QUICK READ Financial Sector

The South African Reserve Bank (SARB) said this week that the domestic financial sector remained vulnerable to international developments such as global stagflation and the spillover effects of the Russia-Ukraine war. However, the financial system continued to be resilient under heightened volatility and challenging global and domestic conditions, and this resilience was expected to be sustained over the forecast period. Macro-prudential specialist Dr Herco Steyn said global stagflation could put pressure on some sectors of the financial system. However, prudentially regulated domestic financial institutions remained resilient, partly owing to their ability to maintain adequate capital buffers to absorb the impact of shocks.

The Eighty20/XDS Credit Stress Report for the first quarter 2022, released this week, notes that although the number of creditactive individuals continues to rise, it is still below 2020 levels. The value of loans also rose despite the total number of loans dropping by more than a quarter million since December. For the first time in more than two years, the total balance of loans that are 30-plus days in arrears has decreased quarter-on-quarter, by 3.4%. However, the number of loans in arrears increased by 0.5%. Loans in arrears now make up 38.7% of open loans, or 8.8% of loan value. Loans more than nine months in arrears (which make up half of all loans in arrears) increased for the fourth quarter in a row, rising by 0.4% quarter-on-quarter (1.5% yearon-year).