COMPANY COMMENT: Outlook for SA’s banks remains clear as mud
SA’s banks have overcome many challenges in the past and their experience will come in handy on the road ahead
S&P Global Ratings’ obligatory downgrade of SA’s banks after the sovereign downgrade earlier in the week presents new challenges to the sector. Already down 10% last week, the banking index lost a further 5% this week, with more downgrades looming from rating agencies Fitch and Moody’s. Analysts emphasise that the banks have healthy balance sheets and capital ratios that will withstand further downgrades, but more political interference was likely, presenting corporate governance problems and pressure on managers. Certain banks have been singled out for a negative outlook, with S&P warning that political and institutional instability had worsened. But it also admitted that SA’s banks have performed resiliently amid slow economic growth and political turbulence.The outlook for the sector remains cloudy and largely dependent on currency and bond market movements. Bond yields and the rand have held up relatively well, and Finance Minister Malusi Gigaba has said he will pursue stable po...
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