[LISTEN] What's behind SA's strong banking sector?

Auditing firm PwC says South Africa's four major banks are producing positive financial results despite operating in a shaky economic climate.

The firm has released it's latest analysis detailing the combined local currency results of Absa, FirstRand, Nedbank and Standard Bank.

Xolani Gwala spoke to Chief Investment Officer at Aeon Investment Management Asief Mohamed to find out how the country's banking sector has managed to stay afloat.

Banks generally in South Africa have for a very long time, been very profitable. What's happening is National Treasury have followed what they call the four pillar banking approach so they could to date, not really allowed significant amount of new banking licenses and that is part of the reason why the banks survived through the global financial crisis....

Asief Mohamed, Chief Investment Officer at Aeon Investment Management

The profitability has been high because they have been supported by this four pillar approach. So their return on equities has also been high at 17 percent, it's very high generally speaking.

Asief Mohamed, Chief Investment Officer at Aeon Investment Management

Mohamed says while the lack of competition has strengthened the sector, the introduction of new players like Discovery Bank will hopefully present a more competitive scenario.

Hopefully they would decrease prices to consumers, become a lot more competitive when it comes to lending and boost the economy.

Asief Mohamed, Chief Investment Officer at Aeon Investment Management

The introduction of Capitec has definitely increased competition and reduced pricing for consumers. It is a competitive product where customers like it very much.

Asief Mohamed, Chief Investment Officer at Aeon Investment Management

Click on the link below to listen to the full conversation...


This article first appeared on 702 : [LISTEN] What's behind SA's strong banking sector?


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