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South Africa – Major Banks Analysis
PwC analysis of major banks’ results for the reporting period ended 30 June 2019
November 2019
www.pwc.co.za/major-banks-analysis
Still a balancing act
2 | PwC South Africa – Major Banks Analysis – September 2019
Contents
PwC’s Major Banks Analysis presents the highlights of the combined local currency results of Absa, FirstRand, Nedbank and Standard Bank. Other major players in the South African banking industry, including Investec and Capitec, are excluded from our analysis of primary results due to their different reporting periods and product mix. However, the analysis identifies common trends shaping the banking industry across all major players and builds on previous biannual PwC analyses dating back over a decade.
1 The big picture 3
2 Results overview 8
3 Hot off the press 13
4 Key banking statistics – 1H19 14
4 Contacts 16
3 | PwC South Africa – Major Banks Analysis – November 2019
The big picture1Francois PrinslooBanking & Capital Markets Industry Leader: PwC Africa
Rivaan RoopnarainPartner, Banking & Capital Markets: PwC South Africa
Combined financial performance
Key metrics 1H19 2H18
ROE%, down 50bps 18.5% 19%
Common Equity Tier 1 %, remained flat 12.3% 12.3%
Net interest margin %, down 4bps 4.32% 4.36%
Cost-to-income ratio, improved 170bps 55.1% 56.8%
Credit loss ratio, down 13bps 0.78% 0.65%
Growth 1H19 vs 1H18 1H19 vs 2H18
Combined headline earnings 5.3% 0.2%
Core earnings 6.8% 5.2%
Bad debts charge 30% 16%
Net interest income 9.5% 2.8%
Total operating income 6.9% 1.2%
Total operating expenses 7% -1.6%
4 | PwC South Africa – Major Banks Analysis – November 2019
Overview An analysis of the major South African banks’ results for the period ended 30 June 2019 reveals a picture of a domestic economy under stress in a low-growth environment and constrained as a result of the slow pace of structural reforms. This challenging picture is further coloured by multiple global economic headwinds and a macroeconomic context that remains complex and fraught with forecast risk.
As is well understood, banks are, by virtue of their role as financial intermediaries, sensitive to stresses in the domestic economy and the broader global economic context. Current lacklustre economic conditions translated into heightened credit risk and subdued client activity across all customer segments during the period, and contributed to earnings pressure over 1H19, particularly in relation to the major banks’ local operations.
However, comparatively more positive contributions came from regional operations outside South Africa — emphasising the growing importance of those businesses and the rest-of-Africa growth strategies all of the major banks have consistently focused on over recent years.
From a customer engagement perspective, in the previous edition of our Major Banks Analysis (published March 2019), we noted that “2019, in South African banking, may be heralded as the ‘year of the customer’: a year in which the industry anticipates the launch of three new retail banking operations — TymeDigital, Discovery Bank and Bank Zero — following the granting of new banking licences (a mutual banking licence in the case of Bank Zero) after more than a decade.”
We also reflected on the fact that other major players in the local banking environment, including African Bank, Sasfin and Bidvest Bank, were placing sharp focus on building out their business models and innovation strategies in an effort to provide easier and wider access to digital banking, differentiated rewards programmes, more competitive pricing and, ultimately, holistic financial services offerings.
During the six months to June 2019, these players launched extensive transactional banking marketing campaigns, focusing relentlessly on differentiated digital offerings and offering attractive interest rates on savings products — largely in an effort to capture deposit share of the South African consumer. Given how this has played out in 1H19, our conviction remains that the operating environment in South African banking will remain fiercely competitive for the rest of 2019, and beyond.
As a result, we observe the major banks continue to be mindful of the long-term implications of this new competitive environment on their product sets, innovation strategies and platforms, and have remained focused on customer-first strategies that leverage their scale, resources and the strength of their brands. This context of increased competitiveness in the domestic banking market presents exciting opportunities for the South African customer, who stands to benefit from ongoing, customised and fit-for-purpose banking and broader financial services innovations.
5 | PwC South Africa – Major Banks Analysis – November 2019
External environmentIn examining the broader operating environment and global economic context that prevailed over 1H19, it is clear that many things can happen in a year in macroeconomics! Twelve months ago, the US Federal Reserve was raising interest rates regularly; the Eurozone was enjoying a multi-year boom; and the global economy was witnessing its fastest period of growth for a decade.
