The domestic banking sector’s operating environment remained challenging during 2011.

However, signs of improvement compared to 2010 were evidenced by the year-on-year growth in banking-sector assets of 9% as at December 2011, which is a marked improvement compared to the year-on-year growth of 5.3% reported as at December 2010.

That’s according to the Reserve Bank’s Annual Supervision report, which was released on Monday.

It said the sector’s profitability had also improved with operating profit increasing by 30% for the 12 months ended 31 December 2011. Average return on equity (ROE) and return on assets (ROA) for the banking sector increased from 14.6% and 1% in December 2010 to 16.4% and 1.2% respectively in December 2011.

“The banking sector remained adequately capitalised with total banking-sector equity increasing by 12.1% during 2011. Total capital adequacy improved from 14.9% at the end of December 2010 to 15.1% at the end of December 2011. The Tier 1 capital-adequacy ratio (CAR) of the banking sector increased from 11.8% to 12.2% during the same period,” the SARB stated. - I-Net Bridge