No spikes in short-term credit industry

Following in-depth discussions with the National Credit Regulator (NCR), Compuscan confirms that the massive ‘spikes’ indicated in short-term credit in the latest Consumer Credit Market Report (CCMR) were influenced by changes in the reporting convention. These ‘spikes’ are therefore not a true reflection of the stability of the ‘short-term credit’ industry.

As an example of such, a 557% year-on-year increase in the value of short term-loans granted in the R5 000 to R8 000 bracket, was published in the CCMR for Q2 2015 by the NCR. This does not mean that there was in actual fact a spike in the industry as it has since been communicated that the numbers were influenced by the reclassification of credit providers from ‘unsecured’ to ‘short-term credit’. Thus, these statistics are not a true reflection of market trends.

Comments Jacobus Eksteen, Senior Data Analyst at Compuscan: “In essence, the CCMR statistics for Q2 2015 relating to ‘short term credit’ and ‘unsecured credit’ cannot be directly compared to those recorded in Q2 2014, and there are a number of major reasons for this. Firstly, the NCR increased the number of credit providers whose data is incorporated in the production of the CCMR in Q4 2014, and this was not applied retrospectively.”

“Furthermore, the required changes to delinquency definitions by the South African Reserve Bank affected the statistics in Q2 2015. And of course, rather significantly, the reclassification of credit providers took place, influencing the numbers in the ‘unsecured’ and ‘short-term credit’ categories. To put it very simply, comparing ‘short-term credit’ data year-on-year would be like comparing apples to pears.”

Eksteen adds: “We did not see the same shifts in our internal reports, which are consistently calculated. Based on this, and the aforementioned reasons, we conclude that, even though consumers are under severe pressure, the ‘short-term credit’ and ‘unsecured’ industries are stable.”