Since then, trade tensions between the US and China have increased, European growth has slipped from above to below trend and recoveries in several major emerging markets have faltered. Given these developments, some commentators are worried about a global recession, while the Fed raised the signals of a potential new round of quantitative easing.
Meanwhile, interest rates remain at record lows in the Eurozone, Australia, Japan and New Zealand, while in the UK, the macroeconomic context continued to be dominated by the seemingly intractable Brexit uncertainty which weighed on UK economic activity over the period.
These developments adversely affected global trade volumes, and manifested in weaker conditions in most commodity-exporting developing economies during the period, including those in sub-Saharan Africa, as a result of stagnant commodity prices.
Regionally, macroeconomic conditions remained relatively stable and the growth outlook somewhat more optimistic than domestically, with some key exceptions where the economic environment remained challenging — eSwatini, Zambia and Namibia.
Domestically, the South African economy encountered a range of challenges in early 2019, including poor rainfall in parts of the country affecting key agricultural sectors and, notably, large-scale electricity supply shortages that adversely impacted vital export-oriented sectors. The effects of this and other challenges played out in real GDP contracting 3.2% quarter-on-quarter in Q1-19.
Increased unemployment levels, rising fuel prices and stagnant to slowing personal income growth combined to erode household purchasing power, while inflation drifted slightly higher and resulted in the Monetary Policy Committee leaving interest rates unchanged in 1H19.
On a positive note, Statistics South Africa released the latest GDP data on 3 September, which showed that the South African economy expanded by 3.1% quarter-on-quarter in Q2-19. This was a much stronger outcome than expected and allowed South Africa to ward off a dreaded recession. The largest contributor to the quarterly GDP recovery was a rebound in mining activity — the first positive quarterly reading in this key sector of the economy in a year.
5 | PwC South Africa – Major Banks Analysis – September 2019
6 | PwC South Africa – Major Banks Analysis – November 2019
Regulatory contextOn the regulatory front, our previous observation remains applicable — that the major banks continue to be focused on forthcoming prudential reforms and initiating programmes to critically analyse what regulatory changes mean for their particular business models, balance sheet mix and overall bank strategy. This includes the package of regulations issued by the Basel Committee on Banking Supervision in December 2017 and referred to as ‘Basel IV’ by the industry. The large-scale operational and prudential impact of some of the standards under the ‘Basel IV’ banner is now at the forefront of risk and regulatory teams’ activities as implementation dates draw closer.
In the South African context, the Prudential Authority published Guidance Note 6 of 2019 during November 2019 which sets out the implementation timeline of the new package of prudential reforms - some of which starts to take effect during 2020.
In July 2019, the SARB published a discussion paper (“Ending too big to fail: South Africa’s intended approach to bank resolution”) which provides an overview of how the SARB intends to perform its functions as the resolution authority, as well as some of the requirements that may be imposed on designated institutions. The discussion paper makes clear that banks will have to develop clearly defined strategies and take pre-emptive in order to achieve the objective of making the orderly resolution of large and complex financial institutions feasible. We expect the finalisation and embedment of the resolution framework to be a key area of focus in the coming periods.
As they undertake these and other regulatory analyses, it is increasingly clear that the major banks are contemplating regulatory change more astutely. Leading banks now actively spend time analysing the continuously evolving regulatory landscape in the context of how they can make regulation work for them — searching for opportunities to drive enterprise efficiencies, optimise IT architecture, organisational structure, or better calibrate product design — and moving beyond just the compliance imperative.
This line of thinking reflects in risk and capital management committees and other governance structures now frequently discussing “what does an optimised and digitised risk and regulatory function look like”, or “how can risk specialists enhance their contribution to business value”, and senior time being spent on crafting future-proof responses to these and other strategic questions.
OutlookAll of the major banks commented, in a clear chorus, on the significance of the structural challenges currently facing the South African economy, the implications these have on the risk outlook for further sovereign downgrades and the extent to which the domestic economic context is constrained as a result. Consequently, they highlighted the need for urgency in structural and economic reform, including policy certainty in reforming state-owned entities, land reform and mining rights, as well as energy supply.
SARB Governor Lesetja Kganyago commented in a speech on July 24 that, according to central bank modelling, a 25bps cut in the repo rate will result in a mere 0.1 percentage point increase in GDP growth over a 12-month period. This underscores the SARB’s argument that a significantly accelerated domestic economic growth rate is ultimately dependent on structural reforms, not monetary policy stimulus.
