South Africa - Major Banks Analysis | September 2026

South Africa's major banks delivered resilient earnings as a promising domestic recovery met renewed inflation, geopolitical disruption, and a more demanding competitive cycle.

Combined headline earnings growth of 9.3% against 1H25 to R82.3bn, combined *#ROE of 20.5% (1H25: 19.9%), **#net interest margin of 474bps (1H25: 472bps), #credit loss ratio of 199bps (1H25: 185bps), #cost-to-income ratio of 49.6% (1H25: 50.6%), common equity tier ratio of 16.3% (1H25: 17.7%) 

^{*Excluding Investec | **Excluding Capitec and Investec | #Based on normalised results as published by the relevant entities, where applicable}

South Africa entered 2026 with improving momentum. More reliable electricity supply, progress in logistics reform, a more credible fiscal trajectory, and favourable sovereign rating actions had begun to strengthen confidence. That recovery proved fragile. As noted by Stats SA, the economy contracted by 0.2% in the second quarter after expanding 0.4% in the first, with trade, manufacturing, and mining – engines of our economy – among the primary drags. Household consumption nevertheless remained positive, highlighting the contrast between resilient consumer activity and challenges in several productive sectors of the economy. 

The global backdrop also changed sharply. Conflict in the Middle East disrupted energy markets, lifted fuel costs, and revived inflationary pressure. South African inflation reached 5.0% in June before moderating to 4.3% in July. The South African Reserve Bank increased the policy rate by 25 basis points to 7.0% in May and held it there in July, interrupting expectations of continued monetary easing.

These crosscurrents created a challenging earnings environment for South Africa’s major banks. Lower average interest rates moderated endowment income on capital and transactional deposits, while the subsequent rate increase renewed pressure on affordability at the customer level. Nonetheless, the results showed positive underlying momentum, supported by different combinations of retail recovery, business and wholesale banking activity, trading and market revenues, cost discipline, and credit performance, offset by institution-specific factors.

Commenting on the major banks’ results for the period, Rivaan Roopnarain, PwC South Africa Banking and Capital Markets Assurance Leader, notes, “The first half of 2026 tested the banks’ ability to adapt as the expected benefits of lower inflation and interest rates gave way to a more uncertain and complex global environment. Overall, these results were not driven by a single earnings engine but instead reflected the portfolio benefits of diversification across products, sectors, and geographies. A retail recovery, business and wholesale banking momentum, market activity, disciplined cost control, and strategic portfolio choices all contributed in different measure. That breadth, coupled with discerning management actions amid a fast-moving operating environment, are important features of the sector’s resilience.”

