Major South African bank opening the taps

Standard Bank can be more aggressive in lending to retail consumers in South Africa as financial pressure on its client base eases. 

This is feedback from the bank’s deputy CEO and head of its South African business, Kenny Fihla, who told Daily Investor that all its operating segments are set to grow their lending books strongly in 2025. 

This is a significant shift compared to the previous couple of years, as clients failed to pass affordability tests due to the immense financial pressure from elevated inflation and interest rates. 

This pressure on individuals translated into rising credit impairment charges for banks, pushing some, including Standard Bank, to raise additional provisions to cover bad debt. 

By the end of 2024, the picture had changed significantly, with inflation plunging to around 3% and interest rates being cut by 50 basis points in the second half of the year. 

In its annual results for the past financial year, Standard Bank noted a reduction in non-performing loans and a slowdown in clients entering delinquency. 

This has translated into declining credit impairment charges and an improved credit-loss ratio. 

“The consumer in our retail business has started to improve, with the number entering early delinquency reducing in the last year. This is a huge, huge positive,” Fihla said. 

“We have also seen the distress book coming down marginally, which is also a positive for our clients and for us.” 

This means that clients are able to afford more credit and take on additional debt and, crucially, means that Standard Bank can meet this demand. 

“So, clearly, there are opportunities for us to start being slightly more aggressive from a lending point of view,” Fihla said. 

“But, we have to do that in a well-thought-through manager in those sectors that are driven and supported by growth and in areas where we think there will be high quality.” 

The graphs below show how Standard Bank’s clients across all its operating segments have fared in terms of credit impairments in 2024 compared to 2025. 

Corporates to lead the way

Other areas where Fihla sees the bank being more aggressive with its lending are its Corporate and Investment Banking (CIB) arm and its business banking division. 

“We think that our CIB business will continue to drive the growth of our asset base, with a focus on energy and infrastructure,” Fihla said. 

“This natural has spinoffs to other sectors of the economy and our business. If South Africa can continue to fix its energy supply and accelerate developments in the logistics sector, that will open up opportunities in industries dependent on functional infrastructure.” 

Fihla explained that there is significant demand for credit in this area. Due to the nature of its CIB unit and its clients, it is very high-quality with minimal non-performing loans and reduced risk. 

The bank’s CIB team is working on several large deals, some of which closed last year, but the drawdowns on the financing will only occur this year. 

“There is also a strong demand for credit growth from our business and commercial banking unit. Here, we need to jack up our own credit management practices.” 

“We needed to clean up the book and rationalise our client base in recent years, with the team doing a lot of work to ensure they are ready to capture the opportunities that are coming.” 

Fihla said that much of the increased lending in the CIB and business banking space was coming on the back of renewed optimism in South Africa following the formation of the Government of National Unity (GNU) in June last year. 

“But even then, it is not going to be wholesale lending. It will be targeted and focused on the areas that offer the most growth opportunity.”

“It will be done in a well-thought-through manner in those sectors that are driven and supported by growth and in areas where we think there is going to be large investment either by the government or the private sector.”

“So, it is going to be widespread, but led in the main by our CIB business.”