South Africa: Banks Will Survive COVID-19 Shocks, Stress Testing Shows

analysis

Financial stress testing has shown that despite the many stresses they face, SA banks are currently sufficiently capitalised to withstand the shocks.

Global accountancy firm PwC said on Tuesday, 2 June that financial stress testing shows South Africa's banks will survive Covid-19. The sector will face pressures but is sufficiently capitalised to withstand the shocks. It would be easy to be glib about fat-cat bankers surviving while so many businesses go under and the spectre of hunger spreads. But if the banks go down the whole economy will go down the drain with them.

PwC said in a statement that "high-level stress testing" was conducted by Corné Conradie, an actuary and PwC partner, in collaboration with Professor Conrad Beyers, Absa Chair in Actuarial Science at the University of Pretoria.

Financial stress testing involves the assessment of modelled outcomes under a range of adverse economic scenarios (called "stress scenarios") - typically mild, medium and severe stress scenarios.

"The largest full-service banks, that include Absa, FirstRand, Standard Bank, Nedbank and Investec, were assessed. These banks account for 91% of all bank deposits and 94% of all loans granted by South African banks," PwC said.

The banks may survive, but they are hardly...

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