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

• Client relationships remain the primary competitive battleground. Competition continues to intensify across retail, business, and corporate banking. Digital activity and transaction volumes increased, while operating models moved closer to customer segments and relationship accountability. The strategic objective is clear: use data, distribution, and product breadth to deliver simpler, more relevant experiences and deepen cross-sell across banking, payments, insurance, and investment propositions. Digital convenience will dominate routine customer servicing, but trusted human judgement, particularly in a South African context, remains important at moments of complexity, financial stress, issue resolution and high-value decision-making.
• Payments, merchant services, and adjacent businesses are becoming growth engines. Payments support fee income, deposits and data-rich client relationships. Merchant services, acquiring capabilities and selected adjacent businesses are receiving greater investment, including through partnerships and acquisitions. The prize is not simply transaction revenue. It is a deeper position in the client’s operating flow and financial ecosystem, with opportunities spanning working-capital finance, insurance, value-added services, and analytics. As real-time and embedded payments evolve, the contest is increasingly for the primary relationship rather than ownership of individual products. Developments within South Africa’s payments ecosystem – anchored by the SARB’s Payments Ecosystem Modernisation Programme to drive fast, simple, inclusive and secure digital payments across South Africa – will likely drive competition, including from non-bank financial services players, ultimately to the benefit of consumers.
• AI is moving from experimentation to enterprise execution. Consistent with global trends, the major banks are extending AI and intelligent automation into client engagement, fraud management, credit decisioning, software development, and employee productivity. The strongest message coming out of this results period is not the number of AI and automation use cases, but the need to convert technology investment into improved client outcomes, revenue opportunities, faster decisions, and sustainable efficiency. Cloud migration, modern data architecture, improved data quality, effective governance and controls, and investment in employee skills remain fundamental building blocks for organisations seeking to scale AI capabilities safely and realise value from their AI investments. Yusuf Bismilla, PwC South Africa Technology Partner, notes, “AI is moving quickly into the operating fabric of banking. Its value will be determined by how well it is embedded into end-to-end processes, underpinned by trusted data, strong governance and controls, explainability, accountability, and effective human oversight. While AI adoption continues to accelerate, many banks continue to refine how they measure and realise value from these investments. Ultimately, the banks that will realise the greatest benefit from AI are those that combine the technology with deep knowledge of their customers and markets, and the expertise of their people, to improve decision-making, enhance customer outcomes, and strengthen risk management.”
• Operating models are being redesigned around clients, productivity and AI. Customer-segment structures, clearer accountability, simplified processes, and targeted portfolio actions featured prominently in the period. Some banks are reorganising existing franchises; others are integrating acquired payments, fleet, merchant, and regional capabilities. These moves are intended to improve cross-sell and decision-making, but they also raise the execution bar. Ultimately, value will depend on disciplined integration, removal of duplication and measurable productivity, not organisational change alone. 
• Wholesale and business banking remain balance sheet anchors. Corporate balance sheets remained relatively healthy, while infrastructure needs across energy, transport, logistics, water, and telecommunications created funding and advisory opportunities for the major banks. Accordingly, corporate and investment banking businesses benefited from improving deal flow, trade finance, and demand for foreign-exchange, commodity, and other risk-management solutions. Business banking also showed stronger momentum as transactional and lending propositions became more integrated. 
• The consumer recovery was interrupted, not extinguished. Lower rates and moderating inflation had begun to support household affordability, with pockets of improved activity in cards, vehicle finance, home loans, payments, and insurance. Higher fuel and transport costs slowed that progress. The results nevertheless showed the value of disciplined origination, proactive collections, and targeted risk appetite. The consumer outlook is likely to remain uneven by income group and product, making granular portfolio management more important.
• Pan-African diversification remains compelling, but uneven. Operations outside South Africa provides access to faster-growing markets, expanding financial-services demand, and favourable demographics. The results in this period also illustrated different routes to regional growth, which span organic investment, customer-segment operating models, partnerships, and selective acquisitions. Currency translation, sovereign risk, liquidity constraints, and differing rate cycles will continue to create volatility for African operations. Diversification is therefore a strategic advantage, but not a guarantee of uniform growth in every reporting period. Where acquisitions are made, they demand a deliberate approach to integration that preserves entrepreneurial agility, local market insight, and customer relationships that made the acquired business valuable in the first place. Heavy-handed integration, imposed structures, or a rush to standardise can erode innovation, local relationships and knowledge, as well as the growth trajectory, that justified the deal.
• Capital strength creates strategic choice. Capital and liquidity remained comfortably above regulatory requirements, preserving capacity to support organic growth, invest in technology, return capital to shareholders, and pursue selective acquisitions or partnerships. This flexibility matters as banks absorb regulatory reform, modernise technology and compete for growth without weakening resilience.

Major banks’ results highlights: PwC's Major Banks Analysis considers the combined local currency results of Absa, Capitec, FirstRand, Investec, Nedbank, and Standard Bank based on published results released in the first half of 2026. The analysis is presented at an aggregate level and does not rank or attribute performance to individual banks. The South African operations of the major banks included in our analysis comprise the majority of total banking sector assets in South Africa. 

• Headline earnings: Combined headline earnings increased 9.3% against 1H25 to R82.3bn, but the composition of growth differed. Some of the major bank results reflected stronger retail and business banking contributions, while wholesale activity, trading income, and improved credit outcomes were more prominent for others. Portfolio changes and differing reporting periods also impact comparability. The common thread between the major banks was diversified earnings capacity rather than dependence on a single driver.  
• Revenue and margins: Net interest income fell 4.3% against 1H25 given pressure from lower average rates and competitive deposit pricing. Non-interest revenue (which grew 8.6% against 1H25) was an important counterweight, supported by transactional activity, payments, insurance, merchant services, origination, and client-driven markets income. This robust revenue mix reinforces the strategic importance of capital-light revenues alongside traditional lending activity.
• Loan formation and deposits: Corporate and commercial lending showed improving momentum as deal pipelines converted across infrastructure, energy, telecommunications, trade, and other productive sectors. Retail growth was more selective. Deposit franchises remained resilient across transactional, cash-management, and investment products. These relationships matter not only for funding and liquidity, but also as the foundation for payments and wider client ecosystem participation. 
• Credit quality: Credit outcomes remained manageable but increasingly differentiated across portfolios. Corporate portfolios generally benefited from healthy balance sheets, cures, and recoveries. Retail outcomes reflected household pressure, portfolio mix impacts, and the timing of risk actions. Proactive collections, disciplined origination, and early-warning capabilities remain central. With inflation and rates changing direction, payment behaviour and early-stage arrears will be important indicators. The combined credit loss ratio of the major banks was reported at 199 bps (1H25: 185 bps), with relative differentiation across individual portfolios and banks reflecting differences in portfolio composition, geographic exposure, and the timing of recoveries and specific charges. Although inflation moderated in July, consumer confidence weakened and the SARB continues to highlight downside risks to household consumption and investment. As noted in the TransUnion Q1-2026 Industry Insights report, “South African consumers are reshaping how they access and use credit as affordability pressures persist. The report’s findings show that credit demand remained resilient, but diverging risk dynamics are increasingly evident across products and providers. Consumers are relying more heavily on existing credit facilities while also shifting toward more accessible lending options that are typically employed by higher risk borrowers to manage short-term liquidity needs.”
• Costs and productivity: Cost growth reflected salary adjustments, specialist skills, and continued investment in technology, data, cybersecurity, and cloud capacity. The period also included spending on new operating models, client propositions, and acquired capabilities. Cost management should therefore be judged not only through cost-to-income ratios, but also through the ability to fund growth, simplify operations, and deliver measurable productivity. 
• Capital and liquidity: Capital strength continues to provide strategic optionality, but the differentiator is increasingly capital allocation discipline, ensuring that investments in technology, client acquisition, acquisitions and growth initiatives translate into sustainable returns and measurable shareholder value. The sector is simultaneously absorbing a demanding regulatory agenda, including resolution-related requirements and the transition from JIBAR to ZARONIA. 

