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Absa, the last of the country’s largest retail banks to publish information on its payment relief program, says it expects more customers to ask for help.
It launched its payment relief program on March 30, 2020, as many consumers and businesses struggled to pay off their debt during closing.
In the first month of the program, the bank assisted more than 376,000 account holders who chose to take the bank’s three-month payment relief option.
Absa will provide R5.8 billion in payment relief between April and June for those who have already applied for it, most of which will go towards home loans. But most people needed relief for unsecured debts like credit cards and personal loans, even though they accounted for a smaller portion of the R5.8 billion.
“What we’ve seen is that across the spectrum, whether a customer earns R10,000 a month or R100,000; when their cash flow is interrupted, it has an immediate impact because their expenses are in line with what they earn. So It doesn’t mean the upper end of the market doesn’t feel so bad. It’s been right on the other side, “said Bongiwe Gangeni, deputy chief executive of Absa Retail and Business Banking.
He added that it is not just in South Africa where consumers are struggling with their cash flows due to Covid-19. In fact, Absa, which has operations in 12 other African countries, has similar programs for specific countries in other markets.
She said a “sizeable” number of business owners also struggled to cope with the sudden interruption in cash flow caused by the Covid-19 blockade, and in most cases they needed more than the standard three months of relief. financial that banks are offering.
“Some of them want a more personalized solution. Many of our commercial banking clients come in and say my circumstances are different. You may want additional loans,” he added.
All of the country’s large retail banks announced payment relief programs in March, and Nedbank was the first to share its experience last month, saying 130,000 customers had reached out to take advantage of the opportunity by April 14.
Standard Bank also announced last week that it granted installment relief to nearly 150,000 clients worth R1 billion per month.
Gangeni said banks are now in a better position to move more relief in case more people need it after the SA Reserve Bank (SARB) relaxed liquidity requirements and the treatment of delinquent loans caused by Covid-19. She said that the easing of regulations by the SARB will help banks remain liquid even in the face of falling collections, but banks’ profitability will eventually be affected by this.
“When we publish our results, we will all have a little more sense of what the book looks like. But it is fair to say at this point that there is no doubt that banks will be affected to varying degrees … But we are not concerned with absolute at this time because of our liquidity levels, “he said.
When most banks first announced their payment relief programs, South Africa was still only considering a 21-day blackout period. With the closure now in its fifth week and with no end in sight, Gangeni said banks realize that more consumers and businesses that didn’t take advantage of the relief opportunity in March or April may need it now.
Absa was also “coming to the end” to work out details of how he will participate in the R200 billion loan guarantee scheme that President Cyril Ramaphosa announced was established to help small businesses that earn less than R300 million in billing per year. , said. The bank expects to implement that loan scheme by the end of this week or next.
