South Africa Banks Gather Their Defenses to Ride Out Virus Storm

South African banks have made their rainy-day provisions. Now, they must wait and see whether the funds set aside will be enough to manage a potential torrent of bad debt and ease pressure on their earnings in coming months, Bloomberg News reported. The country’s so-called “Big Four” experienced a profit slump deeper than that seen during the global financial crisis in the six months ended June after a spike in credit impairment charges as they grappled with the effects of the coronavirus pandemic and a nationwide lockdown. Their return on equity fell to 9.2% from 15.4% a year earlier, according to South African Reserve Bank data. A report by PwC, covering results at Standard Bank Group Ltd., FirstRand Ltd., Absa Group Ltd. and Nedbank Group Ltd., estimates their charges soared by a combined 130% in the first half of 2020 from a year earlier, while profits before provisions grew 4.4%. Read more