Major banks analysis - March 2026

South Africa’s major banks navigated complex operating terrain to deliver solid results in 2025, as geopolitics and macro tensions weighed on domestic conditions

Combined headline earnings growth of 9.4% against FY24 to R152.5bn, combined *ROE of 20% (FY24: 19.7%), **net interest margin of 443 bps (FY24: 451 bps), credit loss ratio of 182 bps (FY24: 187 bps), cost-to-income ratio of 51% (FY24: 50.4%), common equity tier ratio of 17.3% (FY24: 17.2%)

*Excluding Investec **Excluding Capitec and Investec

South Africa's economic recovery gained credible momentum in 2025. GDP recorded its fifth consecutive quarter of growth in Q4-2025, pushing the annualised rate up by 1.1% for 2025, supported by the Government of National Unity's reform agenda, the end of load shedding and recovering consumer and business confidence. Domestic economic optimism was further aided by credit rating upgrades and South Africa’s removal from the FATF greylist. Inflation fell to an average of roughly 3.2%, providing capacity for the South African Reserve Bank to cut the repo rate to 6.75% by year end and enabling a new 3% inflation target.

The impact was tangible: household credit demand, subdued for some time, showed signs of recovery, while corporate fixed investment reclaimed ground off a low base.

Sub-Saharan Africa continued to present compelling growth dynamics. East Africa—often described as the continent’s most consequential subregion and seen as a trade corridor linking Africa with the Middle East and Asia—remained a standout performer, offering fast-expanding consumer markets, infrastructure investment opportunities and growing cross-border economic integration. West Africa presented a more mixed picture: while Nigeria and Ghana offer long-term structural opportunity, currency volatility and inflation continued to weigh on reported earnings in rand terms.

The introduction of US tariffs raised to levels not seen in decades created market volatility that simultaneously subdued investor confidence and presented trading revenue opportunities for banks through their global markets’ operations, as clients turned to hedging and risk mitigation actions for their businesses.

No major bank presented 2025 results without acknowledging the turbulent global geopolitical backdrop. Recent Middle East tensions dominated the discourse in recent weeks, with some commentators cautioning that these dynamics could prompt the SARB to reassess the pace of interest rate reductions. Rising oil prices are an inflationary risk that could interrupt the benign rate environment South African households experienced in 2025.

Key strategic themes emanating from the major banks results for this period include:

• Digitally enabled: South Africa’s major banks continue to compete intensely on digital growth, with client acquisition and transaction volumes continuing to increase, driven by mobile-first platforms. To this end, the major banks’ spend and investment patterns remain focused on transitioning and refining core systems toward cloud compute capability primarily through leveraging hyperscaler platforms to accelerate modernisation, and unifying systems across business segments. This is occurring amidst a rapidly evolving technology landscape, with use cases of fast-moving technologies like generative and agentic artificial intelligence continuing to be analysed by management teams in terms of potential impacts and opportunities internally and on customers, while regulators globally are focusing on governance and trust frameworks around AI adoption.

• Global banking trends emphasise embedding AI for personalised banking experiences, real-time data and intelligence, agentic AI (autonomous agents handling tasks with human oversight), seamless omnichannel experiences, including in third-party platforms, enhanced fraud detection/risk management, and efficiency gains through automation. The focus is on blending digital convenience with human elements, scaling AI beyond pilots for productivity (e.g. in credit decisions, customer service and experience, and operations), and building trust in AI amid regulatory scrutiny that will likely intensify.
  
  
• Client centricity and experience as differentiator: With banking products across the retail, business, and corporate spectrum increasingly commoditised, personalised client experiences tailored to individual needs across customer segments are now the primary differentiator and competitive battlefield between banks. It is this central conviction around client centricity that prompted some banks to pivot their internal structures to segment-based operating models, enabling concentration of talent, systems, technology investment, and product innovation where customer demand is greatest, while preserving scale efficiencies in back-office and shared services. New and emerging entrants in retail banking provide the impetus for competitive client offerings that challenge both traditional pricing assumptions and traditional ideas around digital banking experiences. Consistent with global trends, South African banks reflect increasing conviction that the future of banking is as much about ecosystem orchestration—owning the full client relationship and capturing activity across the financial services and broader lifestyle spectrum—as it is about risk appetite and balance sheet management.
  
