Business Report‘s Mzwandile Jacks :

Absa’s impairment charges – bad debt write-offs and provisions – had surged by 121 percent to R2.1 billion in the six months to June as defaulters increased due to high interest rates and high inflation, Steve Booysen, the chief executive of Absa, said yesterday.

Booysen said the impairment ratios would increase by 140 percent in the next six months to about R5 billion because chances were that the current economic conditions were going to continue.

He said impairment charges had most affected Absa’s retail bank division.

Nedbank said in its interim results presentation on Wednesday that impairment charges for the six months to June had increased by 86.4 percent – from R1 billion in the previous corresponding period to R1.8 billion.

High inflation, personal indebtedness and increases in interest rates have put consumers under severe strain.

The erosion of consumers’ ability to repay debt has led to the continued deterioration of the retail lending environment.

Nedbank said this had placed significant pressure on retail banking, which was expected to continue for the remainder of the year and into next year.

Booysen said: “It is not only interest rates, but we are beginning to see an increase in job losses.”

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