Global risks cloud outlook
business owners will use the favourable credit conditions to scale operations and invest in growth.
“SMME owners have started moving from working capital requirements to expansion, with seasonal businesses, predominately from the retail and hospitality sectors, showing an increase in comparative month-on-month figures in November and December 2024, indicating rising consumer confidence.”
Downard also expects continued growth in unsecured lending, particularly among
SMMEs, which often struggle to obtain funding from traditional institutions such as banks. While this activity will likely continue into the first half of 2025, global factors are clouding the longer-term outlook.
“The new US administration threatens the economic progression because proposed policies, including increased tariffs, would result in higherthan-expected inflation, meaning fewer interest rate reductions and less money in people s pockets, adds Blackmore.
“Current sentiment suggests SA may only see a single rate cut in 2025, says Brett van Aswegen, CEO of Wonga. While every rate cut offers some relief to monthly disposable income, a slow and limited rate-cut cycle would hinder any meaningful real or nominal growth in credit extension. The lack of inflation adjustments to regulated lending fees since 2015 compounds this challenge. As a result, higher-risk consumers may be pushed out of the formal credit market and into informal lending, where pricing remains unaffected by interest rate changes.
Tech helps lenders navigate complexity
writes Pedro van
Gaalen
enders
Lsays
“Traditional credit scoring focuses on things such as bureau scores and bank histories, which excludes many responsible people who don t have a formal credit record, explains Fredericks. Incorporating alternative data, such as mobile top-ups or paying rent, can help providers assess creditworthiness and bring more non-credit active consumers
precise decision-making, and can leave lenders vulnerable to unforeseen market shifts. Grobler says attributes solve these multifaceted challenges by revealing hidden patterns and complex relationships that drive consumer credit behaviour.
INCORPORATING ALTERNATIVE DATA SOURCES IS IMPORTANT TO BROADEN ACCESS TO CREDIT PRODUCTS
“By analysing, aggregating and combining millions of individual data points, from payment histories, credit utilisation and demographic trends to alternative data sources, attributes paint a more detailed and nuanced picture of individual creditworthiness. Andre Fredericks, Chief Operating Officer at Sanlam Studios, says incorporating alternative data sources is important to broaden access to credit products and reimagine other aspects of the credit management value chain and life cycle.
Proactive approach to fraud prevention
For Business, identifies cybercrime, email interception and data theft as other prolific threats. As criminals keep changing their modus operandi, banks constantly develop and enhance technical controls to keep up with these threats. Nick Harris, Head: Financial Crime at Capitec, adds that authorised push payment fraud is another prevalent scam, which gets victims to unknowingly initiate payments to fraudsters. These include investment scams, Ponzi schemes and prepayment and advance-fee scams that require victims to pay upfront fees, deposits or full amounts for goods, services or prizes that never materialise,” says Harris. Fraudsters impersonate bank representatives claiming there has been fraudulent activity on a victim s account, requiring urgent payments via cash send, real-time clearing or other instant transfer methods to protect their funds.
CONSUMERS TARGETED In TransUnion s H2 2024 State of Omnichannel Fraud Report, nearly half (49%)
Mark Wells.
Francois Grobler.
Frank Knight.
Brent Downard.
HSBC to cut $1.8bn in costs by end-2026
ZERO EMISSIONS
Bank backs away from climate goal
year, as itsnew CEO revamps the bank to boost profit while navigatingmixed interestrate policies andprofound geopolitical changes. The Asian-focusedlender booked earnings for 2024 that beat marketexpectations and announced anew $2bnshare buyback, which itplans to complete before its next earnings filing.
The figurescome asCEO Georges Elhedery pushes ahead with acostly revampjust asthe outlookis muddiedbydivergence in global interest rate policies, with theeurozone having room to cut rates, the US holding steady and Japanexpected to raise.
