Growth in private sector credit extension (PSCE) surprised on the upside, according to Standard Bank economist, Tebogo Mosepele, expanding by 7.3% in January, from 6.2% in December - also overshooting the Bloomberg consensus expectation of 7.1%.
But growth in M3 money supply was surprisingly weaker in January, easing to 6.6% in January, from 8.21% in December. The outcome was below the Bloomberg consensus estimate of 8.6%.
In January, private sector credit growth remained flat at 0.7% month-on-month (m/m). The m/m increase in credit growth was driven by investments, installment sales credit and other loans and advances.
Growth in mortgage advances was unchanged (0.0% m/m) in January, after easing to 0.1% in December, from 0.2% in November. On a year-on-year (y/y) basis, this category increased modestly to 2.4% in January from 2.5% in December. Despite this disappointing performance in this category, (which accounts for about 50% of total private sector credit extension), it contributed mildly to the y/y increase in credit.
Growth in other loans and advances (which accounts for about 33.3% of total PSCE) remained the main driver of the y/y increase in PSCE, contributing 4.8% to the 7.3% increase in private sector credit. Nonetheless, growth in this category moderated to 14.9% in January, from 15.3% in December.
Other loans and advances are often used as a proxy for corporate credit demand.
Growth in household credit demand slowed to 6.1% y/y in January, from a slightly revised 6.8% in December. Growth slowed notably for unsecured credit components such as other loans and advances and credit cards. Corporate credit demand was up 8.7% in January, from 8.1% in December.
The installment sales component continued to increase in January, to 11.4% from 10.7% in December. This was inconsistent with the strong growth in vehicle sales in January.
