Pretoria – South Africa’s banks remain well capitalised and the country’s financial sector is growing despite a sluggish economy, said National Treasury in its mini budget.
“Domestic banks remain well capitalised, with a total capital adequacy ratio of 15.2% in June 2016, up from 14.2% in December 2015,” said Treasury in its medium-term budget statement on Wednesday.
Treasury added that South Africa’s ‘Tier 1’ capital adequacy – the highest quality capital reserves – stood at 12.4% in June 2016, which is “well in excess of Basel III’s 6% requirement”.
Local banks’ level of capitalisation also comes amid growth in the financial sector.
“The financial sector grew by 2.2% during the first half of 2016 compared with the same period in 2015, despite low GDP growth and constrained household balance sheets,” said Treasury.
Treasury on Wednesday lowered its growth expectations for the economy from 0.9% to 0.5%.
Gross domestic product growth in South Africa is expected to reach 2.2% in 2019, said Treasury.
Meanwhile, Finance Minister Pravin Gordhan also had praise for South Africa’s banks in his mini budget speech on Wednesday.
“South Africa has soundly-capitalised banks, and strong financial institutions,” said Gordhan.
“They are well placed to finance investment and enterprise development as our economic recovery gains momentum."
Kudos for African Bank curator
Gordhan confirmed that the restructuring of African Bank is complete.
“It was facilitated by a government-guaranteed loan issued by the Reserve Bank, which has been fully repaid, with interest,” said Gordhan.
“Congratulations are due to the curator, Tom Winterboer, on a job well done,” Gordhan.
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