'All seven banks are profitable, have enough liquidity and have enough capital, so there's no need for concern about the next 12 to 18 months,' says Kokkie Kooyman from Denker Capital.
You can also listen to this podcast on iono.fm here. ADVERTISEMENT CONTINUE READING BELOW JIMMY MOYAHA: Moody’s rating agency has been quite gracious in upgrading the deposit ratings of seven of the banks in South Africa. This is something that will serve Standard Bank, Absa, FirstRand, Nedbank, Investec, African Bank and Bidvest rather well in the future.
But Moody’s commented specifically on the individual banks, the capital levels, their funding – in other words, the balance sheet structures, the sufficiency of liquidity, and then the profitability profiles. In other words, they’re saying all seven banks are profitable, have enough liquidity and have enough capital, so there’s no need for concern about the next 12 to 18 months looking at the banks.They did raise some concerns in each of the banks.
So a deterioration in environment in South Africa would affect African Bank’s client base with higher unemployment more than let’s say, Investec’s. We look at the investments and say, ‘South African banks are just too cheap’. They are very mispriced for the quality of the franchises and the quality of the businesses.
KOKKIE KOOYMAN: Jimmy, how do I summarise this in a few minutes? I could go on for an hour because it’s a fascinating topic.Of the banks that were shattered or that failed, two specific ones were caused by deposit losses, a flight of deposits last year.
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