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Major banks analysis

Purpose led. Platform driven.

PwC’s analysis of major banks’ results for the reporting period ended 31 December 2020.


PwC’s Major Banks Analysis presents the highlights of the combined local currency results of Absa, FirstRand, Nedbank and Standard Bank.

Operating under severely constrained macroeconomic conditions and considerable uncertainty, the major banks delivered a financial performance in FY20 that reflects the challenges of an unprecedented year. Anchored in public health concerns related to the COVID-19 pandemic, depressed business and consumer confidence levels combined to produce the largest annual fall in domestic economic activity in nearly seven decades. 

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Key themes arising from the reporting period 

Many of the central themes we highlighted in our 30 June 2020 Major Banks Analysis prevailed throughout the year, as outlined below: 

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Credit impairment charges soared relative to FY19, as forward-looking impairment models and post-model adjustments sought to capture the scale of the crisis on loan portfolios. The dramatic increase in impairments contributed as the primary factor to the steep fall in combined headline earnings and returns, which now compare to 2012 levels

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The robust capital and liquidity positions with which the major banks entered the crisis were maintained above regulatory required levels in FY20, providing risk capacity and supporting their ability to navigate turbulent operating conditions.

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‘The branch is dead. Long live the branch!’ With the undeniable flight to digital and mobile banking platforms – a trend that predates the pandemic – 2020 saw record volumes of banking transactions conducted through lower-cost digital channels across all customer segments. The major banks recognise, however, that while the size, scope and configuration of the physical branch network will change, they will continue to play a central, albeit different, part in their overall channel and distribution strategies going forward.

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Early in the crisis, the major banks shifted strategic focus from managing profitability and delivering stakeholder returns to managing operational stability and ensuring balance sheet resilience. These efforts resulted in both technology infrastructure and customer service levels holding up without major incident in spite of a sudden pivot to remote working and strong demands on systems. Demands on systems and IT architecture came from both facilitating the business of the major banks, as work was conducted remotely, and in supporting higher digital transaction volumes.

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The major banks’ trusted brands, geographic diversity and integrated and growing product set across the financial services spectrum aided their ability to demonstrate operational and balance sheet resilience through crisis conditions. This enabled them to focus efforts on supporting customers, colleagues and communities. 

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In a year characterised by uncertainty, new ways of working and of doing business, tight cost control and a changing variable cost composition resulted in operating expenses being well managed. However, the combined cost-to-income ratio deteriorated as revenue growth did not keep pace with cost growth

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Broader change considerations such as the sustainability agenda now feature prominently in strategic thinking. With expectations for operating uncertainty to prevail, the major banks continue to seek out ways to adapt business models to respond to the changing operating environment, while managing a dynamic risk environment

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To foster customer loyalty in a competitive market, expand access to financial services, leverage technology and create seamless customer experiences, the major banks acknowledge the need to be continuously relevant to how customers engage and transact, and are willing to reward loyalty and embrace partnerships to achieve this. Platform-based banking, increasingly led by digital channels, data-driven targeting and offering a multitude of applications, is likely to foster a new era in how the major banks deliver financial services. The need to be agile and ‘speed to market’ will not be a temporary phenomenon.


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