PRESSURES
Revenue tumbles at SA’s six big banks
Banks struggled in countries where a low oil price had caused significant economic distress as well as where regulators had capped interest rates on loans
In 2016, SA’s six largest banks posted their weakest headline earnings growth since 2009, as returns fell on a higher cost of equity, increased operating expenses and negative loan growth in the rest of Africa. Barclays Africa, Capitec, FirstRand, Investec, Nedbank and Standard Bank posted combined headline earnings growth of 6.6% to R80bn for the 2016 financial year — much lower than the 16.5% growth achieved in the prior year, said EY. "Revenue growth held up fairly well [last year], but increased funding and equity costs were partly responsible for declining returns. Investors are wanting a higher return from their investments into banks," said Andy Bates, EY’s financial services Africa leader. Lower lending in the rest of Africa had also led to weaker earnings, Bates said. Banks had struggled in countries such as Nigeria — where a low oil price had caused significant economic distress — as well as in Kenya, where regulators had capped interest rates on loans, he said. Banks’ tot...
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