Big four banks face bleak earnings picture as promise of Ramaphoria fades
South African banks face another wasted year for earnings growth as the euphoria that greeted Cyril Ramaphosa’s ascendancy to the presidency fades with the reality of the challenges facing the economy. The country’s largest lenders start reporting first-half results from next week against the backdrop of tax hikes, record petrol prices, stubbornly high unemployment and an economy that is showing little sign of recovering after shrinking in the first quarter. While banks have been able to contain expenses and benefit from an improvement in loan collections to stay profitable, those are starting to wane in the face of muted credit growth. "We have seen this for a few years now and most of the banks have been good on costs, but cost growth below inflation rates is not sustainable," said Jan Meintjes, a portfolio manager at Denker Capital in Cape Town. "Another year of poor top line growth could see the banks’ earnings decline in 2019 as cost pressures mount." Since taking over in Febru...
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