SA banks outperform global peers
21 September 2012
South Africa's four major banks - Absa, FirstRand, Nedbank and Standard Bank -
outperformed their Western global peers in several key areas, including return on
equity, in the first half of 2012, professional services firm PricewaterhouseCoopers said in a report released on Wednesday.
Combined headline earnings of R21.3-billion and an average return on equity (RoE) of
15.9% saw the country's banks beat a benchmark group of their Western
counterparts, who recorded an average RoE of 2.1% for United States commercial
banks and 14.7% for Canadian banks.
"This was a commendable performance by South African banks in a relative sense,
and a very strong performance compared to the Western world,"
PricewaterhouseCoopers said in its analysis report covering the first six months of
2012.
"Even more interesting is the composition of earnings for local banks when compared
with other countries, which demonstrate that our
banks have an enviable net
interest income, non-interest revenue mix and continue to operate at favourable
efficiency ratios."
This performance came against the backdrop of the global economic crisis and
financial instability. "While there are some headwinds in the domestic economy and
significant uncertainties from Europe, [South Africa's] banks continue to demonstrate
that they
have the capability to manage and adapt," the report said.
To build on this success, the report said it is necessary to respond to changes in
customer expectations; this includes harnessing technology for customer
convenience and improving operational efficiencies.
Gateway to Africa
As part of its report, PricewaterhouseCoopers looked at South Africa as a gateway
to the rest of Africa.
"As growth and investment in Africa continue to accelerate, South Africa offers a
portal through which companies from Asia, South America and the Middle East
can
tap into opportunities across the continent and African companies can reach out to
other parts of SAAAME (South America, Africa, Asia and the Middle East)," the report
said.
"With growth of more than 5% a year over the past decade, a population of over
800-million and total purchasing power over US$1.9-trillion, Africa is emerging as one
of the most attractive frontiers for growth."
South Africa's financial institutions, in particular, offer a gateway, as the country's
banking sector accounts for more than 40% of Africa's assets and the insurance
sector comprises more than 70% of the continent's premiums.
This allows these institutions to provide trade finance and support for companies
looking to invest in Africa, the report said.
SAinfo reporter
South Africa's Standard Bank is the largest lender on the continent by assets (Photo: Hyde Park Shopping)
