Red flag indicators African banks must look out for

by Aviwe Mtila 0

With European banks facing an array of challenges and China’s banks taking hard knocks, CNBC Africa took a look at the factors that determine the performances of banks.

Rand Swiss Portfolio Manager, Gary Booysen, detailed a few points and ‘red flag indicators’ of the banking world, more especially South African banks.


“You’ve got to remember that all banks are almost GDP players, so depending whether you’re looking at European banks, US banks, South African banks, it’s always going to be linked to the GDP. But it’s also just the optimism around the sector. So obviously you’re mentioning China, you’re mentioning the commodities complex. This has put an incredible damper just on the optimism of business being good going forward.”

–          Rand Swiss Portfolio Manager, Gary Booysen.

“I think about 58 per cent of our banks costs sit in with staff. You’ve seen staff being shed in overseas banks and you’re going to see that happen in the South African industry as well as we embrace technology and more retail banking is done through apps and trading is done through trading algorithms. That really is going to compress the costs that banks have to face.”

–          Rand Swiss Portfolio Manager, Gary Booysen.

“If you look at South African banks, they basically have currency risks in two ways. Some of our banks have currency risk because they actually make dollar denominated or foreign currency denominated loans off a South African balance sheet, which doesn’t work well for it. And the other way is to actually have an offshore footprint.”

–          Rand Swiss Portfolio Manager, Gary Booysen.