Business Day Spotlight
PODCAST | Debt relief requested by wide range of income levels
Punki Modise, CFO for retail and business banking at Absa, discusses the effect of Covid-19 on the financial services sector
In this edition of the Business Day Spotlight we take a look at how the coronavirus has impacted South Africans’ ability to make debt payments.
Our host Mudiwa Gavaza is joined by Punki Modise, CFO for retail and business banking at Absa, to discuss the effect of Covid-19 on the financial services sector.
Absa launched its payment relief programme at the end of March to give people the ability to delay certain loan or debt payments due for three months.
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The conversation begins with Modise explaining Absa’s rationale for instituting this programme for its customers. She says the move came after the global banking industry decided that this is something that can be done around the world to assist people who are facing financial difficulty, given the impact of Covid-19 and the consequent lockdowns.
SA’s large retail banks have all announced payment relief programmes.
So far, more than 376,000 account holders have taken advantage of payment relief across Absa’s retail and business banking unit in SA. This amounts to R5.8bn in cash-flow relief, over three months.
Competitor Nedbank has said that 130,000 of its customers had approached it to take up the opportunity by mid-April. Standard Bank recently said it gave relief to nearly 150,000 clients, worth R1bn a month.
Modise says the take-up for the relief from different income levels shows that Covid-19 has affected people and businesses across the board.
Given the international consensus around banks offering relief for customers, Modise says Absa is working on similar arrangements for customers in other countries in which it operates.
On the whole, the country’s GDP and the banking sector have a direct relationship, Modise says. With the Treasury expecting an up to 6% contraction in GDP, she expects banking to take a hit for the year in line with pressure on consumers and businesses.
The discussion also touches on some of the pressure points felt by customers now; how consumers and businesses at various income levels have been affected by Covid-19; and the outlook for the retail and business banking sector for 2020.
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• Business Day Spotlight is a MultimediaLIVE production.