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Tuesday Sep 01, 2020

Cash crunch from lockdown affects property owners

A major bank has revealed that 200 more customers have sought help to sell their homes as the cash crunch from the Covid-19 lockdown bites property owners even harder.

Nedbank says 10% of their client base has also missed home, vehicle, personal and credit card payments, while another 10% have asked the bank to extend payment holiday agreements as consumers battle the impact of the lockdown which started late in March.

Two weeks ago, The Star reported that at least 500 cars and 89 homes had been turned over for auction or for sales assistance by Absa clients alone since the beginning of July.

Nedbank spokesperson Annaleigh Vallie said on Monday they had received about 200 requests from customers to have their primary homes placed under the bank's assisted sales programme.

"Since July 1, the Nedbank Assisted Sales Programme has received just under 200 enquiries from clients impacted by the pandemic who would be looking for assistance to sell their investment/primary home. With our client-led strategy which seeks to improve the client's financial circumstance, 61% have taken up the Nedbank Assisted Sales Programme to assist with the selling of their home privately with no sign of distress," she said.

Vallie said the bank had to provide relief to over 375000 customers, rallying to over R119billion in loans.

"This support included R30.5bn for clients in Corporate & Investment Banking, R78.4bn in Retail & Business Banking, R7.1bn in Wealth and R2.6bn in Africa Regions," she said.

Vallie said that between 75% to 87% of their clients had now resumed making payments on their home, vehicle, personal and credit cards, while 10% of Nedbank clients had extended their payment holidays and 10% of clients had missed payments.

"Forecasting in the current environment is complex and estimates are subject to a much higher level of forecast risk than usual, but we are hopeful that the worst impacts of Covid-19 and the lockdown are behind us and that impairments in the second half will be lower than in the first half and client activity will continue to increase off a low base," said Vallie.

Standard Bank spokesperson Ross Linstroom did not respond to questions about how many vehicles and homes were going under the hammer.

However, he did say that client activity at ATMs was down by 21% and declined by 42% at bank branches.

Small businesses had turned over 14% less, while mid-sized businesses had turned over 7% less.

The bank's home and vehicle loans divisions had declined sharply, between 32% and 38% respectively.

"Covid-19 has led to the worst economic shock in living memory. Supply chains were disrupted, and demand declined. An oil price war and oversupply drove a swift and significant decline in the oil price.

"Fear and uncertainty drove a precipitous fall in the markets and a liquidity squeeze in the first quarter of the year. This was quickly followed by extraordinary fiscal and monetary actions and fiscal stimulus (in developed markets) and a variety of regulatory actions.

"These bold actions, combined with flattening infection curves, calmed markets somewhat and drove a recovery in the second quarter," explained Linstroom.

He said Standard Bank provided relief to retail and SME clients with R118bn, with home and vehicle asset finance representing 62% and 23% of the bank's personal business and banking client relief portfolio respectively.

"While we have assisted some clients with payment holidays, we have seen improved collections as there has been increased collections activity since the hard lockdown," said Linstroom.

FNB said it was still under a closed period until mid-September and could not provide details yet.

By Sihle Mlambo


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