The number of overall credit originations (a measure of new accounts opened) increased by 15,2%, as South Africans increasingly used new and existing credit products to meet their rising consumption needs via credit cards, personal loans, and retail revolving loans, according to TransUnion’s Q2 2024 South Africa Industry Insights Report.
Overall, the number of credit active consumers grew by 4.7% YoY to 18.5 million people, of which 28.1% hold credit cards, demonstrating that more South Africans have access to financial products and services to facilitate lifestyle essentials.
Originations for consumption-led products i.e. facilities to pay for day-to-day expenses, accounted for 83% of all new credit opened, growing by 16,8% YoY in Q2 2024. The country’s credit market stood at an outstanding balance of R2,37-trillion, up 3,7% YoY, with total balances within consumption-led products up 5,1% YoY.
During Q2 2024, Millennials (46%) and Gen Z (16%)[1] together accounted for nearly two thirds (62%) of all new credit originations, with 60% of Gen Z originations issued among 26 to 29 years old, and one third issued to consumers aged 22-25 years.
According to TransUnion’s Q2 2024 Consumer Pulse Study, 91% of consumers believe that access to credit is important, with Gen Z consumers’ top three anticipated new credit products in the next 12 months being personal loans (35%), credit cards (26%) and student loans (25%) – all considered entry-level products.
“Growth in new credit products issued and use of existing credit is typically driven by economic requirements as consumers take on credit to boost their available income during challenging economic times,” says Lee Naik, CEO of TransUnion Africa.
“However, there is hope on the horizon as inflation decreased during the quarter, with annual food price inflation at its lowest since late 2020. Consumers are likely to see further respite in the coming months, along with the reduction in interest rates this combination will likely provide relief to stretched household budgets.”
Summary of Q2 2024 Metrics for Major Consumer Credit Products
| Product | YoY Growth in Origination Volumes | YoY % Change in Total Outstanding Balances | Serious Account Delinquency Rate* | YoY Basis Points (bps) Change in Delinquency Rate |
| Credit card | 9.3% | +10.3% | 12.4% | -0 bps |
| Personal loans** | 16.7% | +2.6% | 32.6% | -240 bps |
| Home loans | 16.2% | +3.2% | 7.2% | +50 bps |
| Vehicle asset finance | -5.0% | +3.0% | 5.4% | -10 bps |
| Clothing accounts | 12.2% | +8.9% | 28.5% | -150 bps |
| Retail revolving | 25.2% | +12.2% | 17.4% | -230 bps |
| Retail instalment | -6.6% | +12.9% | 27.9% | -180 bps |
*Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears
** Includes both bank-issued, and non-bank issued personal loans
Lower amount personal loans drove significant growth
Personal loan originations increased by 16,7% YoY during Q2 2024, accounting for 77% of all new credit originations. Over the same period, the average new loan amount declined by 14,2%, suggesting that lenders were willing to offer modest amounts as they balanced portfolio health and rising demand from consumers.
A deeper exploration over the last 12 months of originations shows that the vast majority of new personal loans were granted for amounts less than R5 000, comprising 75% of new loans granted during Q2 2024 – an increase from 73% of loans during the same quarter of 2023.
During Q2 2024, 3,2-million consumers opened new personal loans for R5 000 or less, compared to 1,9-million consumers during the same quarter in 2023.
Lenders are understandably examining risk profiles more closely. During Q2 2023, 77% of consumers who opened personal loans under R5 000 held a below prime risk profile, and this proportion decreased to 74% during the same quarter in 2024.
During Q2 2023, 90% of loans of R5 000 or less were granted by non-bank lenders, compared to 86% during Q2 2024. Over this time, 10% of these loans were granted by bank lenders in Q2 2023, compared to 14% in 2024.
These trends clearly indicate that lower amount loan seekers are driving growth in account volumes for both bank and non-bank personal loan lenders.
Throughout this period, account-level delinquency rates improved by 240 basis points YoY to 32,6%, demonstrating that lenders’ more cautious risk management has helped reduce delinquency, while supporting consumers in managing their debt levels.
Demand for personal loans is likely to remain strong, with 33% of consumers responding to the Consumer Pulse Survey saying that they intend to apply for a new personal loan in the next 12 months – more than any other credit product.
Credit card growth led by Gen Z, primarily those opening their first credit card in wallet
Credit card originations increased by 9,3% YoY, with Gen Z credit cardholders having grown by 22,7% YoY. Millennials and Gen X consumers contributed 72% of credit card originations during Q2 2024, with below prime growth at 12% YoY, compared to prime and above growth at 10% YoY.
Findings of a recent study of TransUnion’s South African credit card population showed that while credit card growth has primarily been driven by existing cardholders during Q1 2023, meaning consumers who already have one or more cards and are opening additional new cards, the number of first-time credit cardholders is rising at a fast pace.
In the most recent quarter, 38% of originations were issued to first-time cardholders – the highest proportion observed since Q1 2020.
The study further showed that consumers holding their first-ever credit card are well disciplined in managing their credit card payments, with those who opened their first credit card in recent vintages showing healthy performance trends, especially when compared to those opening additional credit cards.
New-to-Card Compared to Existing Cardholders Delinquency, 90 Days Past Due After 12 Months on Book
| Prime Risk (656-695) Consumer Segment | 2022 cohort of originations | 2023 cohort of originations |
| New-to-Card | 4.61% | 2.66% |
| Existing cardholders | 12.68% | 8.40% |
“Opportunity exists to enable greater access to financial inclusion by getting the first credit card into a consumer’s wallet,” says Naik. “Our research shows that first-time cardholders are disciplined in managing their payments, as they focus on building their credit profile while accessing the opportunities made possible by having access to credit cards.”
Mortgage growth continued the momentum, particularly in the more affordable housing sector
Despite the sustained high interest rate during Q2 2024, mortgage originations continued to grow – by 16,2% YoY, and the average new loan amount increased by 1,7% to R940 675.
During the first half of 2023, 32% of mortgages were granted to subprime and near prime consumers, and this ratio increased to 36% of mortgages being granted to below prime risk tiers during the first half of 2024. Mortgages granted to super prime borrowers declined from 41% in the first half of 2023 to 37% during the first half of 2024.
“The growth in mortgages in the affordable housing bracket and the increase in mortgages granted to below prime borrowers seem to highlight banks’ intent to support South Africans in their quest to own property,” Naik says. “We also note that while there’s been growth in originations, the rate of growth has also increased substantially, which may in turn indicate increased homeowner confidence, supported by banks’ confidence in the country’s property market and in their risk strategies to accommodate more lenders.
“South Africans are managing their credit portfolios, despite the challenging economic environment during the second quarter of the year,” Naik adds. “Lenders would serve their customers well by offering comprehensive financial literacy programs throughout the customer journey, and not just at origination. Collaborating with allied partners who can help consumers understand more about how risk is measured, and how risk scoring is used in decision making around credit would further support consumers in managing their finances more efficiently.”
[1] Gen Z born 1995 to 2010. Millennials born 1980 to 1994