PRETORIA, April 25 Rapid growth in South
Africa's unsecured lending has not sparked a bubble and banks
are managing exposure to the business prudently, the central
bank said in its regular review of the financial system on
Growth of unsecured loans - which don't require collateral
and are riskier and more lucrative for banks - has surged over
the last year in Africa's top economy, as lenders push to offset
weak corporate demand for credit.
The trend has caused some policy makers and analysts to
caution that banks are too eager to extend more credit to
However, in its Financial Stability Review released on
Wednesday, the South African Reserve Bank said unsecured lending
accounted for just 8 percent of total credit extended by major
"At these levels unsecured lending does not constitute a
bubble," the central bank said.
"This should also be seen against the background of a
banking sector that is managing its exposure to unsecured
Reserve Bank Deputy Governor Lesetja Kganyago struck a more
concerned tone last week, saying that unsecured lending was
"growing too fast".
Unsecured lending exposure among six selected banks grew by
11.3 percent year-on-year as of December 2011, the central bank
The central bank also said major lenders had little exposure
to debt-troubled Greece, Italy, Ireland, Portugal and Spain.
It reaffirmed its view that banks will face challenges in
meeting tougher liquidity demands from the coming Basel III
regulations. However, it said weak overall demand for credit
should help lenders with the liquidity requirements.
South Africa's major banks are Standard Bank,
FirstRand Barclays' unit Absa,
Nedbank and Investec .
Smaller lenders Capitec and Africa Bank Investments
are heavily involved in unsecured lending.