Coverage: weekly note · Information to 3 October 2025
Originally Published as TGB Premium Intelligence
This report was first made available exclusively to TGB Premium subscribers. It is now available as open access as part of TGB's research archive.
TGB Weekly Research Note · 3 October 2025
Capitec, Absa and FirstRand reported double-digit earnings growth, while Standard Bank's headline earnings rose 8% and Nedbank's 6%.
The desk view
The latest results from five major South African banks show solid but uneven profit growth rather than uniform double-digit gains. Capitec, Absa and FirstRand grew earnings by 26%, 17% and 10%, while Standard Bank's headline earnings rose 8% and Nedbank's 6%. Lower credit costs did much of the work at Absa and Nedbank: Absa's credit loss ratio fell to 100bp from 123bp and Nedbank's to 81bp from 104bp. Rate cuts helped, but Nedbank and FirstRand both said friction within the government of national unity weighed on confidence. Our reading is that earnings momentum rests on credit quality more than on a clear improvement in the domestic outlook.
Double digits for three of the five
Reporting periods differ: Standard Bank, Absa and Nedbank cover the six months to 30 June 2025, FirstRand its year to 30 June 2025 and Capitec the six months to 31 August 2025.
Capitec led with headline earnings up 26% and an ROE of 31%. Absa's rose 17%, lifting its ROE to 14.8% from 14.0%, with Personal and Private Banking earnings up 23%. FirstRand's normalised earnings rose 10% despite a further R2.7 billion provision for the UK motor commission matter, after R3.0 billion in the prior year; operational earnings rose 16%. Standard Bank's headline earnings rose 8%, although headline earnings per share grew 10%. Its South African franchises earned R11.6 billion, or 49% of group headline earnings, with Africa Regions contributing 41%. Nedbank's headline earnings grew 6%, with diluted HEPS up 7%.
Latest reported results of the five banks
| Bank | Earnings | Growth | ROE | Capital ratio |
|---|---|---|---|---|
| Capitec | R8.0bn | 26% | 31% | CAR 33% |
| Absa | R11.9bn | 17% | 14.8% | CET1 12.5% |
| FirstRand (normalised) | R41.8bn | 10% | 20.2% | CET1 14.0% |
| Standard Bank | R23.8bn | 8% | 19.1% | CET1 13.2% |
| Nedbank | R8.4bn | 6% | 15.2% | CET1 13.1% |
Source: Capitec Bank Holdings Limited, Unaudited interim financial statements, six months ended 31 August 2025, 1 October 2025; Absa Group, Absa Group interim results 2025 media release, 18 August 2025; FirstRand Limited, Results media release, year to 30 June 2025, 11 September 2025; FirstRand Limited, Analysis of financial results, year ended 30 June 2025, 10 September 2025; Standard Bank Group, Results announcement for the six months ended 30 June 2025, 14 August 2025; Nedbank Group, Nedbank Group interim results 2025 press release, 5 August 2025.
Credit costs did more than margins
Lower impairments did much of the work at Absa and Nedbank. Absa's impairments fell 14% while pre-provision profit rose only 4%, its credit loss ratio improved to 100bp from 123bp, and it attributed double-digit growth in its South African operations mainly to lower impairments. Nedbank's impairment charge fell 18% to R3.8 billion and its credit loss ratio to 81bp from 104bp, back within its target range. Its growth came from non-interest revenue, associate income and a lower impairment charge, partly offset by muted net interest income. Standard Bank reported muted growth in credit charges alongside fee and trading revenue growth.
Rate cuts cut both ways. The SARB lowered rates by 50 basis points to 7.25% in the six months to June 2025 and to 7% from 1 August, and said it now prefers inflation to settle at 3%. FirstRand said lower inflation and interest rates stabilised household affordability. At Capitec, repo rate cuts reduced the yield on cash and investments, even as 40% growth in loan disbursements drove 23% growth in net interest income. Credit quality was not uniformly better: FirstRand's credit loss ratio edged up to 85bp from 81bp, and Absa's Business Banking earnings fell 12% on higher impairments and subdued revenue.
Politics weighed on confidence
The banks mostly described politics as a drag rather than a tailwind. Standard Bank said local political developments dented confidence, and Nedbank said disagreements within the government of national unity over taxes, health care and transformation affected business and consumer confidence. FirstRand was more mixed: it credited easing inflation and policy coordination within the government of national unity with underpinning moderate growth, but said policy friction within it continued to weigh on confidence. The SARB said confidence deteriorated in the first half of 2025.
Forward guidance diverged across the banks. Nedbank cut its 2025 guidance to low single-digit DHEPS growth and an ROE of around 15%, citing a more difficult-than-expected South African environment. Absa expects South African growth of just 0.9% in 2025. FirstRand expects normalised earnings growth to trend into the high mid-teens in the 12 months to 30 June 2026.
The backdrop has improved since mid-year. On 18 September 2025 the SARB held its policy rate at 7%, with four members preferring a hold and two a 25 basis point cut, after 125 basis points of easing since September 2024. It raised its 2025 growth forecast to 1.2% from 0.9% and noted real private-sector loan growth of 2.9% in July, the highest since October 2019. Capital is not a constraint, with CET1 ratios between 12.5% and 14.0%. Capitec's capital adequacy ratio fell to 33% from 37%, partly because South Africa implemented Basel IV on 1 July 2025, which changed the treatment of operational risk. The test for the next results is whether loan growth can take over from falling impairments.
What to watch
- 20 November 2025: next SARB Monetary Policy Committee statement
- Year to 30 June 2026: FirstRand guides normalised earnings growth into the high mid-teens
Primary sources: Capitec Bank Holdings Limited, Unaudited interim financial statements, six months ended 31 August 2025, 1 October 2025; Absa Group, Absa Group interim results 2025 media release, 18 August 2025; FirstRand Limited, Results media release, year to 30 June 2025, 11 September 2025; Standard Bank Group, Results announcement for the six months ended 30 June 2025, 14 August 2025; Nedbank Group, Nedbank Group interim results 2025 press release, 5 August 2025; Nedbank Group, Interim results booklet, six months ended 30 June 2025, 5 August 2025; FirstRand Limited, Analysis of financial results, year ended 30 June 2025, 10 September 2025; South African Reserve Bank, Statement of the Monetary Policy Committee, July 2025, 31 July 2025; South African Reserve Bank, Statement of the Monetary Policy Committee, September 2025, 18 September 2025.