, while corporate customers also failed to pay their loans.This compares with R16.7bn in June 2015, which is a decline of 4.1% on the previous comparative period.CEO Mike Brown said Nedbank had changed the way it accounted for defaulted advances after the Reserve Bank had issued a directive requiring banks to report distressed restructured loans for a minimum of six months."The directive is saying that, where previously you could put somebody back in performing loans after three months, you can only put them back in six months (now)," he said.On the previously recorded basis...
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