The agency said in its latest report into South African banks’ performance in 2017 that the “big five” banks performed well last year, despite the challenging South African economy.
The report said that the big banks reported a combined increase of 8percent in operating profit last year.
The report further said that the banks’ return on equity, assets and risk-weighted assets had all improved.
The agency said these improvements came on the back of lower loan impairment charges, which were down almost 10percent.
Andrew Parkinson, a country director for South African banks at Fitch, said confidence had improved following February’s presidential change.
“Fitch expects the economic environment and bank profitability to improve mildly, reflecting stronger loan growth and stable impairments.
“One barrier may be margins, falling with interest rates,” Parkinson said.
South African banks have taken advantage of the “Ramaphoria” wave since the ANC’s elective conference in December, in which Ramaphosa was appointed party leader and set in motion plans for him to assume the country’s presidency.
Nedbank’s stock has strengthened 24.77percent in the past six months, while rivals Standard Bank have surged 19.44percent.
FirstRand stock has risen 7.84percent and Barclays Africa has inched up 3.17percent.
Nedbank chief executive Mike Brown said the bank shared President Ramaphosa’s commitment to ensuring that all South Africa’s social partners work together to find solutions to the country’s major challenges.
“We are encouraged by the approach the president has taken - emphasising unity among South Africans, tackling corruption and appointing a credible and capable cabinet,” Brown said.
South Africa’s big banks are readying themselves for stiff competition in the next few months from tech-savvy new entrants such as Bank Zero, Discovery Bank and TymeDigital.
Ernest van Rooyen, a financial services Africa partner at EY, said the competitive landscape in the banking sector would likely intensify this year.
“A number of new bank entrants are entering or are expected to enter the sector in the next 12 to 24 months, all with a view to capturing a share of the consumer segment, adopting new more cost-effective business models and less burdened by costly legacy systems,” Van Rooyen said.
The Patrice Motsepe backed TymeDigital will offer a full-service digital bank to customers.
Tyme’s parent company, the Commonwealth Bank of Australia, has a higher market cap than all big four South African banks put together.
Bank Zero, an app-driven bank, was founded by former FNB executives Michael Jordaan and Yatin Narsai.
Costa Natsas banking and capital Markets leader for Africa at PwC said 2018 had started with a renewed sense of optimism for the banking sector.
“The domestic banking system remains profitable, well managed, adequately capitalised and supervised in line with international best practice,” Natsas said.