Meanwhile, the Bureau for Economic Research (BER) reported that the RMB/BER Business Confidence Index plunged to a 20-year low in Q3-2019. The National Treasury’s reform-focused economic policy paper published in late August (i.e. during the business confidence survey period) was aimed at supporting local business and consumer confidence. Low business sentiment is holding back the investment required to get the country’s economy to a level that exceeds population growth.
7 | PwC South Africa – Major Banks Analysis – November 2019
In the context of what is expected to be a challenging medium-term operating environment, subdued domestic economic growth and a risk-on macroeconomic outlook at the global level, the major banks continue to remain sharply focused on executing on their key strategic initiatives. These include continuing to build-out their diversified franchises and their African operations outside South Africa to leverage the green shoots of improving economic activity in key sub-Saharan economies, optimising business models, fine-tuning their product mix, retaining and attracting key skills, and driving greater opportunities for seamless cross-sell and up-sell of intersecting banking and insurance products across their platforms.
In a challenging South African economic context and a vigorous competitive environment, we see leading banks as those that calibrate banking product features, pricing structures and their overall touchpoints with customers, across all channels, in a highly differentiated manner.
Key to the realisation of this nuanced approach to banking, which appears to be an emerging norm, will be the effective use of customer data within the banks’ possession. We continue to believe that leading banks will be those that can seamlessly harness this data to underpin personalised customer engagement and overall bank strategy.
Creating a fairer market for capital in South Africa
South Africa is delicately balanced at the moment. We have deep socioeconomic issues exacerbated by low growth and intractable issues in our state-owned sector, but we have a sophisticated financial services environment, good infrastructure, a highly regarded judiciary and reserve bank, and skilled private-sector management. I think there is growth potential. Top South African companies are finding ways to move ahead, although in many cases far more slowly than they would like. If the government made some clear decisions aimed at unlocking impediments to growth, the rate of growth could pick up dramatically.”
– Nicky Newton-King, CEO: Johannesburg Stock Exchange (JSE)
Extract from Strategy& interview, 18 September 2019:
https://www.strategy-business.com/article/Creating-a-fairer-market-for-capital-in-South-Africa?gko=3b06b
“
8 | PwC South Africa – Major Banks Analysis – November 2019
Results overview2Headline earningsAlthough the performances between the individual banks varied, on a combined basis the four major banks posted headline earnings of R42.49bn, which grew 5.3% against 1H18, but only 0.2% against 2H18. To some extent, this reflects the effects of slower than expected GDP growth over 1H19, relatively muted corporate credit demand and generally lower activity on the part of SA Inc. during the first half of the year.
Overall earnings growth was underpinned by resilient operating income growth across both net-interest income and non-interest revenue of 9.5% and 3.7% against 1H18 respectively, offset by operating expenses growth of 7%.
Figure 2.1 Key profit drivers
Note: The graph presents combined IFRS profit for the period (not headline or normalised earnings). Source: PwC analysis
0
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Additionally, and as we noted in the previous period, the earnings contribution from the major banks’ operations in key territories on the continent outside South Africa continues to be notable — with the contribution to earnings from the banks’ African businesses outside South African now making up a significant proportion of overall group results, up to one-third of total earnings in some cases.
9 | PwC South Africa – Major Banks Analysis – November 2019
Return on equity
Figure 2.2 ROE and regulatory capital
Source: PwC anawlysis
2H17 1H18 2H18 1H19 2H17 1H18 2H18 1H19 2H17 1H18 2H18 1H19 2H17 1H18 2H18 1H19
SBKASA NEDFSR
0.0%
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15.0%
20.0%
25.0%
CET 1 capital AT 1 Total Tier 2 capital ROE Regulatory minimum RoRWA
The major banks remain robustly capitalised, comfortably above regulatory minima across all capital tiers, while generating commendable returns. During the current period, the combined common equity tier 1 capital ratio improved marginally by 3bps to
12.3% while the combined ROE shrunk by 30bps to 18.5% when compared 1H18 (19.0% at 2H18). However, strong double-digit ROEs across all the major banks continues to remain well above ROEs generated by global peers in developed markets.
