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Recession hurts SA banks

  1. Posted on Wednesday 20 January 2010 - 09:30
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    South Africa’s banking profits were again down in quarter four of 2009 on the back of weak credit demand and lower transaction volumes, a survey has revealed.

    Ernst & Young’s lead banking and capital markets director Emilio Pera confirmed that credit demand, which has been declining since the start of 2008, has hurt banks.

    “Credit demand actually declined year-on-year for the first time in September, and this is undoubtedly affecting banks’ revenue growth,” said Pera

    Pera believes that even though Africa’s biggest economy is technically out of recession that banks won’t feel the benefits just yet:

    “A lower interest rate environment has yet to result in improved consumer expenditure and debt service affordability, while corporate entities have also not yet responded by increasing credit levels.”

    South Africa’s attempts to bank its large unbanked adult population has also been dealt a blow by the recession as increasing unemployment makes banking services unaffordable.

    “The latest Financial Affordability survey illustrates that the relative portion of un-banked adults grew in 2009, as unemployment levels have risen,” said Pera.

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