Publications
Partners
Cape Town – South African banks are riding the rough economic wave with the necessary finesse delivering strong results, according the PwC Banks Analysis report.
According to the report’s findings, South Africa’s major banking groups - Barclays Africa [JSE:BGA], FirstRand [JSE:FSR], Nedbank [JSE:NED] and Standard Bank [JSE:SBK] - produced a credible set of results for the year ended December 31 2015.
This was achieved despite a “volatile operating and economic landscape”.
The banking sector experienced massive shock waves in December 2015 after the axing of the respected finance minister Nhlanhla Nene, who was replaced by the untested ANC MP Des van Rooyen.
READ: Markets react aggressively to Nene axing
At the time Nedbank lost 7.74%, Standard Bank gave up 7.21%, Capitec [JSE:CPI] was down 3.85% and FirstRand shed 5.8%.
Johannes Grosskopf, banking and capital markets leader for PwC Africa, gave credit to the strength of major banks’ franchises and the “resilience and diversity” within their income streams to withstand economic headwinds while delivering growth at group level.
“Overall, the major banks reported combined growth in headline earnings of 12.5% against the comparable period to December 2014 to reach R33.8bn,” he said.
The report, entitled ‘Growing in turbulent times’, analyses the results of South Africa’s major banking groups for the year ended December 31 2015 and identifies common trends and issues currently shaping the financial services industry.
While the macroeconomic landscape remains highly volatile and subject to a range of persistent challenges at the global and domestic level, the report suggests that the banking industry finds itself in the grasp of an increasingly changing world.
“The combination of technological change, regulatory challenges, and customer and social expectations is daunting, while the stakes are enormous,” said Grosskopf.
“In addition, criminality and technology risks are increasingly becoming concerns of banks given the rise in new competitors who are challenging traditional ways of doing things and operate using more nimble systems and lower overheads.”
From a lending perspective, the major banks reported combined gross loans and advances growth of 4.8% against the first half of 2015.
The report said that the growth in gross loans and advances continues to be stronger in the corporate and investment banking sector than the retail sector.
“In spite of difficult economic conditions, South Africa’s major banks continue to produce laudable financial results. Looking ahead, the outlook remains cautiously optimistic given the level of uncertainty and challenges facing the domestic and global economy,” Grosskopf said.
“Balance sheet resilience, a sustained focus on proactive risk management and overall bank strategy, including diversification in earnings profiles and income streams will all continue to be key for the major banks to ensure that they can navigate the heightened levels of forecast risk and map their paths through the headwinds that are likely to persist throughout the rest of 2016,” he said.
