It’s worth considering what customers are saying about the established banks’ digital offerings, says the writer. Picture: 123RF/ELNUR AMIKISHIYEV
Even so, there are signs that sentiment may be turning for the better. While the coronavirus pandemic has ravaged earnings, banks have bolstered their defences by increasing provisions for Covid-19-related losses under revised accounting standards. High capital buffers have also remained intact, strengthening the case for dividends to resume once regulators give the go-ahead.
“The new accounting standards force bank management to bring forward their bad-debt cycle and concentrate it,” said Peter Brooke, the Cape Town-based head of macro solutions at OMIG. “This means from 2021 onwards, provisions will decrease and profits will increase, which, in our language, means we have an improving theme.”
That is not to suggest that SA banks have an easy ride from here. GDP shrank by an annualised 51% in the three months to end-June from the previous quarter as the nation endured a strict lockdown. That extended the recession into a fourth consecutive quarter, the longest since 1992, and the government has said its forecast of a 7.2% economic contraction this year may be too optimistic.
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