Credit growth stronger than expected

Johannesburg - Growth in credit demand from South Africa's private sector ticked up to 5.65% year-on-year (y/y) in July from a slightly revised 5.28% in June, central bank data showed on Tuesday.

Growth in the broadly defined M3 measure of money supply slowed to 5.58% y/y compared with an upwardly revised 6.03% in June.

Economists surveyed by Reuters last week forecast private sector credit would be at 5.0% y/y in July, while M3 growth was seen braking to 5.5% y/y.

"The increase in credit is mainly due to quite a sharp increase in credit extended to corporates. What was interesting was there was a slowdown in credit extended to households, mainly due to a slowdown in mortgages," said Nedbank senior economist Carmen Altenkirch.

"It is higher than the market expectations, so there is some demand coming back, but we need to keep an eye on where it's coming from.

"There isn't much coming from mortgages, so there are other things driving demand apart from mortgages. I expect interest rates to remain stable," said Freddie Mitchell, senior economist at Efficient.

Source: www.fin24.com

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