Banks scale back on lending in weak credit market
Issuing of new credit cards decreased 15% year on year in fourth quarter of 2018 as banks ‘target lower-risk borrowers’
SA banks are scaling back on lending to subprime consumers as they shift their focus to those with higher credit scores, a move that may leave the needy out in the cold. The TransUnion credit market report released on Wednesday showed that lenders opened fewer new unsecured credit accounts such as credit cards and personal loans in the fourth quarter of 2018. They cut back mostly on those with credit scores of 730 and below. This comes at a time when many SA banks are competing to increase their transactional income coming from the entry-level market, which comprises mostly of people with limited credit records. “The move that we are seeing is that lenders are shifting to lower-risk borrowers who are prime, prime plus and super prime. It is becoming harder for most consumers to get credit,” said Carmen Williams, director of research and consulting for TransUnion Africa. TransUnion’s data showed that clothing accounts and home loans were the only credit products that grew year on yea...
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