17 January 2020
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.
The volume of credit card originations has steadily grown since its low in Q3 2020, indicative of increased lender appetite for growth as well as higher consumer demand for credit, TransUnion said.
“However, despite the resurgence in card originations current volumes remain below pre-pandemic levels.”
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.
Personal Loan—Bank
Bank personal loan originations improved for the fourth consecutive quarter, primarily driven by younger borrowers but remain well below pre-pandemic levels; however, opening balances for new loans are substantially higher than the prior year, said TransUnion.
Average origination amounts increased substantially by 14.7% YoY,” indicating that although lenders have increased their appetite for new business, they remain cautious by giving new credit to lower-risk borrowers”.
Younger consumers drove origination growth, with Gen Z and Millennial brooders accounting for 62.5% of all new card accounts, an increase of 0.8% from the prior year.
“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.”
Source: Business Tech (https://bit.ly/3foGM7F)