SA’s private sector credit extension (PSCE) rebounded in March lifted by a sharp rise in corporate borrowing, even as household credit growth remained subdued and effectively flat.
According to data released by the Reserve Bank on Wednesday, PSCE grew 3.45% year on year marginally slower than February’s 3.68%.
Private sector credit extension is a core indicator of economic momentum. It measures the total value of credit extended by banks to households and corporates and reflects both the willingness of banks to lend and the confidence of consumers and businesses to borrow.
The moderation can be attributed to the bills and investments category, which contracted 6.3% year on year, Nedbank economists noted.
However, credit rose by 1.81% month on month, a notable acceleration from February’s flat reading.
The data came in above market expectations with both Nedbank and Investec forecasting a more muted reading.
Nedbank economists had projected PSCE growth of 3.1% year on year, anticipating sluggish loan demand and only a partial rebound in bills and investments after February’s sharp drop. The bank also expected corporate credit to slow to 3.5%, reflecting fragile business confidence and restrained investment.
Investec economist Lara Hodes had an even more conservative view, forecasting PSCE growth of just 2.3% year on year.
The real improvement was underpinned by a 5.55% year-on-year increase in corporate credit, up from 5.13% in February and a strong 3.60% month on month.
In contrast, household credit grew 2.93% year on year, slightly up from 2.75% in February, but declined marginally month on month by 0.01%.
On the corporate front, Nedbank said credit growth was set to remain modest amid spare capacity and heightened levels of uncertainty. “However, conditions will likely recover more meaningfully later in the year as improved growth outcomes boost confidence and bolster private-sector investment.”
The bank said the “subdued increase mirrors the more cautious attitude adopted by consumers in the context of heightened uncertainty despite lower interest rates and higher real incomes”.
On the household front, consumers appeared apprehensive about taking on additional debt despite the easing in interest rates and lower inflation, the bank noted.
“Specifically, the mortgage advances segment, which makes up a significant 58% of credit extended to households remained largely unchanged when measured on a month-on-month basis,” Hodes said. “This is in line with the FNB/BER Building Confidence survey (of 2025’s first quarter) results, which revealed that sentiment among residential builders ‘was largely flat’.”
“While the repo rate has eased notably from its peak of 8.25%, it is still trending 125 basis points above its pre-pandemic level of 6.25%, indicating that rates remain quite restrictive,” Nedbank said.
“Nonetheless, lower inflation and an improved growth and employment outlook should bolster consumer confidence, allow lenders to ease credit standards, and thus encourage growth in the coming months.”
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