  
• Resilient balance sheets: South Africa’s major banks have consistently revealed their ability to navigate uncertainty with skill and purpose, while capturing client demand in global markets businesses in periods of volatility. Anchoring this ability is the strength of their balance sheets, which remain underpinned by strong capital, liquidity and risk management positions. In FY25, these balance sheets continued to grow, with combined deposits now reaching R8.3 trillion (up 8.4% against FY24), and gross loans and advances of R6.8 trillion growing 5.8% against FY24.
  
  
• Pan African diversification as a structural growth vector: A consistent and continuing theme in the major banks results is that those with significant regional presence benefit from stronger rates of growth in those economies. While inflation, currency volatility and sovereign risks presented headwinds to doing business on the continent, its underlying endowments—including vast commodity and rare earth deposits and younger, digitally-native populations—remain highly attractive. Robust corporate and investment banking opportunities driven by advisory fees and trading activity in African territories outside South Africa, together with partnerships with fintechs and mobile money operators, helped offset softer growth in some parts of their South African operations. However, fiscal and domestic economic concerns in several African countries—compounded by varying tariff impacts—is likely to keep sovereign risk outlooks elevated.
  
  
• Cost discipline, productivity and operational simplification: In recent periods, cost management has become a defining test of management quality. Across the sector, the message from management teams is that sustainable earnings growth requires positive operating leverage—revenue growing faster than costs—and that this requires ongoing reinvention of operational models, not just incremental efficiency. Automation, digital servicing and AI-enabled productivity tools offer efficiency improvements that can support profitability even in low-growth environments, making them continued focus areas in coming periods. Given the central and strategic importance of digital and technological enhancement, IT spend (including on cloud migration) tracks above inflation.
  
  
• Sustainable finance and energy transition as a commercial opportunity: South Africa and Africa’s energy transition is generating bankable infrastructure investment at scale, with the major banks increasingly orienting their corporate and investment banking businesses around these opportunities. Across the sector, renewable energy finance continues to move mainstream, with management teams increasingly framing climate finance not just as a regulatory obligation but as a primary commercial growth driver.

Major banks’ results highlights: PwC’s Major Banks Analysis highlights key themes from the combined local currency results of Absa, Capitec, FirstRand, Investec, Nedbank and Standard Bank based on published results to date for the 2025 reporting period. For this period, all comparative figures were restated to incorporate Investec into our analysis, which includes their SA operations’ published results for the period ended 30 September 2025. The South African operations of the major banks included in our analysis comprised 93% of total banking sector assets in South Africa (based on December 2025 BA 900 industry data).

• Headline earnings: Combined headline earnings growth of 9.4% against FY24 to R152.5bn continued to outpace economic growth rates in South Africa and sub-Saharan Africa. The combination of strong non-interest revenue growth of 9.3% and decisive cost control underpinned earnings growth, supported by a largely flat bad debt charge.
  
  
• Loan formation: Reflecting relatively improved household and business sentiment in 2025, the aggregate gross loans and advances portfolios of the major banks grew by a resilient 5.8% against FY24 (and 5.8% against 1H25), with the individual loan portfolios exhibiting growth varying between the major banks based on a combination of differing strategies, geographic profiles and risk appetites. In the increasingly competitive retail lending sector, the effect of a moderately improved economic environment was evident in home loans, credit card, and asset finance portfolios. Similarly, based on Bureau information from the National Credit Regulator (NCR), the number of South African consumers classified in good standing increased to 18.7 million at the end of June 2025.
  
