Market Report, "South Africa Commercial Banking Report Q3 2012", published

2012-06-30 04:16:47 - Fast Market Research recommends "South Africa Commercial Banking Report Q3 2012" from Business Monitor International, now available

BMI View: We retain our view that South Africa's banking sector will see slow but steady growth over the coming year. Longer-term, we are more upbeat given the potential stemming from the wider region as well as the lower-income groups in the domestic market. The latest data indicate a mild pick-up in the pace of recovery for South Africa's banking

sector. Total asset growth accelerated to 7.5% year-on-year (y-o-y) in September 2011 and the growth of private sector credit extension (PSCE) has trended upward to reach 6.2% y-o-y in December 2011. The latter is a particularly encouraging sign, as it indicates that banks are showing an appetite for lending - albeit still very subdued relative to the period prior to the global financial crisis. Source: South African Reserve Bank; BMI The pick-up in PSCE is, to some extent, warranted by the fundamentals. Credit impairments in the banking sector are levelling off in absolute terms and declining as a percentage of total assets. In September 2011, credit impairments fell to 1.6% of total assets, from the cyclical peak of 1.8% which prevailed between January 2010 and June 2011. We are cautiously optimistic that credit impairments will continue to decline - or at the very least, stay stable - given the low interest rate environment and slowly improving job market. Source: South African Reserve Bank; BMI In spite of the encouraging growth in assets and decline in credit impairments, we retain our relatively subdued outlook for South Africa's banking sector, forecasting asset expansion of 6.0% y-o-y and loan growth of 5.0% for 2012. Our view is predicated on the tepid macroeconomic environment, which we anticipate will keep a lid on banking sector expansion. We believe that the South African economy is poised for a slowdown in 2012, with real GDP growth forecast to come in at 2.7%, down from an estimated 3.1% in 2011. Although private consumption should hold up relatively well, serious headwinds from the global economy will inevitably take their toll on growth. Nevertheless, with minimal exposure to the ongoing eurozone crisis (Greece, Ireland, Portugal and Spain account for just 0.03% of the industry's total credit exposure), we continue to view the sector as having decent prospects for growth over the long term. There is considerable scope for South African banks to expand their footprint across the wider Sub-Saharan Africa region, and there is also potential for more organic growth in the domestic market as incomes rise and a greater proportion of society moves into the formal financial sector. Reflecting our optimism regarding the long-term prospects of the South African banking sector, we continue to forecast double-digit asset growth annually over 2014-2016. Absa appears cognizant of the opportunities offered by lower income groups. The home-grown banking giant has launched a new banking service called Transact which is geared towards lower-income customers who may not have used banking services before. Transactions are charged on a 'pay as you go' basis at a low-cost rate. According to Arrie Rautenbach, Head of Retail Markets at Absa, 'the key advantage of Transact is in its simplicity and affordability'. South Africa Commercial Banking Report Q2 2012 © Business Monitor International Ltd Page 32 Nedbank is making a similar strategic move. It is trying to shed its image of being an 'exclusive' bank for higher-income groups, and actively focusing on low-income customers by expanding its 'Ye Kona' offering to remote areas. The Ye Kona product allows clients to open a 'pay-as-you-go' transaction account for ZAR5, and cash can be withdrawn for ZAR1.


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Partial Table of Contents:

Executive Summary
- Table: Levels (ZARbn)
- Table: Levels (US$bn)
- Table: Levels At December 2011
- Table: Annual Growth Rate Projections 2012-2016 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2011
- Table: Projected Levels (ZARbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- South Africa Commercial Banking SWOT
- South Africa Political SWOT
- South Africa Economic SWOT
- South Africa Business Environment SWOT
Business Environment Outlook
- Commercial Banking Business Environment Rating
- Table: Commercial Banking Business Environment Ratings
- Commercial Banking Business Environment Rating Methodology
- Table: Middle East and Africa Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Regional Outlooks
- Mobile Money Services: Assessing The Risks To Macro Stability And The Banking Sector
Regional Banking Sector Outlook
- MEA Banking Sector Forecast Overview - Q3 2012
- Table: Banks' Bond Portfolios 2011
- Table: Middle East and Africa Commercial Banking Business Environment Ratings
- Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios
- Table: Anticipated Developments in 2012
- Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn)
- Table: Comparison of US$ Per Capita Deposits (2011)
- Table: Interbank Rates and Bond Yields
South Africa Banking Sector Outlook
- Slower But Still Positive Growth Ahead
- Economic Outlook
- Table: South Africa - Economic Activity, 2011-2016
Company Profiles
- Absa Bank
- Table: Stock Market Indicators
- FirstRand
- Table: Stock Market Indicators
- Table: Balance Sheet (ZARmn)
- Table: Balance Sheet (US$mn)
- Table: Key Ratios (%)
- Imperial Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (ZARmn)
- Table: Balance Sheet (US$mn)
- Table: Key Ratios (%)
- Capitec Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (ZARmn)
- Table: Balance Sheet (US$mn)
- Table: Key Ratios (%)
- African Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (ZARmn)
- Table: Balance Sheet (US$mn)
- Table: Key Ratios (%)
- Investec
- Table: Balance Sheet (ZARmn)
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