S.Africa's Abil puts the brakes on consumer loans

African Bank Investments is slowing down its lending after years of rapid growth, the first sign South African banks may be turning more cautious about lucrative, but high-risk loans to increasingly indebted consumers.African Bank, also known as Abil, helped pioneer the booming South African market for unsecured lending - highly profitable, though risky, credit that is not backed by collateral.Abil, which fell short of expectations with an 18 percent rise in full-year profit on Monday, is now seeing competition from South Africas big banks, which are also lending to low-income consumers.We have cut back slightly on our credit and more importantly were being more selective about who and how much we give following the excessive supply in the market, Chief Financial Officer Nithia Nalliah told Reuters.The central bank has said it is not unduly worried about the rise in unsecured loans, but some analysts disagree. Unsecured credit surged 21 percent to $43 billion in the year to June, according to central bank data.The loans have helped underpin consumer spending, especially among the poor. However, there is also vast potential for default, given that South Africas household debt stands at 76 percent of disposable income.The fact that they are aware of the dangers of the unsecured lending is positive, said Viv Govender, analyst at Vunani Private Clients.People have been nervous about this sector as a whole. Theres been talk about the possibility of a bubble in unsecured lending.