THE search is on for value in the banking sector now that banking shares have pulled back from the highs that preceded the recent reporting season. With the exception of Capitec, which still has to report annuals on March 26, all the big four banks showed relatively strong growth last year. But it did not match the earnings reported in 2012 and 2013.For example, FirstRand reported earnings growth of 25% then. Now it is at 15%, mainly due to an uptick in bad debt from Wesbank and FNB’s business division. Standard Bank delivered 15% in 2013, now it is down to 1% overall.Both FirstRand and Standard Bank are trading at price:earnings (p:e) ratios above the average for the banking index of 14.4. Standard is at 14.5 and FirstRand at 14.8. Capitec also seems pricey at a p:e of 22.3, despite guiding the market to earnings growth of 23%-27% last year, which hardly makes it a value proposition.The focus is therefore on Nedbank and Barclays Africa, both trading below the banking index average ...
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