Lending group Absa has said the first half of the year, characterised by higher interest rates and a rising cost of living, has seen more of its customers roll into arrears and fall into debt review, forcing the bank to take on heavier loan losses that pushed credit impairments up by 60%. The bank handed out R8.3 billion in bad debt charges during the six-month period to the end of June 2023, with credit impairment charges in mortgage lending, its biggest loan book, growing the fastest.
Despite 6% home loan growth to R298 billion, production dropped by 26%, Quinn said. While the lender conceded that the credit impairment charges the bank reported are significant, group CEO of Absa Arrie Rautenbach said this was not unexpected given rising consumer distress. “We’ve got a cohort of loans that I think are moving through the delinquency buckets, but we’ve built significant coverage for that,” said Quinn.