10 | PwC South Africa – Major Banks Analysis – November 2019
Efficiency
Figure 2.3 Staff costs vs headcount
Source: PwC analysis
Total staff costs Number of employees
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Tight cost control and a disciplined approach to cost management is an area that the banks have consistently focused on over recent reporting periods. The outcome of their efforts is reflected in the major banks combined results through operating expenses growing 7% against 1H18, but falling 1.6% against 2H18, resulting in an overall positive operating leverage experience (operating income grew faster than costs) for 1H19.
The combined cost-to-income ratio fell by roughly 170bps at 1H19 to 55.1% when compared to 2H18 and remained flat against 1H18. Staff costs continue to comprise the majority of overall group costs, reflecting both the inflationary environment as well as the demand for critical talent in response to increasing specialisation in the areas of risk, compliance and IT. At the same time, we continue to see increases in IT expenditure as the banks’ grow their direct investments in their applications and systems infrastructure towards further digitising their platforms.
11 | PwC South Africa – Major Banks Analysis – November 2019
Credit growth and asset quality
Figure 2.4 Total advances
Source: PwC analysis
Stage 1 advances Stage 2 advances Stage 3 advances
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SBKNEDINVFSRCAPASA
Notwithstanding the subdued economic conditions that prevailed over 1H19, the aggregate loan book registered growth of 9% against 1H18 (and a more moderate 3.7% against 2H18). The theme we had previously observed of retail credit demand outpacing corporate lending continued in the current period for some banks, with growth mainly attributable to business banking products and credit cards.
Some banks noted continuing challenges facing corporate borrowers in the mining and construction industries, as well as certain large-cap corporate counters in the telecommunications industry, while persistent challenges to the SOE lending books remained as a result of certain SOE counters coming under considerable financial stress in the current period.
Although an increase can be noted in credit loss ratios (CLRs), banks continue their persistent focus on credit. The major banks reported a combined credit loss ratio of 0.78% (0.72% at 1H18).
Most of the banks commented that impairment levels remain at the bottom end of the longer-term range. As IFRS 9 is now fully embedded in the major banks results, the effects on total non-performing (Stage 3) loans, which comprised 3.9% of gross advances (3.7% and 3.9% at 1H18 and 2H18 respectively), tracked higher compared to pre-IFRS 9 levels. This was expected as a result of certain technical features of the Standard and commented on in previous periods by the banks upon their IFRS 9 transitions.
Non-performing loans remain well provided for, with a coverage ratio of 45.0% (46.5% at 2H18), while performing advances (Stage 1) have coverage ratios of 0.6% (0.6% at 2H18). For those exhibiting characteristics of significant increases in credit risk since origination (Stage 2), the credit loss was reported at 7.1% (6.6% at 2H18). Certain major banks experienced an uptick in their personal loans and credit card impairments levels over the period under review.
12 | PwC South Africa – Major Banks Analysis – November 2019
Table 2.1 Analysis of credit performance
ASA CAP FSR INV NED SBK
Advances distribution (100%)
Stage 1 % 86% 75% 89% 93% 87% 89%
Stage 2 % 9% 7% 8% 5% 9% 7%
Stage 3 % 6% 18% 3% 2% 4% 4%
Impairment coverage ratio
Stage 1 % 0.6% 6.4% 0.7% 0.2% 0.5% 0.6%
Stage 2 % 6% 32% 8% 4% 5% 8%
Stage 3 % 44% 80% 45% 38% 37% 51%
Note: Capitec as at August 2019, Investec as at February 2019
Source: PwC Analysis
13 | PwC South Africa – Major Banks Analysis – November 2019
Hot off the press3
Being a smarter risk taker through digital transformation2019 Risk in Review StudyOur 2019 Risk in Review Study reveals six behaviours that divide risk functions into those helping their organiaations take smarter risks on their digital journeys — a group we call Dynamics — and those a step or more behind: the Actives and the Beginners. The groups tell us that risk management, internal audit and compliance professionals (or, collectively risk functions), far from stalling digital initiatives, can help their organisations meet or beat their transformation goals. Certain risk functions are there now. For others, it’s time to take action.
