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Sarb: SA banks safe

Jul 02 2009 10:03

Johannesburg - The South African banking system remained stable, and banks were adequately capitalised and profitable, the SA Reserve Bank (Sarb) said in its Bank Supervision Annual Report 2008.

This was in spite of the "turmoil experienced in international financial markets and the domestic cyclical economic developments during 2008", Sarb said.

South Africa's top commercial banks - Absa, FirstRand, Standard Bank and Nedbank - had all said that future profits would be lower.

This was due to consumers defaulting and debts rising as South Africa's first recession in 17 years took its toll.

According to the Sarb's report, liquid assets held by South Africa's banks exceeded the statutory requirement throughout 2008.

The liquid assets held, measured against the minimum liquid asset requirement, amounted to 115.5% at the end of December 2008.

Sarb said the increase in interest rates, other cyclical economic developments in South Africa and the turmoil experienced in international financial markets contributed to credit risk ratios deteriorating during 2008.

- Sapa

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Nicolaas Smith
Jul 04 2009 18:40 Report this comment

SA banks will never be safe as long as their accountants unknowingly unnecessarily destroy billions of Rand in the real value of their issued share capital and reserves each and ever year. The will only be safe and maintain their capital and reserves when their boards of directors reject the very destructive stable measuring unit assumption as if forms part of the Historical Cost Accounting model http://realvalueaccounting.blogspot.com

Nicolaas Smith
Jul 02 2009 23:54 Report this comment

When SA banks measure financial capital maintenance in real value maintaining units of constant purchasing power instead of in real value destroying nominal monetary units (as they are doing at the moment) as they are allowed to do in terms of the IASB´s Framework, Par. 104(a) which is compliant with IFRS, they will maintain the real value of their investment capital for an unlimited period of time - ceteris paribus. They will avoid the capital deficiency that is behind the current crisis.

Nicolaas Smith
Jul 02 2009 21:39 Report this comment

SA banks may be adequately capitalized as per the SARB. What the SARB can not deny is that their accountants are unknowingly destroying the real value of their Retained Earnings at 8% per annum because their Boards of Directors choose to implement the stable measuring unit assumption. ABSA´s accountants are currently unknowingly destroying R3.338 billion in the real value of ABSA´s Retained Earnings during 2009. I dare the SARB or anyone to prove me wrong. http://realvalueaccounting.blogspot.com

cjl: GK Insight
Jul 02 2009 15:53 Report this comment

What you say is true and conventional wisdom. But the times require a courageous new dispensation a NEW MARSHALL PLAN for now

GKT Insight
Jul 02 2009 14:55 Report this comment

Interest rates are not the target. Inflation is. Increase interest rates, which will happen by the end of next year, then inflation will decrease (with a lag period in between of course), and hopefully within the 3 - 6 % range. SA Banks are profitable at the expense of their SA customers. The margins in SA (developing country) are still high compared to other developed countries. But then again, high risk equates to high return! Shareholders must be loving this!

cjl PRIME RATE DOWN
Jul 02 2009 14:49 Report this comment

PRIME RATE MUST COME DOWN TO 8% OR LOWER:That is call; forget economists arm theorists: We know repo is down but the commercial banks have not responded. WHERE IS THAT REPORT? SMME's need finance to produce and the public need to spend on homes and on white goods. WE are in stagflation; the banks are sound & cash flush but the Joeblog suffers: No jobs No homes ALL the theories about inflation and other ECON 1 & 2 very good but useless in pratice if they had the answer why the problems

PUTZ
Jul 02 2009 14:42 Report this comment

AS I RECALL, GIRLS AND BOYS, OUR ILLUSTRIOUS FINANCIAL GURU HAS OPINED ON MANY OCCASIONS - "" WE ARE NOT IN RECESSION"" - THEY ALWAYS SAY THAT WHEN THINGS ARE LOOKING TRICKY AND ITS ABOUT TIME TO STICK THEIR HEADS IN THE SAND - AGAIN. DONT BELIEVE A WORD OF IT. ITS ALL SMOKE & MIRRORS.

Graham
Jul 02 2009 12:39 Report this comment

Banks are a powerfull instution and when together become a voice of recon....whatever happend to the Competition Investigation into the bank charges?? swept under the carpet and ignored.


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