SOUTH African bank shares came under pressure on Tuesday afternoon, with unsecured lenders taking the biggest knocks.

Abil shares ended down 5.91% to R35, while its main rival, Capitec, dipped 2.72% to R214.

The banking index was down 1.05%‚ underperforming a flat JSE all-share index.

Abil, the largest provider of unsecured loans in South Africa, on Monday issued a trading update and its leadership told an investor conference there was a sign of a pull-back in the advancing of unsecured loans.

It also pointed to intense competition in the market and certain areas that were feeling stress.

Harry Botha, an investment analyst at Avior Research, said there could be potential risk in unsecured credit, and that in other markets experience had shown that oversupply could lead to other credit providers overextending themselves.

In a sign of a pull-back in unsecured credit compared with the last quarter of 2011, new data from the National Credit Regulator (NCR) showed that in the quarter to the end of March 2012, unsecured credit granted fell to R21.94bn, a decline of 17% from the previous quarter’s R26.5bn.

Among the big four banks, Absa had the sharpest decline on on Tuesday‚ ending down 1.64% to R136.99, followed by Standard Bank, which lost 1.1% to R116.70. FirstRand ended the day 0.97% in the red at R28.62 and Nedbank was off 0.39% to R184.28.

Investec Ltd gave up 2.09% to R49.20.

"Bank shares have rallied strongly, so to an extent it could be general profit taking," said Peter Mushangwe, a financial analyst at Legae Securities. "But, of course, some could be stock-specific issues. The investor day (on Monday) at Abil seemed to point to a worsening credit environment in the unsecured market, and yields are declining, which are general concerns we have been highlighting for some time."