Credit ratings agency Moody’s Investors Service expects profits in the South African banking system to wane over the next year-and-a-half as low growth, and weak consumer and investor confidence, which are not expected to improve, take their toll on the sector. Moody’s has projected SA’s real GDP at 0.5% in 2017, growing to 1.2% in 2018. Both forecasts are less than the Treasury’s projections of 1.7% and 2%, respectively. Moody’s forecasts are in line with the Reserve Bank’s. “Our negative outlook for South Africa’s banking system is mainly due to the weak operating conditions, which will challenge banks’ loan quality and profitability,” said Nondas Nicolaides, a vice-president at the ratings agency. Reserve Bank filings show that banks are not signing on many new loans. By June, all banks registered with the Bank supervision department collectively had R3.78-trillion in gross loans and advances to customers — just 2.1% more than 2016. It represents a significant drop from the 7.5% ...
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