South African banking analysts at the weekend moved to agree with Moody’s and Standard & Poor’s (S&P) warning on the worsening conditions in the local bank’s unsecured lending, saying the rating agencies were spot-on this time around.

South Africa’s banking analysts have been among experts that have accused the rating agencies of pulling the trigger far too early and causing unnecessary mayhem.

South African analysts have also accused the rating agencies of issuing “self-fulfilling” predictions of doom, greatly exacerbating any sort of financial market crunch.

Johan De Kock, a senior equity analyst at Momentum Asset Management (MAM), told Ventures Africa he found nothing wrong in the rating agencies’ latest report on local banks.

“I think these rating agencies have been trying to be proactive in case something goes wrong,” De Kock said, adding this was fair enough.

Kokkie Kooyman, the award-winning head of global equities at Sanlam Investment Management (SIM Global), said this time around the rating agencies reacted to something that had already been noted by many South Africans.

“We have seen what they are talking about in the JSE-listed African Bank Investment Limited (Abil) sometime in May this year,” Kooyman said.

In May this year, Abil, which is the country’s biggest provider of unsecured loans, said operating conditions had deteriorated faster than it expected.

Steve Meintjes, a senior banking analyst at Imara SP Reid, said the rating agencies were correct in their comments that there will be trouble in South Africa’s unsecured lending space.

“I do not think this is a concern anymore because the banks have made provisions for this right on time,” Meintjes said, adding this was known all along.

Moody’s rating agency on Monday last week warned South African banks that offer unsecure loans that they faced a tough road ahead as the economy stumbled and labour action trudged on.

Moody’s cautioned that unsecured lenders which are domineering in the mining sector would be heavily battered in the next 12-18 months.

“We expect higher delinquencies from employees in the gold and platinum mining sector, and the agricultural sector, which have been hardest hit by labour unrest and strikes,” Moody’s said in a statement.

On Wednesday last week, another rating agency Standard & Poor’s (S&P), also painted a gloomy picture of South Africa’s unsecured lending space.

In its Banking Industry Country Risk Assessment of South Africa, S&P said South African banks will see increasing credit losses in the next 18 to 24 months.

“There will be weakening asset quality in unsecured lending that will negate any real estate market improvement when it comes to the banks’ loan books,” it said in the report.

“Rising debt and low economic growth could lead to increasing political risk and reduced policy flexibility to respond proactively to economic forces that threaten bank stability.”

Standard Bank, Africa’s biggest bank by assets, admitted earlier this year that Sub-Saharan Africa’s trade links with the developed world will mean that its prospects will be impacted by any weakness in the global economic recovery.

The bank said it expected GDP growth of between 2.5 percent and 3.0 percent in South Africa this year.

But it looks as if things are worse than they thought as the IMF this week reduced its South African GDP forecast to 2 percent from 2.8 percent.

De Kock said a dreary economic outlook meant less employment rates.  Unemployment means unsecured lending will suffer.

Absa, South Africa’s biggest retail bank, posted 68 percent credit impairment in the year to December 2012.

One of the most common reasons for credit impairment is the consistent late payment of debt obligations on the part of the debtor among other things.