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South Africa Commercial Banking Report Q3 2008Published by: Business Monitor International Published: Sep. 17, 2008 - 35 Pages Table of Contents
AbstractOver the last year, the crisis in the inter-bank market, and the soaring prices of oil and other raw materials,tended to obscure several other important trends. In most of the developing world (i.e. the vast majority ofthe countries whose banking industries are surveyed by BMI), lending has been growing quickly. In manyemerging markets, inflationary pressures have been boosted by a rapid increase in credit. In a number ofemerging markets, macro-economic imbalances are evident.The figures on the tables above provide a snapshot of the banking sector in South Africa and the changesthat have taken place within it over the last year. To place the figures in context, it may be useful to bear inmind certain aspects of the 59 countries whose banking sectors are currently surveyed by BMI. Acrossthis sample, the median growth in assets in local currency terms was 21.3% (in Colombia). The medianloan growth was 21.6% (in India). The median growth in deposits was 17.9% (in Brazil). On their own, the ratios of loans to deposits, assets, and GDP mean little: however, they can provideuseful hints when combined with other data. Across the 59 countries, the median loan/deposit ratio is92.3% (in Greece). The median loan/asset ratio is 56.0% (in Poland). The median loan/GDP ratio was63.9% in India. From Q308, we have included a new section that examines the risks associated with each country’sbanking sector in a new way. We have essentially sought to ask this question: to what extent will thebanking sector likely need to source funding from banks in the rest of the world over the course of 2008.Given that the answer is not necessarily, on its own, meaningful, we have looked at other key issues suchas the size and recent movement in the loan/deposit ratio, macro-economic developments and recentmovements in financial markets. In general, the first half of 2008 has been kind to fixed income investors and money market participants inCentral and Eastern Europe and, indeed, in South Africa. Inter-bank lending rates have come down,thanks to the actions of the European Central Bank and the Federal Reserve, among others. Benchmarkbond yields have generally fallen in absolute terms and, in some cases, relative to yields in developedcountries. This is in spite of the fact that, in many of the countries in the region, the statistics from thebanking sector are worrying given the economic imbalances that persist. As in previous reports, we include a SWOT analysis for South Africa. The commercial banking sector haslong been recognised as one that is highly sophisticated relative to the country’s per capita income levels.Taking a longer-term view, though, the slowish growth in the number of people who are wealthy enoughto avail themselves of the services provided by the banks will continue to constrain the sector’s growth.Since Q108, we have calculated, on a consistent basis, a Commercial Bank Business Environment Rating(CBBER) for each of the 59 countries surveyed. The CBBER includes an assessment of the limits ofpotential returns: it does this by taking into account the size, growth potential and bancassurancepotential of the banking sector, as well as aspects of the economy in 2007. The CBBER also depends onan assessment of the risks to the realisation of potential returns: this reflects BMI’s assessments ofoverall country risk, together with the regulatory and competitive environment. South Africa’s overall CBBER is 67.8. Within the limits to potential return, the banking market structureis higher than the country structure - with scores of 71.9 and 56.5 respectively. Within the risks to therealisation of potential returns, the banking market elements are again somewhat higher than the countryelements - with respective scores of 86.7 and 63.4. Get Full Details About This Report >> |
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