Aug 2023 | Data Insights |

The Experian Data Insights Check-In brings you key insights based on the Q2 2023 Consumer Default Index.


Experian’s CDIx

In this edition, we launch the CDIx or Consumer Default Index Expanded report which brings you the latest:

  • Macroeconomic trends that have a direct bearing on consumers
  • Market appetite for credit
  • Qualification and take-up of credit (i.e. new credit)
  • Performance of credit consumers (i.e. arrears/defaults and vintages)

Our analytics experts have extracted key highlights to give you a good understanding of the current trends we’re seeing in the market.

Short and to the point, these key trends leave you with enough information to start making better business decisions.


Get the summary Q2 2023 CDI Report for an overview of the latest consumer default trends.

Get the summary Q2 2023 CDI Report for an overview of the latest consumer default trends.

Download the summary CDIx report

*Note the full CDIx is now a paid product. Contact us for more information.


Listen to the Podcast

No time to read the article below? Listen to our podcast.


The Experian Data Insights Check-In brings you key insights based on the Q2 2023 Consumer Default Index.

8-minute read

The CDIx (Consumer Default Index – extended) provides a quarterly overview of the consumer credit landscape in South Africa. We report on the latest CDI as well as some of the latest credit industry trends regarding the greater economic context within which these trends are observed.


There are 4 main components to the CDIx:

  1. Macroeconomic Market Context that has a direct bearing on consumers
  2. Market appetite for credit
  3. Qualification and take-up of credit (i.e. new business)
  4. Performance of credit consumers (i.e. arrears/defaults and vintages, CDI and Debt Review)


For details on these aspects, you are encouraged to subscribe to the full CDIx report, as only highlights of some of the elements are covered in this podcast. A CDIx subscription also includes a spreadsheet with the CDI time-series by product as well as at a composite level.


The Macro-economic market context


Consumer Price Inflation has shown further easing over the course of the last quarter, moving down significantly from 7.1% in March 2023 to 5.4% in June 2023. Note, this does not mean that the cost of living is easing, but rather that living costs are rising at a slower rate.


At 5.4% in June 2023, the CPI has now returned to the SARB’s target band of 3% – 6%.


One of the burning points in terms of cost of living, has been the costs associated with electricity – both from an Eskom tariff perspective as well as from an alternative electricity perspective (e.g. generators, solar). Energy (and alternative energy) costs are also impacting on other elements of consumer cost of living, e.g. the cost of food stuffs. We have been commenting on the increase in the cost of food and non-alcoholic beverages for a number of quarters now, and these costs are still continuing along a steep increasing path.


Another one of the key drivers of the affordability challenges consumers are currently facing relates to the cost of credit.


The prime lending rate in South Africa has continued along the same rapidly increasing trajectory since December 2021 and saw yet another increase in Q2 of 2023. The main driver behind the prime lending rate upcycle has been the CPI. At the current 11.75%, this is the highest that the prime lending rate has been since 2009. Interest rate increases have been used quite aggressively by the SARB to curb Consumer Price Inflation. This seems to have been successful – considering that CPI is now back below the 6% mark.


The rate at which interest rates have been increasing over the last 20 months has been staggering – increasing by 475 bp’s over these 20 months vs. the previous upcycle of 200 bp’s over the span of 24 months. For young consumers, being relatively new to the credit world, these continued and steep interest rate increases would have had an impact of note on household expendable income and might have caught them off-guard.


Looking at the second element of the CDIx, i.e., the Market Appetite for consumer credit, the National Credit Regulator’s data indicates that the number of credit applications received, eased slightly over 2023 Q1 (note that these results are lagged by a quarter). Although we have seen a slight easing in demand, we are still seeing appetite levels exceeding pre-covid levels by 25%.


Despite this softening in demand, we have seen approval volumes decrease to below 30% of the number of applications made, meaning that applications are only approved less than a third of the time.


We now move on to the third aspect of the CDIx, looking at New Business.


From a volume perspective, we have seen the characteristic contraction early in the first quarter, following the uptick observed in the festive season. However, the gradual recovery we usually see after the early-year reduction has not occurred yet for 2023.


In fact, we see this pattern not only emerging from volume, but also for disbursement values this year.


This suggests that the potential for credit extension among the existing qualifying consumer base is now reaching a ceiling – most probably brought about due to the affordability challenges faced by these consumers.


And finally, the fourth component of the CDIx – looks at portfolio performance metrics.


The CDI tracks the rate of first-time defaults: looking at the rate at which accounts get into technical arrears (>90 days) for the very first time.


The latest Composite CDI has shown drastic deterioration – both from both a Y-o-Y and a Q-o-Q perspective. What’s more is the fact that we have seen Y-o-Y deterioration for each of the five products that are tracked as part of the CDI – Home Loans, Vehicle Loans, Credit Card, Personal Loans as well as Retail Loans.


Indications are that the CDI has not only returned to the long-term deterioration that was present prior to the onset of COVID but is now deteriorating at a much more rapid rate. This comes as no surprise, as the structural reforms that are required to get the South African economy to grow and strengthen again, are yet to be implemented.


When considering the consumer segment split view of the composite CDI, an interesting observation emerges.

  1. As expected, the more affluent consumers (FAS 1 and 2) typically have lower CDI’s than less affluent consumers do.
  2. However, the high affluence consumers show the most sizable relative deterioration in CDI.
  3. In particular, FAS Groups 1 & 2 (Luxury Living and Aspirational Achievers), who are the most affluent consumer groups, have been showing steady increase in distress over the last two years, as these consumers have become increasingly reliant on initially, the available secured credit on existing facilities and then later on, also unsecured credit to fund their lifestyle. With secured credit, the repayment of these products typically has an immediate negative impact on household expenses upon announcement of increase in interest rates, putting these households under a significant amount of financial pressure.


Considering how high affluence consumers – and particularly FAS Group 2 consumers – have shown an increase in Debt Review application, the financial strain endured by these consumers becomes quite evident.


The CDIx provides views on Debt Review as provided via the National Credit Regulator’s Debt Help System, and reports on the latest trends both from a volume and value perspective.


We have seen a steady increase in the exposure of consumers applying for a Debt Review over the last four years. This stems from consumers becoming increasingly aware of the benefits of the debt counselling process and using this to repair their debt situation. But also, the relative increase in representation of the high affluence consumers in FAS Groups 1 and 2 particularly over the last 2 years, has also been a driver of this upward trend. This observation re. high affluence consumers highlight the fact that these upper and middle-class consumers are under increased pressure to make ends meet from a cost-of-living perspective, and that we are now at a point where they are looking to Debt Review as a means to ease the financial pressure.


Get the summary Q2 2023 CDI Report for an overview of the latest consumer default trends.

Get the summary Q2 2023 CDI Report for an overview of the latest consumer default trends.

Download the summary CDIx report


Watch the Video

Watch our video in which Ans takes you through the various graphs that bring these data insights to life.