Story audio is generated using AI
HomeChoice owner Weaver Fintech has tightened its lending rules as affordability pressure weighs on consumers, cutting credit limits, reducing approval rates and shortening loan terms as it moves to protect the quality of its lending book.The company said on Wednesday that its lending performance for the interim period to end-June was affected by affordability headwinds. The changes come as the company works to protect the quality of its lending book while consumers face pressure in meeting their financial commitments.The pressure Weaver is responding to is borne out in Old Mutual’s 2026 Savings and Investment Monitor. The survey of 1,519 working South Africans earning R8,000 or more a month found that 50% now worry often or always about debt, up from 43% in 2024, with the increase sharpest among those earning less than R30,000 a month. Personal loans of any kind, including from financial institutions, family, stokvels and informal lenders, were held by 64% of respondents, up from 54% in 2024, while 62% of those with a personal loan said it was taken out to cover an unplanned expense.A quarter of respondents said they had fallen behind on a loan repayment in the past year, a trend Old Mutual said was more prevalent among consumers earning R8,000-R30,000.During the first half of its 2026 financial year, Weaver reduced its targeted approval rate from 81.4% to 75.8% and cut the average loan term from 13.1 months to 12.6 months. It also reduced credit-limit exposure by R700m.Weaver said existing customer credit limits were too high in the prevailing macroeconomic environment, while new customers were performing well.The company also pointed to problems with customer payment processing and collections execution as factors that affected lending performance.As a result, the group said it has increased its collection agent headcount by 24.4% and said changes to its tracking strategy have been rectified.Early signs have since improved, with the company reporting that July 0-1 roll rates (an early measure of customers moving into arrears) improved by 13%. But credit losses remained a major pressure on the business. Debtor costs increased 62% in the first half, while Weaver increased provisions against its lending book.The pressure on lending also affected overall profitability. Group revenue increased 10% to R2.8bn, but profit before tax fell 9% to R337m.Despite the pressure, lending remains part of Weaver’s broader fintech ecosystem, which includes payments, insurance and other financial products.The company is shifting its growth towards payments and fee-based income. Weaver said its fintech revenue increased 30%, while fee income rose 43% and accounted for 40% of fintech revenue.Payments have become a bigger entry point into the business, allowing Weaver to offer customers products such as lending, insurance and buy-now-pay-later services.The group had 5.1-million customers at end-June, up 17% from the previous year.“We have positioned the business for prevailing macro headwinds,” the company said.The tighter lending approach is also part of a wider reshaping of Weaver’s retail business. Retail sales fell as the company adopted stricter credit criteria and shortened terms, while it continued to reduce its retail credit book.Weaver said it is transforming the retail operation into a smaller homewares business focused on cash generation. It is also closing underperforming showrooms, resizing older stores and has no plans for new openings.The group is investing in technology and AI to reduce costs and improve customer service. It said more than 90% of its engineers are building with AI daily, while AI is also being used in areas such as fraud detection, modelling and customer support.The company said it has strong liquidity, with R1.1bn in cash and unutilised facilities available to support growth.Business Day
