With the successful implementation of the css, stats sa was emboldened and delivered the community survey in june this year. Growth and innovation in african retail banking 3 africas banking markets are among the most exciting in the world. The standard bank group is one of south africa s largest financial services groups having presence in 20 countries in subsaharan africa. The past few decades, however, have posed challenges to the industry, with external and domestic factors weighing on sector growth. Market research analysis industry south african banking. The south african economy contracted by 1,4% in the fourth quarter of 2019, following a contraction of 0,8% revised in the third quarter. Jan 30, 2014 the automotive industry is one of south africas most important sectors, with many of the major multinationals using south africa to source components and assemble vehicles for both the local and international markets. The study of entry and competition in south africa found that the leading south african retail banks can be said to enjoy market power derived from various factors including barriers to the entry and growth of smaller banks. While south africa s banking sector already ranks as one of the best regulated and well capitalised in the region, regulatory changes are set to bring further improvements to the industry s soundness and. Click here to instantly access all the reports, in one place. The impact of interest rate spread on the banking system. South africas automotive industry is a global, turbocharged engine for the manufacture and export of vehicles and components. The industry does not suffer any real threat of substitutes as far as deposits or withdrawals, however insurances, mutual funds, and fixed income securities are some of the many banking services that are also offered by non banking companies. Moreover, with the recovery in economic conditions, rise in middleclass population, and favorable government support, the bank assets will surge at cagr of nearly 10% during 20112014, says south african banking sector analysis, a recent report by rncos.
Taking all of this into account, the south african banking sector continues to face a. Africas banking sector provides a refreshing con trast. Customs procedures remain costly and rules of origin complex. According to hajer and anis 2016 several reasons covers the. A banks market share can be approximated by its total assets a proxy for total loans or total deposits as a percentage of industry totals. The success of south africas financial sector is attributed to its. Growth and innovation in african retail banking globally, the banking industry is facing disappointing returns and sluggish growth. For seven consecutive years its roe has been stuck in a narrowly defined range, between 8 percent and 10 percenta level that most consider the industry s cost of equity. Banking in africa matters african banking survey 2016. While the south african government does not view bitcoin which was the starting point of blockchain technology as a legal form of. Competition and efficiency in the banking sector in south africa.
A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. The company operates as a division of firstrand bank. Download all the latest market reports you need on the transportation industry in south africa. For seven consecutive years, its return on equity roe has stayed in a narrowly defined range, between 8 and 10 percenta level that most consider the industrys cost of equity. Below is a list of the largest banks operating in south africa. Unlike earlier studies such as claessens and laeven 2004, and bikker et al. Overview of the petrol and diesel market in south africa. South african banking sentiment index 4 in partnership with sentiment and net promoter score analysis sentiment analysis september 2016 august 2017 for a third consecutive year, capitec had the highest net sentiment. South africas economic structure south african market insights. African banking survey october 2016 pwc south africa. There were 42 banking institutions, excluding registered foreign bank representatives, registered with the prudential.
Oct 15, 2017 south africas financial services sector, backed by a sound regulatory and legal framework, is sophisticated, boasting dozens of domestic and foreign institutions providing a full range of services commercial, retail and merchant banking, mortgage lending, insurance and investment. A recent fed report found that the effects of climate change have a pervasive effect across all sectors of the us economy, including the banking industry. In prices adjusted for inflation the south african economy is worth r2. African retail bankings next growth frontier mckinsey. On average, domestic south african banks achieve ci ratios of approximately 51%, while foreign banks operating in south africa achieve ci ratios of approximately 54%. It gives me great pleasure to introduce the report, overview of the petrol and diesel market in south africa between 2007 and 2016. The banking association south africa basa advances the interests of the industry with its regulators, legislators and stakeholders, to make banking sustainable, profitable and better able contribute to the social and economic development and transformation of the country. If you already have an account please use the link below to sign in if you have any problems with your access or would like to. They do not expect to reduce those in the medium term three to five years. The retail sector is one of the largest industries in the south african economy accounting for 14. Accordingly, each bank needs to define its own target business model in light of its. Simplify and adopt a single set of rules of origin in the forthcoming tripartite free trade area. If you click on an industry the column chart below will show the value of this industry in rand millions. South africas financial sector has been the largest contributor of new jobs and the biggest source of gdp growth.
Fintech can enable the region to leapfrog stages of financial development, while automating legacy manual processes through rpa can make banking leaner, more. Banking in subsaharan africa european investment bank. An examination of te global investment management industry 6 while there is a global movement to adopt blockchainoperated investment management solutions, this is still not widely adopted in south africa. Earlier in june, stats sa took over the expenditure side of the gross domestic product from the south african reserve bank. You are currently accessing central banking via your enterprise account. I n recent years, the reputation of south africas banking industry has blossomed remarkably.
