adminThe South African Reserve Bank says SA’s financial system is under stress and headed for “extraordinary shocks”, as people are expected to struggle servicing their debt or keep their insurance policies in place, while those who still have money to save and invest are already opting for short-term deposits.
In its 2020 edition of the Financial Stability Review report, the Bank said due to coronavirus-related market turmoil in late February and March, banks are already counting losses from the decline of their financial asset prices.
The JSE All-Share Index already lost 12 percent in the first four months of 2020, but the JSE Financials Index in which banks, insurance and investment firms fall under was more severely bruised, falling 32 percent by the end of April.
Now, the financial sector is expected to grapple with more chaos as people lose jobs and household incomes are stretched.
Alex Smith, lead macro-prudential economist at SARB, said since the lockdown began, the Bank has already observed a sharp decline in economic activity, some signs of dysfunction in financial markets, and thousands of people restructuring their loans and taking up insurance premium holidays. — fin24.com
Online Reporter