Credit growth in the private sector held steady in June, rising 5% year on year, with businesses leading the increase through stronger borrowing.
The private sector credit extension (PSCE) data, released by the Reserve Bank on Tuesday, shows total credit extended to the private sector reached R4.98-trillion in June, up from R4.74-trillion in the same month last year.
PSCE is a core indicator of economic momentum.
Credit levels increased for both businesses and households, though the rise was more pronounced among businesses. In fact, corporate credit continued to dominate private sector lending, making up 51.86% of total loans in June.
Most categories of corporate credit recorded year-on-year growth, except for investments and bills, which declined for the fourth consecutive month. Overall, corporate lending volumes rose over the past 12 months, increasing by 8.1%.”
“Encouragingly, the most significant momentum came from general loans (usually used to finance fixed investment), which maintained healthy growth of 9.1% year on year,” Nedbank economists noted.
Yet, the subdued economic environment continues to weigh on corporates, Investec economist Lara Hodes said.
“Moreover, global uncertainty around the extent and effect of tariffs remains heightened weighing on confidence and investment decisions,” she said.
Household credit, while showing marginal improvement, remained sluggish. Total credit to households reached R2.23-trillion in June — a 3.08% annual increase.
Home loans remained steady at 2.2% year on year, while vehicle finance increased from 6.7% to 6.8%. “Low interest rates and subdued inflation support these categories,” Nedbank noted, adding that the rise in personal loans by a marginal 0.1% year on year is “the first expansion since March 2024”.
Jee-A van der Linde, Oxford Economics senior economist, expects “a gradual uptrend” in household credit uptake over the next quarters, “aided by somewhat easier monetary policy and favourable inflation”.
“Household credit growth has eased since the start of 2023, with current levels hovering below the aggregate post-pandemic average of about 5.5% per annum,” he said.
Nedbank concurred: “Lower interest rates have moderated debt service costs, and subdued inflation has boosted real disposable income. These factors support credit affordability, while falling debt defaults should prompt lenders to relax lending criteria.”
The bank also pointed out that any gains would be limited by weak consumer confidence, driven by a soft job market and poor growth prospects, which are making people more cautious with their spending.
“Company loan growth will further improve off a low base and as the modest economic recovery starts to pressure existing capacity.”
“However, the uncertainty surrounding the impact of the US tariffs will prompt some companies to remain sceptical about increasing capital spending. We forecast bank credit growth to end 2025 at about 5.5% from 4.2% in December 2024.”
July 29 2025. This story has been updated with comments from economists.
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