While regulation by the government can act as a catalyst, financial institutions will need to work. This report is based on information collected from government departments, petroleum industry and research papers, and covers a broad overview and analysis of the south african petrol and diesel industry. Political developments once again dominated the south african economic landscape in the first quarter of the year, with. Wesbank the largest provider of vehicle finance in south africa, financing 1 in 3 new cars sold. Economic fundamentals are strong, the regulatory climate is favorable, and. The latest africa banking news from the banker, providing financial analysis and commentary on african banks. Market structure and competition in the south african. Pestel analysis of south africa presented by grishma rane. African banks generally have more manual pro cesses. Natal, stats sa used tablet technology and waved byebye to paper, pencil and pen. Ranked lists show the leading firms in diverse parts of the financial industry. An overview of the prominent barriers to entry in south.
An analysis of competition, efficiency and soundness in the. Getting the balance right major banks analysis south africa pwc. South africa has a very concentrated banking industry with a c4 concentration ratio of over 80%. The south african banking sector has undergone significant changes and developments over the past few years, particularly in the regulatory environment with the enactment of several new laws and the. Pdf corporate social responsibility in south africa. It has become a wellregulated system that has seen large foreign players consistenty increase their presence within the country, while many have acquired stakes in major south african banks. South africa news and analysis articles central banking. Globally, the banking industry is facing disappointing returns and sluggish growth. Four areas sa banks really need to focus on in 2017. Banking in africa matters african banking survey 2016 5 executive summary in this edition of the pwc african banking survey, we have extended the scope to include participants from banks in nigeria and kenya, in addition to our focus on south africa, in order to provide a more comprehensive view on the state of the banking industry in africa. Durban the banking sector is poised for a major shakeup in competition this year as three new entrants begin plying their craft against the established institutions which have perennially. Selected trends monthly banks ba900 economic returns on south african reserve bank website. Structure and conduct in the commercial banking sector of south africa 4 1. This spending power is further bolstered by widely available consumer credit, both from retail banks and retail chains.
Study of the commercial banking industry in ethiopia by assefa worede tesfay submitted in accordance with the requirements for the degree of doctor of business leadership at the university of south africa supervisor. There were 42 banking institutions, excluding registered foreign bank representatives, registered with the prudential authority in may 2019, an increase from 36 institutions a yea. Testing for competition in the south african banking. These banks account for over 70% of south africas banking assets. The results of this study further suggest that economic growth and real. An analysis of competition, efficiency and soundness in. One of the top manufacturing powerhouses on the continent, south africa has a strong industrial tradition dating back 150 years. Transportation industry in south africa market research. I n recent years, the reputation of south africa s banking industry has blossomed remarkably. However, a more innovative approach to financial inclusion is required in south africa. Economic overview in brief the south african economy, which grew by an estimated 0. Oct 31, 2016 a weak economy will cause new corporations to be cautious when thinking of expanding business into south africa. The continents overall bank ing market is the secondfastestgrowing and secondmost profitable of any global region, and a hotbed of innovation.
Unsurprisingly, for the third consecutive year, world leaders ranked environmental threats as the biggest risk to the world. The structure conduct performance hypothesis would suggest that competition in the sector would therefore be very low. Sectoral analysis of south africa by kgomotso charlotte nchoe submitted in accordance with the requirements for the degree of master of commerce in the subject economics at the university of south africa supervisor. China and south africa have performed the best in the. The banking association south africa basa advances the interests of the industry with its regulators, legislators and stakeholders, to make banking sustainable, profitable and better able contribute to the. Nov 21, 2017 south africas banking industry is rapidly evolving in response to regulatory changes, economic pressures, technological advances and innovation in digital.
Political developments once again dominated the south african economic landscape in the first quarter of the year, with revelations on state capture and the constitutional court ruling op. A bank s market share can be approximated by its total assets a proxy for total loans or total deposits as a percentage of industry totals. South africa financial services analysis and data from the eiu. It also makes it more difficult for businesses within south africa to branch out a high exchange rate makes costs and expenses for south african businessmen difficult. Fintech can enable the region to leapfrog stages of financial development, while automating legacy manual processes through rpa can make banking. Pdf the impact of big data on the south african banking industry. Growth and innovation in african retail banking mckinsey. It has become a wellregulated system that has seen large foreign players consistenty increase their presence within the country, while many have acquired stakes in major south african. Sa banks under pressure as economy stumbles apr 28 2016 16. Other banks such as regal bank also ran into financial trouble at the time and were placed under curatorship the banking association south africa, 2009. An analysis of competition, efficiency and soundness in the south. Since january the national treasury, reserve bank and international monetary fund imf have all adjusted their growth forecasts for 2016 to below 1%. Upgrade information technology at custom posts and improve the interconnectivity of systems within the south african. The reserve bank expects growth to average 0,8% and 1,4% in 2016 and 2017 respectively from forecasts of 0,9% and 1,6% previously.
