SA: Banks' recovery slower than US

  1. Posted on Wednesday 13 January 2010 - 08:42
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    Peter Griffiths, AfricaNews reporter in Johannesburg, South Africa
    South Africa's banks would not recover as quickly from the global economic crisis as US banks, with analysts expecting bad debt charges would weigh down profits.
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    Earnings for the country’s four biggest banks would be down a combined 37 percent for 2009, said head of Sanlam Investment Management Global Kokkie Kooyman.

    Kooyman said that Absa, Standard Bank, FirstRand and Nedbank would suffer under the burden of heavy bad debt charges.

    In contrast to US banking houses, which have seen earnings rise over the last quarter, earnings in Africa’s biggest economy were expected to fall 33 percent over the last two quarters of 2009.

    “US banks have come to the end of their high bad debt charges in the third quarter ended September," Kooyman said.

    Kooyman believed that South African banks would continue to struggle to lift profits during the first half of 2010.

    However, there is hope that South Africa’s banks will follow the strong recovery of US banks in 2011.

    “We will start to see a recovery in the second half of this year, with significant earnings growth expected in 2011,” said Old Mutual Investment Group South Africa’s head of financials Tracy Brodziak.

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