lender kicked off the earnings reporting season for
The stock dropped on Friday leading declines on the six-member FTSE/JSE Africa Banks Index and extending its losses this year to 14 percent.
The strain of
“We expect the economic environment to remain challenging,” Ramos said in an emailed statement. The company also sketched a bleak outlook for the rest of year across its businesses in 12 African countries, predicting “low- to middle-single digit loan growth,” a decline in its net-interest margin, slower revenue growth and higher costs.
The country’s foreign-currency debt was downgraded to junk in April after President Jacob Zuma fired his respected finance minister and replaced him with someone who has no financial experience. Unemployment is also at a 14-year high as the governing African National Congress prepares to pick a new party president at the end of the year.
“Key risks facing South Africa in the second half include heightened political and policy uncertainty in the run up to the ruling party’s December elective conference, the potential for the country’s sovereign credit rating to be downgraded further, and for weak business and consumer confidence to lead to a longer, more protracted recession,” Barclays Africa said.
Its Johannesburg-based peer, Nedbank Group, reports first-half earnings on Monday.
“The main risk to our view
on Nedbank and on South African banks in general remains the political and
economic situation in
A 25 basis-point reduction in interest rates last week will also be “slightly negative” for South African banks, Harry Botha, an analyst at Avior Capital Markets, said in a note. Barclays Africa hedges most of its short-term interest rate exposure so it’s probably in the best position followed by Standard Bank Group, he said.
A 27 percent improvement in impairments following credit losses from two large corporate clients the previous year and 19 percent growth in profit from its African businesses helped boost earnings. The lender reported a 7 percent increase in normalized EPS excluding one-time items to 9.18 rand, beating the 8.80 rand median estimate of four analysts.
“For the remainder of the
year, Barclays Africa will place priority focus on its retail and business bank