  
• Credit quality: The combined credit loss ratio (the income statement impairment charge divided by average advances) remained well managed, improving marginally to 182 bps (FY24: 187 bps) as the bad debt charge (i.e., the income statement expense) decreased by 0.6%. Total non-performing loans fell 0.2% against FY24, comprising 5.1% of gross loans and advances (FY24: 5.4%). According to the NCR Bureau information noted above, the number of South African consumers with impaired accounts decreased from 20.7 million to 20.5 million in Q2-25 when compared to Q1-25, a decrease of 154,846 or 0.75% quarter-on-quarter and of 246,284 or 1.2% year-on-year.
  
  
• Costs: As noted by Stats SA, in South Africa “the average inflation rate for 2025 was 3.2%. This is the lowest rate in 21 years (since 2004) when it was 1.4%. The next most recent year that average inflation was lower than 3.2% was in 1969 (3%), 56 years ago.” However, in certain key African territories in which some of the major banks operate, fiscal pressure weighed on inflation trajectories, making for a volatile inflationary environment. Against this context, disciplined cost control remained a key focus area for the major banks’ management teams throughout 2025. Cost drivers continue to be aligned to strategic focus areas, including spend in digital innovation, cloud technology, and cyber investments amidst a highly competitive retail transactional banking environment in SA given recent entrants with agile, cloud-based technology stacks. Overall, cost growth (up 6.9% against FY24) continued to be managed below operating income growth (up 7.2% against FY24), creating positive operating leverage. The aggregate cost-to-income ratio remained essentially flat at 51% (FY24: 50.4%).
  
  
• ROE and capital: On a combined basis, the major banks reported ROE for the period expanded approximately 42 bps to 20% (FY24: 19.7%), above the major banks’ average cost of equity. Driven by earnings, the combined common equity tier 1 capital ratio improved marginally to 17.3% (FY24: 17.2%) against the backdrop of new prudential regulatory reforms that took effect from 1 July 2025.

Outlook: As we noted in our recent economics blog, the US-Israeli military action against Iran, initiated in late February 2026, has triggered a global energy shock that is already reshaping fuel prices, inflation, shipping routes, the rand, and commodity markets. In the days that followed, Brent crude surged, breaking above $119/barrel in early March after starting at just $73/barrel. The Strait of Hormuz, through which roughly one-fifth of global oil supply transits, effectively ceased large parts of commercial operations following the withdrawal of P&I insurance cover, with fast moving developments occurring almost daily.

South Africa's exposure is more complex and differentiated than that of most emerging markets. It faces the same imported inflation pressures as any net oil importer, but also benefits from a record commodity price windfall and an activated maritime corridor. Whether those advantages convert into real economic gains depends on operational capacity and the speed of policy response.

Notwithstanding these global developments, the 2025 SA major banks results season articulates a coherent story: a sector that has navigated significant macro headwinds with discipline and delivered earnings growth that, in several cases, represents record performances. Credit quality has improved. Technology investment is bearing dividends. Geographic diversification is a robust earnings contributor.

But resilience is not reinvention.

The deeper challenge—building genuinely differentiated client relationships, deploying AI at scale, competing with fintech players and ecosystems, and striking the optimal balance of cost efficiency while investing for growth—remains ongoing.

South Africa's major banks are well capitalised, well managed and well positioned. The question for 2026 and beyond is whether their many successes to date will catalyse the bold moves that the next competitive cycle demands: a cycle that has already commenced with challenger banks making strong strides.

At the same time, regulatory complexity is likely to intensify. With new requirements for FLAC (First Loss After Capital) instruments—a new class of loss-absorbing capital—and the recent finalisation of post-crisis Basel prudential reforms, regulatory complexity could bear on strategy execution. Meanwhile globally, anti-money laundering, data privacy, and consumer protection requirements are raising compliance complexities for all institutions.

We expect that South Africa’s major banks will remain attuned to these broader operating environment and macro dynamics. As they have consistently shown, the foundations underpinning their resilience—including advanced risk management capabilities and strong levels of capital and liquidity—provide the platform for them to continue to focus on internal efficiencies and enhancements, client experience improvements and to leverage the opportunities presented by rapid technological changes.