From digital adoption to measurable value: Digital transformation is increasingly embedded in banks’ core businesses rather than managed as a separate programme. The focus is shifting from channel migration and technology deployment towards commercial outcomes: deeper primary relationships, faster service, better fraud prevention, more effective credit decisions, and lower unit costs. Banking is likely to become more digital and more human at the same time. Routine interactions will continue to migrate to self-service and AI-assisted channels, while personal expertise becomes more valuable in complex advice, business banking, fraud disputes, issue resolution, and financial distress. We think the winning model will not choose between digital scale and human trust but will combine them deliberately.

Infrastructure, sustainability and regional growth: Africa’s infrastructure needs remain a significant commercial opportunity. Energy generation and transmission, transport, water, telecommunications, and digital infrastructure require long-term capital and sophisticated risk allocation. Sustainable finance is therefore evolving from a reporting obligation into a mainstream banking opportunity spanning origination, advisory, syndication, and the mobilisation of institutional capital. Regional expansion offers additional growth but requires selectivity. Local partnerships and targeted acquisitions can provide distribution, market knowledge, and existing customer relationships, while reducing the execution risk of greenfield expansion. The trade-offs are equally clear: regulatory fragmentation, capital constraints, currency volatility, and integration complexity are permanent features of pan-African banking, not temporary entry costs.

Outlook: South Africa’s second-quarter GDP contraction confirmed that the recovery is vulnerable, even as household consumption remained positive and the finance sector continued to grow. Structural reform, improved electricity availability, and fiscal credibility provide a better foundation than in recent years, but weak fixed investment, municipal constraints, and global uncertainty continue to limit momentum.

East Africa remains the continent’s fastest growing region, supported by resilient private sector consumption, increased public and private investment, stronger agricultural production and a continuously growing services sector. Growth is expected to moderate in 2026 as higher energy prices, geopolitical tensions, and tighter global financial conditions weigh on economic activity. Meanwhile, West Africa's regional economic growth is projected to reach between 4.2% and 4.7% in 2026, supported by robust agricultural output, ongoing domestic policy reforms, and expanding energy and hydrocarbon projects, albeit susceptible to macroeconomic developments. 

For banks, the consequences of the rate cycle are mixed. Higher rates can support margins and endowment income, but they can also weaken affordability, slow credit demand, and increase impairment risk. Market volatility can stimulate risk management and trading activity while delaying capital formation and corporate investment. Stronger business pipelines, selective retail growth, payments, insurance, and the integration of new capabilities nevertheless continue to provide multiple routes to earnings growth.

The South African major banks reported results for the first half of 2026 tell a coherent story. Earnings remained resilient. Revenue sources continue to be diverse. Capital and liquidity strength persists as a core and sustained feature of our banking sector. Technology investment is moving towards measurable value. Operating-model changes, investment in payments capabilities, acquisitions, and regional strategies showed management teams positioning their franchises for a more integrated, data-driven and competitive market.

But resilience alone will not define the next competitive cycle.

The conversion of digital activity and AI into deeper, human-led relationships, alongside the demonstration of sustainable returns from AI and resilience against evolving cyber and fraud risks, will form the basis for competitive differentiation. SA’s major banks remain in a position of strength. The defining question is whether they can convert that strength into simpler client experiences, higher productivity, and more durable growth.