Johannesburg — STANDARD Bank has increased its risk acceptance rate on its home loan and credit card conditions because it believes there are sufficient signs the economy is starting to improve albeit slowly.

Standard Bank SA CEO Sim Tshabalala said: "We see medium- term improvement among households, as affordability improves on lower interest rates. We have taken proactive steps to capitalise on this improvement."

South African banks have faced criticism recently that they may be stifling recovery by cutting access to credit to hard-pressed consumers through the application of overly strict lending criteria .

But Standard Bank personal and business banking CEO Peter Schlebusch said the weak economy, surplus production capacity, risk aversion, lower spending on durable and semi durable goods and retail sales, and a propensity to save and repay debt, had resulted in a lower consumer credit appetite . In the business market the sweating of assets and uncertainty had curbed credit demand.

Standard Bank's greater risk appetite was prompted by improved debt affordability after the interest rate cuts and improving nonperforming loan ratios, signalling better consumer health.

Potential increases in real disposable income, the fact that asset prices appeared to be bottoming, and fixed investment by the public sector were other positive signs.

Risks included unemployment and business closures, increases in inflation and interest rates, and prolonged subdued house prices.

Standard's increased appetite for risk would lead to the provision of 100% home loans again for houses under R1,5m (up from 90%- 95% loans previously). The bank would allow loans to the value of up to 100% on affordable housing, it would accept non-Standard Bank customers, and first-time homeowners applying for bonds of up to R1m could qualify for a 104% loan.

Schlebusch said the bad debt ratio in home loans was increasing, but at a slower rate: 1,30% in June last year, 1,49% in December and 1,55% in June this year. The home loan approval rate had fallen to 55% from 75%, but was expected to improve to 65% this year.

Nonperforming home loans came to R22bn out of a total arrears and outstanding book of R250bn. The bank was working with clients to save their homes, and debt from R27bn of loans involving about 30000 clients had been restructured, with 85% of those honouring commitments.

In credit cards, Standard was raising the "acceptable" bad debt ratio to 11% on new business written in an entry-level segment .