Introduction
South Africa’s banking sector is well capitalised and its capital adequacy and liquidity ratios have remained well above minimum statutory requirements. In the year to end-March 2022 the sector recorded increased assets, gross loans and advances, investment and trading securities and short-term negotiable securities. Profitability improved significantly. However, the operating environment remains highly volatile and the sector is facing elevated domestic and global risks. These include a possible greylisting over South Africa’s failure to implement adequate measures to prevent illicit money flows.Opportunities
Expansion of the major banks into the growing African corporate and investment banking market.The development of digital banking products and apps. The inclusion of unbanked low-income earners. The R50bn a year stokvel savings pot can be leveraged to finance small business development. The regulation of the cryptocurrency market could allow for the development of new banking channels.
Outlook
The Reserve Bank expects banks and financial institutions to remain resilient with adequate capital buffers to absorb shocks.With inflation and interest rate increases, and as consumers and businesses come under increased pressure, analysts predict that the risk of non-performing loans will rise. Analysts expect climate change to increasingly impact financial stability and monetary policy. The rise of digital banking will continue to drive the demise of in-person banking.
Report Coverage
This report covers the banking industry in South Africa including the major commercial banks, development banks, central bank, digital banks, microfinancing and stokvels.It includes comprehensive information on the size and state of the sector, industry statistics and performance indicators, rankings, corporate actions and other developments. There are profiles of 81 companies including the major banks such as FirstRand (FNB), ABSA, Standard, Nedbank, Capitec and Investec, development banks such as the Land Bank and relatively new players such as TymeBank and Bank Zero.
Strengths
Stokvels are effective savings and investment instruments.The banking sector is stable and well capitalised. The level of formal financial inclusion is 91%, and 81% of South Africans aged 16 years and over have a commercial bank account. The major banks have well-diversified product portfolios and broad geographical reach. The South African banking system is well regulated and is regarded by the International Monetary Fund as one of the best banking systems in the world.
Threats
Ballooning national debt poses a threat to financial stability.Banking-related corruption, crime and fraud, including cybercrime and money laundering. Climate change-related shocks. Domestic and global macroeconomic pressures. Further waves of COVID-19. The impact of the war in Ukraine on inflation. The threat of South Africa’s grey-listing over inadequate measures to combat money laundering.
Weaknesses
Capital requirements that determine how banks allocate credit tend to work against small businesses and poor people. The commercial banking sector is dominated by five major players and is highly concentrated.Table of Contents
1. INTRODUCTION4. AFRICA5. INTERNATIONAL8. SWOT ANALYSIS9. OUTLOOK10. INDUSTRY ASSOCIATIONS
2. DESCRIPTION OF THE INDUSTRY
3. LOCAL
6. INFLUENCING FACTORS
7. COMPETITIVE ENVIRONMENT
11. REFERENCES
APPENdix
COMPANY PROFILES
Companies Mentioned
- Development Bank of Southern Africa
- Greenhouse Funding 5 (RF) Ltd
- Ned Investment Trust
- Nedbank Ltd
- NPE 1 (Pty) Ltd
- NPE 2 (Pty) Ltd
- NPE Holdco (Pty) Ltd
Methodology
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