28 May 2013
The total assets of South Africa’s banks increased by 6.9% in 2012 as the sector “continued on a good growth trajectory while displaying increased signs of resilience”, the Reserve Bank said in its bank supervision report for 2012 on Monday.
Gross loans and advances, making up around 74% of the banking sector’s assets, increased by 9.2% to R2 753-billion for the year to end December.
According to the report, healthy levels of capitalisation and strong levels of liquidity were evidence of the resilience of South Africa’s banking system, whose average capital adequacy ratio, at 15.9%, was well above the minimum requirement of 9.5%.
The average liquid assets held by the country’s banks expressed as a percentage of required liquid assets was 198.7% in December 2012, up from 193.5% in December 2011.
“In addition to the improving levels of capital and liquidity, credit risk as the biggest risk area in the banking system has been declining and remained well managed,” the Reserve Bank said. “Total impaired advances declined 5.1% from R118.1-billion as at December 2011 to R112.1-billion as at December 2012.”
The report also found that rates of growth in unsecured lending had begun to slow down, with total unsecured credit exposures – including revolving credit facilities and overdrafts – increasing by about 24% from R364-billion in March 2012 to R453-billion in March 2013.
“Measured against the total banking assets of R3..6-trillion, banks’ exposure to unsecured loans does not pose a systemic risk to the stability of the banking system,” the Bank said.
The report covered the transition from the Basel II to the Basel III framework, effective from January 2013, which revised banks’ capital and liquidity standards worldwide following the 2008-09 global financial crisis. South Africa is among the first 10 regulatory authorities to have implemented Basel III on schedule.