Nedbank: Money supply and credit

31 Jan.

Nedbank Economic Commentary: Money supply and credit.

Credit rises by more than expected but still modest.

• Broad money supply growth rose to 8,2% y-o-y in December from 7,2% in November and against the market consensus of 7,6%.
• Growth in private sector credit extension was unchanged at 6,2% y-o-y, higher than the market consensus of 5,9%.
• Credit to households rose by 1,4% m-o-m and 6,7% y-o-y, while corporate credit rose by 0,9% m-o-m and 8,4% y-o-y.
• Growth in asset-backed credit was slow at 3,4% y-o-y from 2,7% in the previous month. However, instalment sales and leasing finance has accelerated, rising by 1,4% m-o-m and 7,0% y-o-y. Mortgage finance edged higher, expanding by 2,5% y-o-y.
• The other loans and advances category increased by a strong 2,6% m-o-m and 15,4% y-o-y, and this, combined with the robust growth in household sector credit, suggests that firm growth in personal loans, overdrafts and credit cards was largely behind the rise.
• These credit numbers do not change our view that the Monetary Policy Committee is likely to keep policy neutral while the economic climate remains cloudy in the face of weak global conditions. We expect that the Reserve Bank will start to tighten policy only in the fourth quarter of 2012.

Comment

Broad money supply growth rose to 8,2% y-o-y in December from 7,2% in November and against the market consensus of 7,6%. Net foreign assets increased by R1,6 billion, while net claims on the government sector fell by R23,6 billion. Net claims on the private sector rose by R17,3 billion.

Growth in private sector credit extension was unchanged at 6,2% y-o-y, with credit to households rising by 1,4% m-o-m and 6,7% y-o-y, while corporate credit rose by 0,9% m-o-m and 8,4% y-o-y. …

See the full Commentary