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AfricaMay 2 2016

South Africa's banks stay ahead of the slump

Though South Africa's economy is cooling, its banks are continuing to perform strongly. For some, growth is coming from operations elsewhere in Africa, while for others its is stemming from the domestic market. James King looks at the strategies being employed to keep the country's lenders buoyant in a slow-growth environment.
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South Africa's banks stay ahead of the slump

Though South Africa’s economic growth has cooled in recent years, the country’s banks are showing little sign of strain. Based on their performance over the past 12 months, most lenders have enjoyed a period of robust growth, as increases in total assets have gone hand in hand with an uptick in profitability.  

To be sure, there appears to be difficult times ahead and opportunities for further growth are expected to diminish in the coming months. In particular, credit risks are likely to increase as the impact of elevated interest rates and high household debt, among other factors, begin to bite. But as far as banking sectors go, South Africa’s is both well regulated and competitive, meaning that capitalisation and liquidity levels are healthy and that most banks are in a good position to weather a more challenging environment.

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