Finance

How much money South Africa’s big banks make in a day

South Africa’s ‘Big Four’ banks – Absa, FirstRand, Nedbank, and Standard Bank – made over R1 billion in revenue a day in the past financial year. 

Their revenue benefitted from higher interest rates, balance sheet growth, and efficiencies from digitalising their services, said PwC in its Major Banks Analysis. 

The financial services firm’s report presents the highlights of Absa, FirstRand, Nedbank, and Standard Bank’s combined local currency results and incorporates key themes from other African banks. 

It said South Africa’s traditional ‘Big Four’ posted strong growth in a difficult operating environment, with their home market registering low growth and being plagued with uncertainty. 

The combined headline earnings of these four banks rose 13.8% in the past financial year to R113.2 billion, despite these headwinds and their average credit loss ratio rising to over 100 basis points. 

PwC’s banking and capital markets partner, Rivaan Roopnarain, said these results are enviable by global standards and reflect the country’s strong financial sector. 

The firm said the South African components of these businesses continued to suffer due to load-shedding and the elevated cost of living. 

This resulted in more clients coming under financial pressure and being unable to pay back their debt owed to banks, resulting in rising bad debt and credit impairments. 

However, these banks benefited immensely from their decades-long expansion into Africa, offsetting their local operations’ flat growth. 

In particular, Standard Bank benefitted from this as its African operations contributed 42% of the company’s headline earnings – up from just 12% a decade ago. 

This is reflected in its strong results for the 2023 financial year, where it registered revenue of R177.62 billion and profits north of R50 billion. 

Standard Bank was followed by Africa’s most valuable banking group, FirstRand, with Absa and Nedbank in third and fourth place, respectively. 

The revenue and profits of the Big Four are shown in the table below. 

RevenueProfitRevenue per dayProfit per day
Standard BankR177.62 billionR50.3 billionR486.62 millionR137.82 million
FirstRandR119.33 billionR38.6 billionR326.93 millionR105.96 million
AbsaR104.64 billionR22.57 billionR286.69 millionR61.82 million
NedbankR70.63 billionR17 billionR193.5 millionR46.58 million
Source: Annual reports, PwC Major Banks Analysis

As a result of this strong performance from South Africa’s premier financial institutions, they contributed significantly to the country’s fiscus. 

In total, these companies paid R37.7 billion in direct tax to the government in the 2023 financial year. 

Standard Bank paid the most at R12.72 billion, followed by FirstRand at R12.59 billion. Absa and Nedbank paid R7.98 billion and R4.43 billion, respectively.

This is only one way in which these financial institutions contribute to the local economy. They also employ over 100,000 South Africans and facilitate substantial investment into the country.

Recently, this has resulted in some of these banks opening offices in China to complement their presence in New York and London.

China has historically been the largest investor on the continent, and trade between the two countries has grown significantly over the past two decades.

Chinese companies have invested significant sums of money in Africa’s vast natural resources and infrastructure projects, creating huge commercial opportunities for both regions.

South African banks are attempting to capture the growing value of the trade between China and Africa and the significant financial flows. 

Newsletter

Comments