Thebank, whichearnsmost of its revenue andprofit in Asia, saidthat its2024performance came against thebackdrop of significant geopoliticaluncertainty, heightened by many consequential elections across the world
Sino-US tension is a concern for investors inHSBC, which counts Chinaas akey market whereit hasdeployed billionsof dollarsoverthe pastfewyears. That concernhas intensified sincethereturn totheWhite House ofa presidentwho, inhis first tenure,implemented antiChinese trade policies.
Elhedery became HSBC CEO
Simon Jessop and Tommy Reggiori Wilkes London HSBC is ditching its target of reaching net-zero carbon emissions acrossits business by 2030 becauseof slow changein thereal economy,it said on Wednesday. Europe s biggest bank said it expected to recorda 40% reduction inemissions across itsoperations, businesstravel and supply chain by 2030. The bank said itaimed to hit the more ambitious net-zero target bythe middleof the century. It also announced an
in September and has since been working toboost returns and intensify the London-headquartered bank s focusonAsia, where it earns most of its profit.
HSBCreported profitbefore tax for2024 of$32.3bn, as income withstood the impact of falling interestrates. That compared with$30.3bn ayear earlier andthe $31.7bnaverage of analyst estimates compiled by the bank.
The banksaid thatit aimed for about $300m in cost reduction in 2025, with a commitment to anannualised reductionof $1.5bn in cost base by end-2026.
internal review oftargets on emissions linked to its loans. In its annual report, the bank said that it had limited influence on companies over issues such as technologicaladvances, market demandand effective policy influencing thepace of change.
HSBC said thatits original target wasbased onan ability to use carbon credits to offset some of its supply chain emissions,which wouldnot alignwith recentguidance from the ScienceBased Targets Initiative, whichassesses and approves corporate targets. The bank schief sustain-
“We have renewed vigour in finding theefficiencies thatwill optimise our resource allocation, bethat geographical,business line or balancesheet, Elhedery said in thebank s earnings statement.
HEADCOUNT
“This will enhancethe way we actively anddynamically manage costs andcapital, and target investments
Theprice ofHSBC s Hong Kong-listed shares roseafter the earningsannouncement byas muchas 1.8%toHK$88.80 which was itshighest since
ability officer stepped down several months ago after CEO Georges Elhedery removed the role from thebank s executive committee in a management reshuffle Activists saidthey were concerned the decision signalled a pullback from HSBC s climate ambition, compoundingfears thatthewider banking sectoris rowingback on emission reduction pledges. Morgan Stanley in October lowered expectations for emissions cuts from its corporate lending portfolio and a number of US banks have left a climate coalition. /Reuters
February 2011. The broader market was down 0.4%. HSBC s headcount fell 3% last year, and itsstaff bonus pool hardlychanged fromtheyear earlier as Elhedery sharpened focus on costs, the bank also said on Wednesday. Plansto trimpersonnel expense by 8% over 2025 and 2026 arepositive but Idon t see a lot ofnew eye-catching overhaul or cost-cutting measures in the release, said senior equity analyst MichaelMakdad at Morningstar. That snot necessarilyabad thing increasingefficiency at a
bank likeHSBC isa matterof many smalland midsizedetails that have to be well co-ordinated he said.
HSBC said that it aimed for a performance target ofa midteensreturn onaveragetangible equity for each year from 2025 to 2027, while noting the outlook for interestrates isvolatile and uncertain in the medium term.
For 2024, wealth and personal banking,its biggestearner, delivered $12.2bn in profit before tax, a 5.2% rise from a year earlier, as it won new customers and soldmore wealthmanagement products.
Profit in globalbanking and markets rose nearly27% to $7.1bn, HSBC s earningsfiling showed
HSBCalso saidthat itwould payafourth interimdividendof $0.36 a share, resulting in a total of $0.87 for2024, which includes aspecial dividendof $0.21 for the disposal of its Canadian business.
