Mzansi banks well capitalised

demand attention, the central bank said in its annual banking report yesterday.
South African banks weathered the financial crisis, thanks to high levels of capital and close regulation, but were later hit when a recession sparked a surge in bad loans.
The industry remains adequately capitalised, with a Tier-1 capital ratio of 11,8 percent, the South African Reserve Bank said in its annual report on banking supervision. The Tier-1 ratio is the gauge of a bank’s financial stability.
However, the central bank also cautioned that credit impairments, or bad debts, remain a concern.
“Banks continue to operate in tough economic conditions and further debt needed to be written down during 2010,” the central bank said.
“The high level of impaired advances continue to be an active focus area for the banking sector.” Impaired advances, or bad loans, averaged 5,9 percent of banks’ total loans in 2010, and stood at 5,8 percent at the end of December, the central bank said.
Four commercial lenders Standard Bank, FirstRand, Absa Group and Nedbank dominate banking in South Africa.
Standard Bank is 20 percent owned by Industrial and Commercial Bank of China, while Absa is a unit of Britian’s Barclays. – Reuters.