With South African banks set to release their earnings reports, BizNews founder Alec Hogg chats to Kokkie Kooyman – executive director and portfolio manager of Denker Capital – about the global outlook on banking and how it compares locally with South African banks – Jarryd Neves
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I’m Alec Hogg with Kokkie Kooyman. Kokkie, we have the South African banks reporting in the next weeks. Is there anything there that we need to be looking out for? Apart from what they’ve already told us they; they’re going to show some bad numbers because of Covid-19.Â
What we’ve got to look out for is the forward looking statements. Everything that’s going to be reported now, we know. We know the economy contracted. We know IFS/IFRS 9 now forces banks to take the big provisions now. The key is now, are these provisions – have they over provided while the economy is going down?Â
Read also: Drowning in debt: Harsh reality for many South Africans – and alarm bell  for banks
So a key is going to be where the economy recovers. What is fascinating if you look at our bank shares compared to any other bank in the world – by the way, all of them have more or less shown the same results. Big increases in provisions, focus on cost cutting.Â
Globally, banks have all bounced back about 30% – depending on the bank. Some only 20% or 15%. Our banks are still exactly where they were at the end of March. Basically, our market is taking a very dim view of the South African economy’s ability to grow hereafter. In the rest of the world, guys are saying ‘I hear what you’re saying – big provisions’.
It will be a non-repeat, as provisions might not even become bad debts as economies recover. But here in South Africa, I think you might actually need more provisions. That’s really what our banks are going to have to explain as to what they see in the next six months and 2021.
Read also: Standard Bank profits plunge, as much as 50%, as banks prepare for earnings slump
