"The overall banking confidence fell from 82 index points in the first quarter of 2013 to 62 points in the second quarter, significantly lower than 2012 levels," EY financial services director Emilio Pera told CNBC Africa on Monday.
The survey indicates that retail banking confidence fell back to its weakest level in over a year whereas investment banking confidence only fell by five basis points.
“We definitely began seeing a slow deterioration of the banking confidence levels especially in the retail segment from the last quarter of 2012 but the drop in 2013’s second quarter has been quite substantial,” said Pera.
The lower retail banking confidence is not driven by poorer earnings, but rather by anxiety about the financial state of the consumer, particularly in lower market groups that require unsecured lending.
Pera explains that the reason for the low confidence is due to an increase in retail banks’ credit impairments, which resulted in tighter credit conditions.
Other contributing factors to the figures is the country’s general weakened economy, low employment growth and the continuous labour disputes in the mining sector.
“Due to the size and significance of the retail banking sector, these results definitely affect the banking industry as a whole,” Pera adds.
Pera concludes that despite the lack of confidence, banks profitability continues to grow as they are well capitalised and offer a robust portfolio of products to the market. This means that they are in a good position to avoid crises and could potentially remain profitable.