Banking & Capital Markets Trends 2019 Highlights from our 22nd Annual Global CEO SurveyEmerging technologies are revolutionising customer intelligence, engagement and experience within both corporate and retail banking. Yet it’s people who drive enterprise transformation and ultimately derive the value. As our report explores, putting people at the heart of successful enterprise transformation demands a new type of leadership — a ‘tech-savvy humanist’. These leaders understand the potential of new technologies, how they knit together and how they align with strategic objectives, while recognising that successful banking and capital markets organisations are run by people for people.
Non-executive directorsPractices and fees trends report 2019 editionIn this edition of our annual review of fees paid to non-executive directors, we take a closer look at investor views on the role of the remuneration committee in South Africa, and the overall state of pay among listed companies. A central theme of this year’s report is the role of the remuneration committee in corporate South Africa, and the question of whether remuneration committees are actually fit for purpose.
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Banking and capital markets trends 2019
Part of PwC’s 22nd Annual Global CEO Survey trends series
Why banking and capital markets transformation is all about people
Practices and fees trends report
12th edition January 2019 South Africa
www.pwc.co.za/ned
Non-executive directors
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14 | PwC South Africa – Major Banks Analysis – November 2019
Key banking statistics – 1H194
15 | PwC South Africa – Major Banks Analysis – November 2019
ASA FSR NED SBK Combined Growth (% and
bps)
R’ millions R’ millions 1H19 2H18 1H18 2H17 1H19 2H18 1H18 2H17 1H19 2H18 1H18 2H17 1H19 2H18 1H18 2H17 1H19 2H18 1H18 2H17 1H19 v 1H18
1H19 v 2H18
Balance sheet
Total assets 1 372 797 1 285 552 1 234 643 1 165 979 1 669 039 1 589 462 1 532 310 1 291 724 1 101 595 1 043 912 1 019 015 983 314 1 769 682 1 704 335 1 617 569 1 597 968 5 913 113 5 623 261 5 403 537 5 038 985 9.4% 5.2%
Gross loans and advances 949 312 925 027 874 129 824 072 1 239 914 1 205 114 1 140 482 945 008 775 363 751 793 726 933 722 331 1 223 662 1 157 353 1 101 730 1 070 471 4 188 251 4 039 287 3 843 274 3 561 882 9.0% 3.7%
Gross loans and advances growth 2.6% 5.8% 6.1% 1.5% 2.9% 5.7% 20.7% 3.8% 3.1% 3.4% 0.6% 0.1% 5.7% 5.0% 2.9% 0.4% 3.7% 5.1% 7.9% 1.5%
Total deposits 914 395 857 726 802 957 757 257 1 393 104 1 338 621 1 267 448 1 040 042 865 815 825 804 801 165 771 584 1 396 757 1 371 919 1 275 675 1 258 359 4 570 071 4 394 070 4 147 245 3 827 242 10.2% 4.0%
Risk-weighted assets 844 332 818 592 771 268 736 892 1 007 000 972 000 941 000 782 000 618 608 586 626 552 623 528 206 1 063 866 1 079 642 986 352 957 045 3 533 806 3 456 860 3 251 243 3 004 143 8.7% 2.2%
Loan-to-deposit ratio 103.8% 107.8% 108.9% 108.8% 89.0% 90.0% 90.0% 90.9% 89.6% 91.0% 90.7% 93.6% 87.6% 84.4% 86.4% 85.1% 91.6% 91.9% 92.7% 93.1% -1.11 -0.31
