South African Banking Sector Analysis

Publication Date	August 2009
Publisher	RNCOS
Product Type	Report
Pages	70
ISBN Number	not applicable
Product Code	RCS00408

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Summary

South African banking sector is well-developed and highly liberalized. It is one of the largest and most deregulated sectors within the emerging markets. The sector is experiencing significant growth, defying the global economic slowdown. The banking assets grew at a CAGR of around 19% between 2002 and 2008, far higher than witnessed by the global banking industry, says "South African Banking Sector Analysis", a recent report by RNCOS.

Our findings show that the South African banks have largely been protected from the direct effects of the global financial crisis. Domestic banks did not invest heavily in high-risk securities or complex instruments, and have maintained a traditional and relatively conservative banking model. They have maintained high lending standards and enjoyed high profitability for a number of years. With low levels of foreign funding, the banks have limited activity outside the African continent.

We have also found that future of the banking sector lies mainly in personal banking (especially the lower end of the market) and the small and medium-sized business sector. The banks need to focus more on expansion in the domestic economy in the coming years. Given the recent boom in mobile phones and internet accessibility, another key area for growth will be the telephone and internet banking.

Our report "South African Banking Sector Analysis" provides detailed analysis of the banking sector in South Africa. It gives deep insight into each of the banking parameters like assets, loans, deposits and payment instruments. Most importantly, the report gives future outlook for each of the important industry aspects (assets, loans, deposits etc) considering the effects of the global economic crisis on base drivers, opportunities and challenges faced by the banking sector.

Additionally, the report contains detailed information of key industry players (both domestic and foreign), their business strategies and their market share. The key players discussed are ABSA Group Limited, FirstRand Limited, Nedbank Group Limited, Investec Limited, Citibank N.A., JPMorgan Chase & Co., Deutsche Bank and ABN AMRO Holding N.V.

Content

1. Analyst View
2. Macroeconomic Analysis
3. Banking Industry Overview
4. Key Performance Indicators
- 4.1 Loans
  - 4.1.1 Mortgage Advances
  - 4.1.2 Installment Debtors
  - 4.1.3 Overdrafts and Loans
  - 4.1.4 Resale Agreements
- 4.2 Deposits
  - 4.2.1 Residents
  - 4.2.2 Non-residents
- 4.3 Bank Profitability and Investment Strategy
- 4.4 Payment Instruments
  - 4.4.1 Credit Cards
  - 4.4.2 ATMs
  - 4.4.3 Cheque
5. Industry Trends
- 5.1 Partnership with Fuel Stakeholders
- 5.2 Private Banking
- 5.3 FSC and Mzansi Accounts
- 5.4 Card-less ATMs
- 5.5 Distance Banking
- 5.6 Affordability of Housing Loans
- 5.7 Non-performing Loans
6. Risk Assessment and Ratio Analysis
7. Regulatory Developments
8. Competitive Landscape
- 8.1 Domestic Banks
  - 8.1.1 ABSA Group Limited
  - 8.1.2 FirstRand Limited
  - 8.1.3 Nedbank Group Limited
  - 8.1.4 Investec Limited
- 8.2 Foreign Banks
  - 8.2.1 Citibank N.A.
  - 8.2.2 JPMorgan Chase & Co.
  - 8.2.3 Deutsche Bank AG
  - 8.2.4 ABN AMRO Holding N.V.
List of Figures
- Figure 2-1: Real GDP Growth (%), 2008-2013
- Figure 2-2: Per Head Personal Disposable Income (US$), 2008-2013
- Figure 2-3: Population Growth (%), 2008-2013
- Figure 3-1: Bank Assets (Billion ZAR), 2002-2008
- Figure 3-2: Forecast for Bank Assets (Billion ZAR), 2009-2013
- Figure 3-3: Breakup of Bank Assets (%), 2007
- Figure 4-1: Bank Loans and Advances (Billion ZAR), 2002-2008
- Figure 4-2: Forecast for Bank Loans and Advances (Billion ZAR), 2009-2013
- Figure 4-3: Breakup of Bank Loans and Advances (%), 2008
- Figure 4-4: Mortgage Advances (Billion ZAR), 2002-2008
- Figure 4-5: Share of Mortgage Advances by Major Banks (2006 & 2007)
- Figure 4-6: Installment Debtors (Billion ZAR), 2002-2008
- Figure 4-7: Share of Installment Finance by Major Banks (2006 & 2007)
- Figure 4-8: Overdrafts and Loans (Billion ZAR), 2002-2008
- Figure 4-9: Share of Overdrafts and Loans by Major Banks (2006 & 2007)
- Figure 4-10: Loans under Resale Agreements (Billion ZAR), 2004-2008
- Figure 4-11: Deposits with Banks (Billion ZAR), 2002-2008
- Figure 4-12: Forecast for Deposits with Banks (Billion ZAR), 2009-2013
- Figure 4-13: Deposits with Banks by Type (%), 2008
- Figure 4-14: Resident Deposits with Banks (Billion ZAR), 2003-2008
- Figure 4-15: Resident Deposits with Banks by Type (%), 2008
- Figure 4-16: Non-resident Deposits with Banks (Billion ZAR), 2003-2008
- Figure 4-17: Income of Banks (Billion ZAR), 2005-2007
- Figure 4-18: Net Income of Banks (Billion ZAR), 2005-2007
- Figure 4-19: Growth in Interest Income of Banks (%), 2006 & 2007
- Figure 4-20: Investment by Banks (Billion ZAR), 2007 & 2008
- Figure 4-21: Investment Portfolio of Banks (%), 2008
- Figure 4-22: Credit Card Transactions (Billion ZAR), 2002-2008
- Figure 4-23: Forecast for Credit Card Transactions (Billion ZAR), 2009-2013
- Figure 4-24: Credit Card Debtors (Billion ZAR), 2002-2008
- Figure 4-25: Share of Credit Cards by Major Banks (2006 & 2007)
- Figure 4-26: Number of ATMs (May 2007 & 2010)
- Figure 4-27: Number of Cheque Transactions (Million), 2002-2008
- Figure 4-28: Cheque Transactions (Billion ZAR), 2002-2008
- Figure 5-1: Africa & World - Growth in High-net-worth Population (%), 2007
- Figure 5-2: Wealthy Women Population ('000), 2006 & 2011
- Figure 5-3: Bank Accounts Penetration (%), 2006 & 2007
- Figure 5-4: Forecast for Internet Users Penetration (%), 2009-2013
- Figure 5-5: Forecast for Number of Mobile Subscribers (Million), 2009-2013
- Figure 5-6: Mortgage Affordability by Household Income (2005-2008 & Jun 2008)
- Figure 5-7: Impaired Advances (%), Jan 2008 to Jan 2009
- Figure 6-1: Banking Sector Risk (Aug 2008 to Jan 2009)
- Figure 6-2: Loan-to-Deposit Ratio (%), 2004-2008
- Figure 6-3: Loan-to-Asset Ratio (%), 2003-2008
- Figure 6-4: Capital Adequacy Ratio (%), 2006-2008
List of Tables
- Table 3-1: Breakup of Bank Assets (Billion ZAR), 2002-2007
- Table 8-1: Top Ten Domestic Banks by Assets (Million ZAR), H1 2008
- Table 8-2: Top Ten Foreign Banks by Assets (Million ZAR), H1 2008