South Africans are going into overdraft again, new data shows – but not much

• South African banks have R20 billion less in overdrafts and credit cards on their books than a year ago, data released by the SA Reserve Bank on Tuesday shows.
• The combined overdrafts from all banks are bigger than they were in November – but still down 8.1% year-on-year.
• Meanwhile, “impaired advances” (an indicator of bad debts) across South African banks now stand at R67 billion more than a year ago.
• For more stories go to www.BusinessInsider.co.za.

By the end of January the books of South African banks reflected a combined R20 billion less in overdraft and credit card debt than at the same point in 2020, data release by the SA Reserve Bank’s Prudential Authority on Tuesday showed.

Overdrafts are bigger than they were in November, when they dipped to R197 billion. But at R209 billion, they were still down 8.1% compared to January 2020, when news of a novel coronavirus detected in China was just starting to attract some notice.

Credit card advances also remain low, around R1 billion less than a year ago, at R132 billion.

On the other side of the coin, statistics suggested South Africans were hanging on to cash.

Compared to a year ago, current account balances were up 31.5%, savings accounts were up 18.3%, and call accounts were up 19.1%.

Between those three type of deposits, South Africans held around R2.5 trillion in accessible cash, compared to just a little over R2 trillion at the end of January 2020.

At the same time, loans against which banks have raised specific impairments were up R67 billion, and were fast approaching R240 billion. 

When the scale of the pandemic started to become clear in April 2020, the Prudential Authority told banks to hang onto their cash – rather than pay dividends and executive bonuses – so they would be in a better position to fund hard-hit consumers and businesses.

But a giant government-backed loan guarantee scheme has been called a complete failure, with banks saying their clients did not come looking for money.

(Compiled by Phillip de Wet)

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