Asset quality & provisioning
Non-performing loans 46 939 47 167 46 447 30 891 41 349 38 588 26 947 21 982 26 829 25 231 22 785 19 576 46 018 44 193 43 829 34 521 161 135 155 179 140 008 106 970 15.1% 3.8%
Impairments - 29 631 - 30 190 - 28 191 - 18 874 - 34 162 - 32 570 - 19 255 - 17 276 - 16 273 - 15 845 - 14 265 - 12 002 - 36 532 - 36 622 - 36 945 - 22 444 - 116 598 - 115 227 - 98 656 - 70 596 18.2% 1.2%
Collective provisions - 8 836 - 8 907 - 8 659 - 5 559 - 15 667 - 14 696 - 9 263 - 9 011 - 6 309 - 6 476 - 6 255 - 4 921 - 13 240 - 12 821 - 13 314 - 7 174 - 44 052 - 42 900 - 37 491 - 26 665 17.5% 2.7%
Individually assessed provisions - 20 795 - 21 283 - 19 532 - 13 315 - 18 495 - 17 874 - 9 992 - 8 265 - 9 964 - 9 369 - 8 010 - 7 081 - 23 292 - 23 801 - 23 631 - 15 270 - 72 546 - 72 327 - 61 165 - 43 931 18.6% 0.3%
Non-performing loans (% of advances) 4.9% 5.1% 5.3% 3.7% 3.3% 3.2% 2.4% 2.3% 3.5% 3.4% 3.1% 2.7% 3.8% 3.8% 4.0% 3.2% 3.9% 3.9% 3.7% 3.0% 4.81 0.16
Impairment charge (% of average advances) – credit loss ratio
0.79% 0.73% 0.83% 0.87% 0.88% 0.91% 0.81% 0.87% 0.70% 0.53% 0.53% 0.51% 0.76% 0.42% 0.70% 0.76% 0.78% 0.65% 0.72% 0.75% 9.06 20.85
Impairment coverage ratio 63.13% 64.01% 60.69% 61.1% 82.62% 84.40% 71.46% 78.6% 60.65% 62.80% 62.61% 61.3% 79.39% 82.87% 84.29% 65.0% 71.45% 73.52% 69.76% 66.50% 2.41 -2.82
Implied loss given default 44.30% 45.12% 42.05% 43.1% 44.73% 46.32% 37.08% 37.6% 37.14% 37.13% 35.15% 36.2% 50.61% 53.86% 53.92% 44.2% 44.20% 45.61% 42.05% 40.28% 5.10 -3.10
Profit & loss analysis
Net interest income 22 667 22 237 21 188 21 528 30 893 29 406 26 689 24 565 14 819 14 813 14 006 14 076 31 265 30 472 29 150 31 355 99 644 96 928 91 033 91 524 9.5% 2.8%
Non interest income 16 404 16 381 15 854 15 377 21 971 21 080 21 498 19 514 12 874 13 740 12 236 12 333 23 012 23 679 22 030 22 687 74 261 74 880 71 618 69 911 3.7% -0.8%
Total operating income 39 071 38 618 37 042 36 905 52 864 50 486 48 187 44 079 27 693 28 553 26 242 26 409 54 277 54 151 51 180 54 042 173 905 171 808 162 651 161 435 6.9% 1.2%
Total operating expenses - 22 989 - 23 752 - 21 722 - 22 446 - 27 895 - 27 524 - 25 230 - 23 511 - 16 084 - 17 342 - 15 232 - 15 970 - 31 935 - 31 893 - 30 214 - 30 703 - 98 903 - 100 511 - 92 398 - 92 630 7.0% -1.6%
Core earnings 16 082 14 866 15 320 14 459 24 969 22 962 22 957 20 568 11 609 11 211 11 010 10 439 22 342 22 258 20 966 23 339 75 002 71 297 70 253 68 805 6.8% 5.2%
Impairment charge - 3 695 - 2 893 - 3 431 - 3 249 - 5 479 - 5 021 - 4 515 - 4 052 - 2 543 - 1 873 - 1 815 - 1 710 - 4 247 - 2 490 - 3 999 - 4 255 - 15 964 - 12 277 - 13 760 - 13 266 16.0% 30.0%
Other income/(expenses) 93 123 56 91 776 481 426 488 316 211 153 22 13 - 199 238 - 38 1 198 616 873 563 37.2% 94.5%
Income tax expenses - 3 385 - 3 444 - 3 322 - 3 086 - 4 770 - 4 475 - 3 971 - 3 894 - 2 192 - 2 416 - 2 346 - 2 031 - 3 691 - 4 097 - 3 726 - 4 293 - 14 038 - 14 432 - 13 365 - 13 304 5.0% -2.7%
