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PwC’s South Africa - Major Banks Analysis presents the highlights of the combined local currency results of Absa, FirstRand, Nedbank and Standard Bank and incorporates key themes from other South African banks.
In identifying the main trend lines impacting the industry, the analysis builds on previous PwC Major Banks Analyses spanning more than a decade.
Revenue growth benefited from higher interest rates through positive endowment effects. At the same time, balance sheet growth and the focus of recent years on superior and increasingly digital customer experiences was leveraged, translating into higher transaction volumes.
Volatility in financial markets favoured trading revenues as customer demand for hedging and risk management products was strong, particularly in relation to foreign exchange, commodity and interest rate markets.
Driven by challenging macros, the cost of risk in the form of credit impairments increased across most lending portfolios. Heightened sovereign and currency risks in several key African territories, coupled with interest rate pressure and the adverse effects of load shedding on South African households and businesses, triggered increased impairments as credit models reacted to fraught conditions.
In spite of the amplified risk outlook, the major banks’ balance sheets remained resilient. Key prudential ratios across capital and liquidity continued to be maintained well above regulatory requirements, while balance sheet provisions reached unprecedented levels in anticipation of forecast risks.
Sub-saharan Africa continued on a significantly faster growth path than South Africa. Those banks with sizable operations across the continent saw the benefits of geographic diversity in the region, resulting in record contributions to earnings growth and a higher growth rate relative to their South African operations.
PwC's Major Banks Analysis presents the highlights of the combined local currency results of Absa, FirstRand, Nedbank and Standard Bank and incorporates key themes from other South African banks.