Johannesburg- South Africa’s low economic growth will weaken the country’s banks' loan quality and profitability in the next 12 to 18 months, with rating agency Moody’s on Monday maintaining a negative outlook on the country’s banking system.
The rating agency said its negative outlook for the banking system is consistent with the current negative outlook on the government rating and on the large banks' ratings.
Also read: Moody’s warns that continued bailouts will threaten SA's future credit outlook
Nondas Nicolaides, a senior credit officer at Moody's, on Monday said that the banks' creditworthiness will come under some pressure over the next 12 to 18 months.
“We expect interest margins to come under modest stress following years of steady gains, as waning demand for credit amid rising asset risks could lead banks to ramp up competition for prime clients, limiting their ability to fully reprice current loan books in tandem with the high repo rate.”
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