Profit for the period 9 095 8 652 8 623 8 215 15 496 13 947 14 897 13 110 7 190 7 133 7 002 6 720 14 417 15 472 13 479 14 753 46 198 45 204 44 001 42 798 5.0% 2.2%
Attributable earnings 8 377 6 242 9 661 7 524 14 479 15 732 13 797 12 749 6 794 6 953 6 423 6 377 13 195 13 857 11 717 13 056 42 845 42 784 41 598 39 706 3.0% 0.1%
Headline earnings from continuing operations
8 267 8 085 8 043 7 821 14 543 13 344 13 936 12 573 6 870 6 799 6 696 6 516 12 806 14 173 11 674 13 251 42 486 42 401 40 349 40 161 5.3% 0.2%
2.3% 0.5% 2.8% 3.1% 9.0% -4.2% 10.8% 17.1% 1.0% 1.5% 2.8% 27.0% -9.6% 21.4% -11.9% 6.0% 0.2% 5.1% 0.5% 12.1%
Key data
Other operating income (% of total income)
41.99% 42.42% 42.80% 41.67% 41.56% 41.75% 44.61% 44.27% 46.49% 48.12% 46.63% 46.70% 42.40% 43.73% 43.04% 41.98% 43.11% 44.01% 44.27% 43.65% -2.63 -2.04
Net interest margin (% of total assets) 3.43% 3.69% 3.65% 3.83% 3.79% 3.99% 3.34% 3.92% 2.78% 2.42% 2.84% 2.91% 3.73% 4.67% 4.47% 4.01% 3.43% 3.69% 3.58% 3.67% -4.05 -7.10
Net interest margin (% of average interest earning advances)
4.52% 4.52% 4.76% 4.85% 4.80% 4.70% 4.52% 5.26% 3.57% 3.63% 3.67% 3.66% 4.40% 4.58% 4.50% 4.74% 4.32% 4.36% 4.36% 4.63% -0.92 -0.80
Standardised efficiency ratio - Cost to Income
56.7% 59.2% 56.2% 57.9% 51.2% 52.4% 51.1% 52.3% 55.4% 58.6% 55.8% 57.9% 57.0% 56.9% 57.1% 54.9% 55.1% 56.8% 55.1% 55.7% 4.0% -170.0%
Return on equity 16.4% 16.7% 16.9% 16.2% 23.3% 22.9% 23.5% 22.5% 16.8% 16.4% 17.2% 16.6% 17.5% 20.1% 17.5% 19.2% 18.5% 19.0% 18.8% 18.6% -0.28 -0.53
Total number of staff 39 763 40 856 41 250 41 703 48 780 47 334 46 284 45 026 30 335 30 877 31 272 31 531 46 168 47 419 48 265 48 322 165 046 166 486 167 071 166 582 -1.2% -0.9%
Capital ratios
CET 1 11.9% 12.8% 13.3% 13.5% 12.1% 12.0% 11.5% 14.0% 11.3% 11.7% 12.4% 12.6% 14.0% 12.7% 13.8% 13.5% 12.3% 12.3% 12.8% 13.4% -0.43 0.03
Tier 1 12.7% 13.5% 13.9% 14.1% 12.9% 12.6% 12.1% 14.6% 12.3% 12.5% 13.2% 13.4% 14.8% 13.3% 14.4% 14.2% 13.2% 13.0% 13.4% 14.1% -1.68 1.54
Tier 2 2.7% 2.6% 2.8% 2.0% 2.3% 2.2% 2.6% 2.3% 2.3% 2.3% 2.4% 2.1% 2.5% 2.4% 1.8% 2.4% 2.5% 2.4% 2.4% 2.2% 2.08 3.16
Total 15.4% 16.1% 16.7% 16.1% 15.2% 14.8% 14.7% 16.9% 14.6% 14.8% 15.6% 15.5% 17.3% 15.7% 16.2% 16.6% 15.6% 15.4% 15.8% 16.3% -111.0% 179.0%
NSFR 111.4% 110.1% 106.0% 118.0% 112.0% 112.0% 109.6% 114.0% 116.4% 118.8% 118.6% 123.1% 114.5% 113.7% 114.4% 0.07 0.68
LCR 127.0% 116.7% 108.6% 107.5% 122.0% 122.0% 115.0% 107.0% 115.4% 109.4% 106.9% 116.2% 123.7% 116.8% 121.3% 135.1% 122.0% 116.2% 113.0% 116.5% 8.03 4.99
16 | PwC South Africa – Major Banks Analysis – November 2019
4 Contacts
Costa NatsasFinancial Services Industry Leader: PwC Africa
+27 (0) 11 797 4105
Francois PrinslooBanking & Capital Markets Industry Leader: PwC Africa
+27 (0) 11 797 4419
Rivaan RoopnarainBanking & Capital Markets Partner: PwC South Africa
+27 (0) 11 287 0915
Hermann PfeillBanking & Capital Markets Manager: PwC South Africa
+27 (0) 11 797 5109
www.pwc.co.za/major-banks-analysis
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