Business Report’s Tonny Mafu on IOL reports that:

“South African banks, which account for the majority of loans issued, may have no idea how deeply indebted their customers are.

This is the view of Carel van Aardt, a professor at Unisa’s Bureau for Market Research (BMR).

According to Van Aardt, the BMR has done a study on the extent of indebtedness on behalf of one of the banks and the findings point to higher levels of debt.

This had put doubt on the official debt-to-income ratio of 76 percent, recently given by the SA Reserve Bank.

While Van Aardt could not disclose the details of the survey, he highlighted some of the survey’s observations.

The study showed that consumers had a tendency to use more than one bank to access credit. In such cases, a consumer would access multiple credit-type products. A consumer would typically use one facility and once this was exhausted would “migrate” to another bank.

Van Aardt’s view of high debt levels was echoed by another study commissioned by Credit Suisse Standard Securities (CSSS). The brokerage firm found that debt burdens of households ranged between 95 percent and 135 percent, well above the official 76 percent.

CSSS found that lower-income earners had higher exposure to unsecured loans, with store credit and credit card access showing strong growth.

Johan van den Heever, economist at the Reserve Bank, said the bank only had aggregated debt statistics. He said he was confident that the “macronumber” was reasonable. The data also included non-bank institutions, micro-lenders and in-store credit. But the central bank relied on studies done by market research firms.

But Gabriel Davel, the chief executive of the National Credit Regulator, said lenders had a 90 percent chance to determine the extent to which a prospective borrower was indebted in their first interface with the customer.

This would require the consumer’s pay slip, bank statement, and credit bureau record, and credit providers would have to perform an expense test on the borrower.”