Slackening of deal flow likely to hit bank growth
Earnings growth across SA’s major banks is expected to slow in 2017 as restructuring, mergers and acquisitions and other corporate deals that provided a buffer against defaulting households normalise. In 2016, there was an increase in corporate activity, which had a positive effect on noninterest revenue. But the market is expecting little in the way of mergers and acquisitions in 2017. Households have come under pressure, prompting ratings agency S&P Global Ratings to keep its negative outlook on the local banking sector unchanged. "Corporate credit growth has continually outperformed our expectations, but we don’t expect the buoyant growth seen in the first half of 2016," primary credit analyst Matthew Pirnie said in a report. "This is because the pockets of infrastructure development — particularly in the renewables space — and real estate deals are less attractive and the ‘into Africa’ story is less compelling."
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