BANKS and credit providers are stepping up efforts to recover bad debts, even as they start relaxing lending criteria, figures from the National Credit Regulator show.

The number of enquiries lenders made to credit bureaus for the purpose of tracing and debt collection jumped almost 16% in the three months to March to 18,57-million, the latest quarterly credit bureau monitor report shows.

Over the same period, the number of enquiries made as a result of consumers seeking to take out new credit fell almost 5%.

Enquiries to credit bureaus, which store the records of SA’s 18,2-million active borrowers, are made by both consumers and lenders, and the reasons for inquiries include providing sales leads for new credit products, vetting new loan applications, and debt collection and enforcement.

The growth of enquiries for debt enforcement purposes in the three months to March, the fourth straight quarter to show vigorous debt collection-related inquiries, shows lenders are now calling in their loans. “Credit providers are more and more starting to follow up and enforce where they have arrears,” National Credit Regulator CEO Gabriel Davel said yesterday.

Further evidence of this comes from the figures illustrating the deterioration of the South African consumer’s debt profile. The number of people with credit records marked as “impaired” — those with accounts three months or more in arrears, with an adverse listing such as “absconded” or a judgment order against them — rose to 8,37-million, or 46% of all active credit users.

While this suggests a continued deterioration of the sort seen for the past three years, the quarterly decline came from increases in adverse listings as well as judgments and administration orders — moves sparked by debtor action.

The “natural” deterioration of debts that fell into three or more months in arrears — reflecting a failure by debtors to keep paying their obligations on time — actually improved, with this category of debtors improving slightly to 17,2% of the total from 17,3% in the December quarter.

In contrast, adverse listings grew to 17% from 14,6%, and the category for judgments and administration orders rose to 13,7% from 13,3% as a proportion of all debtors.

“It’s not as if the level of arrears or debt stress is deteriorating,” said Mr Davel. “It’s much more the enforcement of action by credit providers.”

Nonetheless, the overall profile of South African consumer debt continued to worsen in the first quarter. The number of people recorded as being in “good standing” — with accounts marked as current or no more than one to two months in arrears — slipped to 54% of the total from 54,7% in the December quarter, to a total 9,84-million people.

The pace of both deterioration of good records and the growth in impaired records was faster in the March quarter than either measure saw in the December quarter. Still, both measures show smaller changes than they did midway through last year, leading Mr Davel to repeat earlier comments that the worst may well be over.

Others repeated the sentiment.

“Nonperforming loans have peaked. Generally, financial services institutions are more bullish about the future,” said David McAlpin, CEO of Cape Town-based PIC Solutions, a credit risk consultancy.

Still, other reports show loans for big-ticket vehicle loans and homeloans are growing more slowly than shorter, unsecured types of credit.

The number of active credit accounts grew in the March quarter to 64,75-million, from 63,94-million in the December quarter. This increase was almost double the increase of 400000 accounts seen in December from September.

This was a sign of debt stress, as cash-strapped consumers took advantage of better credit availability to take out loans to tide themselves over, consultancy Econometrix said in response to yesterday’s report.

Mr Davel disagreed: “Small amounts of credit have grown much more than mortgages or motor vehicle loans. Does that indicate stress? I’m not certain.”