South Africa

South Africa has the largest banking system in sub-Saharan Africa, with sector assets of R9.13tn in July 2026, up 8.3% year on year. Twenty-eight registered banks operate, but the market is dominated by a handful of listed groups: Standard Bank, FirstRand, Absa, Nedbank, Investec and Capitec. The SARB's June 2026 Financial Stability Review puts the banking-sector Herfindahl-Hirschman Index above 0.18, which it classifies as high concentration, and flags interconnectedness with non-bank intermediaries as a contagion channel should a systemically important institution come under stress.

The business model is deposit-funded and diversified. Deposits and other creditors totalled R7.69tn in July 2026, with fixed and notice deposits the largest block at R2.39tn, while the ten largest depositors account for about 20% of funding. Gross loans of R6.48tn are weighted towards term lending, home loans and instalment finance. Non-interest income equals roughly 2.1% of assets, underpinning a cost-to-income ratio near 57%. The large groups have diversified into the rest of Africa: Standard Bank's Africa Regions contributed about 40% of its record R49.2bn FY2025 headline earnings.

Prudential metrics are sound. In July 2026 the sector's total capital adequacy ratio was 17.5%, with CET1 at 13.3% and a leverage ratio of 6.3%. The liquidity coverage ratio stood at 156% and the net stable funding ratio at 116%. Impaired advances fell to 4.61% of gross loans from 5.18% a year earlier. Return on equity reached 16.1% on a 12-month rolling basis. PwC's review of the major banks shows combined FY2025 headline earnings of R152.5bn, an ROE of 20% and a credit loss ratio of 182bp.

The principal risks are macroeconomic and external. The SARB notes that direct exposures to the Middle East are modest, but the oil shock after the Strait of Hormuz closure in March 2026 has transmitted through risk premia, capital flows and inflation. The SARB reversed its easing cycle, raising the repo rate to 7.00% in May and 7.25% in September 2026, and revised its growth forecast down to 1.2%. Sovereign debt dynamics, low growth and high unemployment remain the structural vulnerabilities identified in the FSR.