SA’s private sector credit extension (PSCE) rose by 7.3% year on year in October, the highest it’s been since February 2023.
According to data released by the Reserve Bank, total credit extended to the domestic private sector reached R5.12-trillion in October, up from R4.78-trillion a year earlier. The rise was mainly driven by other loans and advances.
PSCE is a core indicator of economic momentum. It measures the total value of credit extended by banks to households and corporates and reflects the willingness of banks to lend and the confidence of consumers and businesses to borrow.
Corporate credit was the standout contributor, climbing 10.73% year on year. Nedbank economists noted growth in commercial mortgages was steady, “but healthy,” at 6.3%.
By contrast, credit extended to households increased more modestly by 3.1%. All categories except overdrafts improved.
“Home loans, the biggest category, increased for the fourth consecutive month, and vehicle finance remained robust, benefiting from falling interest rates and improving household finances,” Nedbank said.
Overdraft facilities continued their downward trajectory for a tenth straight month, with the pace of decline worsening from -7.1% to -7.9% in October.
Despite the rebound in overall PSCE, the split between corporate and household credit continues to shift. As of October, corporate loans accounted for 56.1% of total credit extended, up from 54.3% a year earlier. This reweighting reflects stronger credit demand from the business sector relative to consumers.
On a month-to-month basis, total private sector credit grew by 0.03% in October. Corporate borrowing declined by 0.32%, while household credit rose by 0.5%.
Nedbank expects credit growth to continue improving in the final month of the year and early into 2026.
“Both households and companies will contribute to the rise,” the economists said. “Company loans are expected to remain strong, sustained by a recovery in fixed investment, particularly in the renewable energy sector. However, the year-on-year growth rate will start to moderate around the first quarter of 2026 as the base effects begin to wane and pressure starts to mount on industries heavily exposed to higher US tariffs and the end of the African Growth and Opportunity Act (Agoa).”
For households, the ongoing decline in interest rates is expected to gradually filter through the broader economy.
“Low debt service costs, combined with subdued inflation and improving household finances, will convince consumers to spend and take on additional debt,” Nedbank said. “As debt service costs fall, default rates are also expected to ease, prompting lending institutions to relax their lending criteria.”
The bank expects household credit growth to remain limited, as weak consumer confidence (pressured by job insecurity and the broader effects of US tariffs and the loss of Agoa benefits) continues to weigh on borrowing behaviour.
“Nonetheless, we forecast growth in household finances to end 2025 at around 7%, up from 4.2% at the end of 2024. The faded base effects on corporate loans will pull growth in loans and advances to about 6.5% by the end of 2026,” Nedbank said.
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