SARB finds big banks reasonably well placed in first climate risk stress test

The South African Reserve Bank (SARB) published the results of the country's first climate risk stress test of systemically important banks on 19 June 2025, in its latest Financial Stability Review.

The exercise covered six lenders: Absa, Capitec Bank, FirstRand, Investec, Nedbank and Standard Bank. The SARB found that the banks were reasonably well positioned to assess their vulnerability to climate risks, but said that some challenges remained, specifically around data gaps and modelling capabilities.

CREDIT EXPOSURES

According to the review, the participating banks categorised 68% of their total credit exposure as non-climate sensitive and 32% as climate sensitive at the end of 2023.

The results mean that close to a third of the total credit exposure of South Africa's largest banks was classed by the banks themselves as climate sensitive at the end of 2023.

WIDER STABILITY RISKS

The biannual Financial Stability Review also warned that growing geopolitical tensions and global policy uncertainty posed risks to South Africa's financial stability. The SARB said the country remained exposed to spillovers from trade tensions and international conflicts, citing developments including US tariff policies and the conflict between Israel and Iran, which had pushed oil prices higher.

It said these pressures had raised the risk of rapid capital outflows from South Africa, which could affect the government bond market and fiscal sustainability.