* Reserve Bank says unsecured lending growing too fast
* Local financial companies however still sound
(Adds background)
JOHANNESBURG, April 17 (Reuters) – Unsecured lending in
South Africa is growing too fast, Reserve Bank Deputy Governor
Lesetja Kganyago said on Tuesday, in the latest sign policy
makers are worried about rising levels of borrowing by highly
indebted households.
Recent data has pointed to local banks increasingly giving
out loans without security to consumers already struggling to
pay their bills.
“As a regulator we are concerned about the growth in
unsecured lending. It is growing and it is growing too fast,”
Kganyago told a forum on the impact of the euro zone crisis on
Africa.
A day earlier, Finance Minister Pravin Gordhan also noted
the significant growth in the loans, saying it would be a big
worry if it was feeding solely into consumption as this would
fuel inflation.
Until recently, unsecured lending – which is riskier for
banks and thus more expensive for borrowers – was dominated by
smaller lenders, but now the bigger banks also looking for a
slice of the high-margin business.
The rand value of unsecured credit granted increased was up
more than 57 percent in the last quarter of 2011 compared with
the same period the previous year, the latest official data
shows.
Kganyago also said the economy remained vulnerable to the
downturn in Europe, a major trading partner for South Africa.
(Reporting by Stella Mapenzauswa; Writing by Xola Potelwa;
Editing by Jon Herskovitz)
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