TransUnion today released its Q4 2024 Industry Insights Report. The findings in the report highlight that South Africa’s credit market has remained steady with clear evidence of strategic adaptation in Q4 2024, as lenders balanced growth with effective risk management.
The TransUnion Report highlights key trends across credit cards, personal loans, and vehicle finance, showcasing how lenders are navigating a challenging economic environment.
Some of the key findings include:
- Card issuers focused on existing cardholders by increasing credit limits (+5.0% YoY), while reducing new account credit limits (-3.9% YoY).
- Delinquencies improved, with a 34 bps YoY decline, reflecting better consumer payment behaviour.
- Outstanding balances rose 7.8% YoY as consumers relied on credit cards to manage financial pressures.
- Personal loan originations, driven by younger borrowers, especially Gen Z (+48.5% YoY).
- Banks shifted focus to subprime borrowers (58% share in Q4 2024, up from 53% in Q4 2023), while non-bank lenders maintained consistent risk-tier distribution.
- Vehicle loan originations grew for the second consecutive quarter (+9.6% YoY), with notable growth among Gen Z consumers (+27.9% YoY).
- Average loan amounts increased by 1.4%, supported by recent interest rate cuts and improved consumer confidence.
Personal loan lenders target younger borrowers
While personal loan originations from traditional banks declined by 6.2% YoY in Q4 2024, personal loan originations from non-bank lenders increased by 13.9% YoY. Non-bank personal loan originations among Gen Z[3] consumers grew by 48.5% YoY, with this cohort accounting for 15.5% of all non-bank originations.
Non-bank personal loan originations increased YoY across all risk tiers (except for the super prime risk tier, where originations declined by a marginal 1.0% YoY), with the greatest increase seen among prime borrowers (16.1%). However, bank personal loans declined across all risk tiers YoY, except for subprime, where they increased by 6.0% YoY.
Banks are expanding their personal loan offerings to a greater proportion of subprime borrowers. Among bank personal loans, the share of subprime borrowers increased from 53% in Q4 2023 to 58% in Q4 2024, with the share of near prime borrowers remaining consistent across the year.
There were minimal YoY fluctuations across the remaining risk tiers. In contrast, the distribution across risk tiers for non-bank personal loans remained consistent over the last two quarters of 2024.
