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Recent notes:
Banking Monthly – August 2023
In this issue:
Another full month. This month we look at the overall macro picture, summarise our thoughts on the Jackson Hole lekgotla and then provide a rundown of all the interim banking results that came out in August.
Download the full analysis here.
Banking Monthly – December 2022
In this issue:
It is the end of another very volatile year. The biggest pressure on the banking sector has been rising inflation, which put a stop to provision releases. This has been somewhat offset by rising interest rates, which have benefitted the topline. In our final edition of the year, we touch on some key themes that will affect global financial stability in the coming year. Finally, with our big banks now in a closed period, we give guidance on where they stack up on 2022 earnings results which will be reported in the new year.
Download the Intellidex Banking Monthly Christmas special here
Banking Monthly – September 2022
In this issue:
We are now in the final quarter of the year, SA’s last chance to deliver around 2% real GDP growth. Unfortunately global inflation risks are skewed to the upside and there’s little relief expected in the near term. In our analysis this month we show how interest rates will remain high throughout 2023, providing a tailwind for revenue growth. Locally, more earnings results trickled in during September and we cover those while on the global front, we look at why Credit Suisse has the market worried about its own survival.
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Banking Monthly – August 2022
In this issue:
Welcome to the September edition of the Intellidex Banking Monthly.
In August, three of the big banks reported results. While the sector showed good earnings growth in line with the economic recovery, some stress on households began to emerge. Additionally, banks must take on increased interchange fees from Visa and Mastercard which we explore this month. Competition is also heating up to service both small businesses and consumers. Banks are now fighting off insurers, retailers and telcos for a share of wallet. In our competitor watch we detail the M&A activity.
Download the full analysis here August banking monthly
Banking Monthly – July 2022
In this issue:
Welcome to the fourth edition of the Intellidex Banking Monthly.
In July, all eyes were on central bank policy decisions, again. The steeper hiking cycle we find ourselves in will drive NIM expansion for the banking sector. The endowment benefit will last for the next 6-12 months. Our banks report in August and our performance index shows us that revenue growth has some upside risk, while impairments remain under pressure. We still expect improvements in ROE which will benefit share prices… and long-term incentives. Looking at global events, the Chinese mortgage crisis seems to have taken a turn for the worse last month and regulators are now stepping in. We’re keeping an eye on this, as it could have a negative effect on global growth.
Download the full analysis here July banking monthly
Banking Monthly – June 2022
In this issue:
Welcome to the third edition of the Intellidex Banking Monthly.
We’re halfway through the year, which means all eyes are on bank results in a few weeks’ time. Global trends suggest that the pandemic is in the rear-view mirror and regulatory authorities have eased restrictions with regards to capital requirements. This is good news for shareholders as it means better dividends. However, inflation remains a headwind to earnings growth, despite increasing rates providing endowment benefit to the sector. All this combined makes it a very challenging environment in which to lend for our banks. However, this isn’t new as South African banks have been navigating low growth for the last seven years. Balance sheet optimisation and growing non-interest revenue are some of the low hanging fruit we see in the current environment. To get a sense of how things are playing out we’ve reviewed bank trading updates, while picking up on an interesting trend in our stat of the month.
Nolwandle Mthombeni
Senior Banks Analyst
Download the full analysis here Banking Monthly June 2022
Banking Monthly – May 2022
South Africa, 31 May 2022
In this issue:
- Stat of the month – Retail mortgage volumes have been compensating for plummeting commercial mortgages, but now looks set to succumb to higher rates.
- Intellidex Momentum Index – Our proprietary measure of the growth trajectory of the banking sector shows a bounce back in the first month of the year after weakness in Q4.
- Global perspective – Central banks are baking in a longer term view on higher inflation, while shareholders are pushing back against bank executive remuneration.
- Home front – Ubank’s curatorship, Investec and African Bank results, and African Bank’s acquisition of Grindrod, AGM outcomes and the Financial Stability Review.
- In or out the money – Bank share options have generally had a good month
Nolwandle Mthombeni
Senior Banks Analyst
Download the full analysis here Banking Monthly May 2022
