The financial results of South Africa’s four major banks for the six months ended 30 June 2012 have remained resilient despite the recent global economic uncertainty, according to a report issued by professional services firm PricewaterhouseCoopers.
Tough economic conditions prevail
“Our banks have had to cope with another six months of global financial instability, particularly in Europe. The downside risks in Europe remain elevated, which is weighing heavily on market sentiment and will be the case for some time,” says Tom Winterboer, financial services leader for PwC southern Africa and Africa.
Despite these difficult economic circumstances, the four major South African banks (Absa, FirstRand, Nedbank and Standard Bank) posted combined headline earnings of R21.3 billion. This is up 17% from the comparable period last year and average normalised return on equity (RoE) of 15.9%.
This compares favourably to a benchmark group of Western global peers that recorded average RoE for the 2011 financial year in the range of 2.1% for US commercial banks and 14.7% for Canadian banks.
SA banks performed well
“This was a strong performance by South African banks compared to the Western world. Even more interesting is the composition of earnings for local banks when compared to other countries. Our banks have an enviable non-interest revenue mix and continue to operate at favourable efficiency ratios,” says Johannes Grosskopf, PwC banking and capital markets leader for southern Africa.
Read the full report
These are just some of the findings from PwC’s South Africa Major Banks Analysis Report.