Established in 1864, it is headquartered in johannesburg, south africa and has over 55,000 employees as of 2016. Growth and innovation in african retail banking 3 africa s banking markets are among the most exciting in the world. Foreign banks in south africa, insurance companies. South africa looking at funding for lending coronavirus scheme for banks. The impact of the 4th industrial revolution on the south. The sector does, however, continue to face headwinds. Capitec is also the only bank to maintain a positive net sentiment. Developing the banking sector in west africa and central africa. Malaysian commercial banking sector, found the same relationship as schaek and cihak 2008 who used banks in.
Testing for competition in the south african banking sector. While south africas banking sector already ranks as one of the best regulated and well capitalised in the region, regulatory changes are set to bring further improvements to the industrys soundness and stability, as well as the treatment of its customers. We invest deep in order to bring you insightful research which can add tangible value to your business or academic goals. This paper examines the relationship between bank structure, performance and competition in the south african banking industry. South africa s banking industry is rapidly evolving in response to regulatory changes, economic pressures, technological advances and innovation in digital. The second edition of the survey was conducted in 2016 and was expanded. Experience and lessons from south africa unep inquiry.
Given population growth, gross domestic product gdp per capita growth has been close to nil since 2014, leaving little room to reduce poverty. South africa has a very concentrated banking industry with a c4. South africa financial services analysis, data and forecasts from the eiu to support industry executives decisionmaking. Major banks analysis still a balancing act more positive contributions came from regional operations outside south africa emphasizing the growing importance of those businesses and the restofafrica growth strategies all of the major banks have consistently focused on over recent years.
Conventionally, the approach to bank performance analysis is based on financial ratio. In chapter 3, stuart theobald observes that the banking industry in the southern african development community sadc has been affected by the sharp decline in commodity prices, causing an increase. Competition and efficiency in the banking sector in south. The global economic growth outlook has improved, but is clouded by policy uncertainty as. Introduction the aim of this paper is to evaluate competition and concentration in south africa s banking industry. We expect regulation of the south african banking system to remain a supportive factor for the ratings on domestic banks, but we also believe it will be an increasing strain on profitability and management time in 2016.
By 2016, some 11 million households are expected to have an annual income above r89 500. This is done through an analysis of the priceconcentration relationship in the retail banking sector of the industry. It is an important driver of consumption and is characterised by high linkages and spill overs. The african development bank s preliminary report africa to africa investment. The clearest example of this was in kenya where mpesa. December 3rd 2019 south africa banking south african banks resilient despite global headwinds. Growing in turbulent times major banks analysis south africa pwc.
Structure and conduct in the commercial banking sector of. While south africa s banking sector already ranks as one of the best regulated and well capitalised in the region, regulatory changes are set to bring further improvements to the industry s soundness and stability, as well as the treatment of its customers. The standard bank group is one of south africas largest financial services groups having presence in 20 countries in subsaharan africa as of 2018. It can be seen in table 2 that the total deposits and total assets for the south african banking sector in 2007 are dominated by four banks. Worldwide, 2% of adults have a mobile money account compared to 12% in ssa. Porters 5 forces and the banking industry the banking. An analysis of competition, efficiency and soundness. South africa s financial services sector, backed by a sound regulatory and legal framework, is sophisticated, boasting dozens of domestic and foreign institutions providing a full range of services commercial, retail and merchant banking. To help revitalise the industry, the government and industry. The financial sector is one of the countrys strategic assets, with a highly skilled labour force. In todays rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry. Mar 14, 2017 four areas sa banks really need to focus on in 2017. The figures are adjusted for inflation to ensure the data shows underlying growth and not growth caused by price increases. The south african retail industry is the largest in the subsaharan region and is the 20th largest retail.
Against the background of a rapidly evolving context for the ssa banking industry, the economics department of the european investment bankeib has coordinated this volume, which combines inhouse expertise on the region with contributions from leading experts. Pdf performance of the south african banking sector since 1994. The market share of major banks in south africa in december 2016. There is also the threat of payment method substitutes and loans are relatively high for the industry.
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