South Africa - Major Banks Analysis | September 2023

Thriving through turbulence

PwC’s analysis of South Africa’s major banks’ results for the reporting period ended 30 June 2023.


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.

Women reading about the latest South Africa Major banks analysis.

Key themes observed from the report includes:

  • 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.

  • In spite of elevated inflationary pressures, the major banks’ deliberate approach to cost management and revenue growth translated into the lowest combined cost-to-income ratio observed in a decade. Consistent with recent periods, underlying franchise momentum resulted in revenue growth outweighing cost growth, creating positive operating leverage.
  • The digital transformation journeys of the major banks continue to mature and yield a range of positive benefits — both to them and their customers. At the same time, the retooling of legacy technology estates to be more modular, cloud-based and agile continues to create efficiency and productivity gains, enhanced customer experiences and helped position the major banks to be able to leverage future technology transformation. We see continued investment in fast emerging areas such as artificial intelligence.
  • The sustainability agenda is front and centre — driving a range of implications from emissions targets, reporting and disclosure, lending strategies and risk management. The major banks have all commented on the growth in their sustainable financing portfolios, their commitments in this area, and the balance between these initiatives and socio-economic development on the continent.
  • The outlook for the rest of the year is expected to remain challenging as economic conditions are forecast to weigh on consumer, business and corporate confidence. In South Africa, electricity supply constraints are expected to remain a clear and present risk to the local economy, while evidence increasingly emerges that the higher interest rate environment is placing significant pressure on consumers and consumer-facing industries. 

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South Africa - Major Banks Analysis | September 2023 publication

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Rivaan Roopnarain

Rivaan Roopnarain

Partner | Banking and Capital Markets, PwC South Africa

Tel: +27 (0) 11 287 0915

Costa  Natsas

Costa Natsas

Partner | Financial Services Industry Leader, PwC South Africa

Tel: +27 (0) 11 797 4105

Francois Prinsloo

Francois Prinsloo

Partner | Banking and Capital Markets Industry Leader, PwC South Africa

Tel: +27 (0) 11 797 4419

Zulfah Murray

Zulfah Murray

Partner | Banking and Capital Markets, PwC South Africa

Tel: +27 (0) 11 287 0610