Elhedery, a career HSBC insider promoted fromthe CFO role, hasmoved fasterthan someanalysts andinvestors expected toshake upthe bank byslashingthe ranksofsenior managers andreorganising operating divisionsalong EastWest lines.
He cutthe mergers& acquisitions andequity capitalmarkets teams inEurope and the Americasin thebank s biggest investment bankingretrenchment in decades,accelerating a pivot towardsAsian markets.
/Reuters
Mitsui to buy 40% stake in Rio Tinto iron ore project
• Japanese company expands involvement in Australia
Yuka Obayashi and Kaori Kaneko Tokyo Japanesetrading houseMitsui& Co said on Wednesday it would acquire a40% stake inthe Rio Tinto-operated Rhodes Ridge iron ore project in Western Australia for $5.34bn, to strengthen its long-term earnings base. The deal, marking Mitsui s largest investment,was aresult of long-term efforts to expand its production volume ofiron ore, a key growth driver,CEO Kenichi Hori said. Rhodes Ridgewas oneof the world s largestundeveloped depositsof thesteelmaking ingredient, with6.8-billion metrictonnes ofmineral resources, Mitsui said. The project isin Western Australia,where wehavebeen involvedin miningdevelopment since the1960s andhave the most expertise,” Hori said. “It will further strengthenour business foundation
The deposit s proximity to existing iron ore projects reduced capital costs and risk, he said. The Japanese company is
buying out two separate stakes controlledbythe familyoflate Australian magnate Michael Wright,whose fatherjointlydiscovered the region siron ore lodeinthe 1960s.Mitsui,witha diverse portfolio spanning metal resources, energy,machinery, andfood, expectsproductionto start by 2030. Its 40% stakein Rhodes Ridge is projectedto yield 16milliontonnes ofironore ayear initially,rising tomore than40million tonnes after further expansion, boosting
cash flow by ¥100bn ($659m) and ¥250bn, respectively. In the financialyear that ended in March2024, Mitsui s annual equity shareof iron ore production was61-million tonnes throughinvestment in Valeand partnershipswithRio Tinto and BHP. Mitsui expects tofind cost savingsby tappingexisting infrastructure between Rhodes
DEAL STRENGTHENS JAPANESE TRADING HOUSE’S LONG-TERM EARNINGS BASE
Growing sense of cautious optimism
among younger consumers. We are also seeing an increase in applications for consolidation loans as consumers look to collapse debt into one account with a better interest rate and lower, more manageable repayments. In addition, TransUnion data shows consumers are inquiring about credit, but 54% of respondents ultimately decided not to pursue credit applications, with 31% citing the high cost of
credit as a deterrent, even after the recent interest rate cuts. Says Adams: Local consumers are weighing their options as interest rates come down, especially on big-ticket items like cars and homes. In this context, TransUnion s Q3 2024 South Africa Industry Insights Report shows consumers preferred buying used over new vehicles to manage affordability pressures, with the
use this period wisely to regain financial stability rather than accumulating more debt.
“For those who have managed their repayments comfortably, the decline in interest rates translates into increased disposable income, adds Yaaseen Albertyn, Executive Head of Business and Client Solutions at Metropolitan.
This surplus income will likely drive consumer spending, contributing positively to broader economic growth. Albertyn also expects an increase in credit applications, rather than any meaningful increase in voluntary savings. This trend is borne out in TransUnion data, which shows an increase in year-on-year credit demand.
“Our Q4 2024 Consumer Pulse Survey revealed a growing sense of cautious optimism among surveyed consumers, says Fatgie Adams, Head of Credit Risk Solutions at TransUnion Africa. Access to two-pot retirement savings in September also improved sentiment and spending, with some consumers using the funds to pay down short-term debt. Adams affirms that the debt hangover from the past four years means local consumers are making considered financial decisions, especially those still trying to make ends meet.
The Q4 2024 TransUnion Consumer Pulse Survey highlights a trend of prioritising debt repayment, particularly
Jaco van Jaarsveldt.
Fatgie Adams.