Still wary of banking
Barclays Africa Group’s (BGA) results were pretty much as expected. But one thing that has struck me with bank results has been the bad debt levels. We know consumers are under pressure, yet bad debts on the banks’ books remain very low with Barclays coming in at 0.96%. I have been expecting bad debts to rise to maybe as much as 1.5%, but all four of the big banks have managed their debtors’ books very well. This is in part due to new legislation but also just old-fashioned caution from bankers that has served them very well during this tough spell. Of the big four, Barclays remains the pick for me. However, I stay away from the banks in part because I expect bad debts to rise, but more importantly because increased regulations make it more difficult and more expensive to do business with BGA’s cost-to-income ratio creeping higher to 56.4%. My favourite in the sector is still Capitec*, with a simple and cheaper business model.
We know consumers are under pressure, yet bad debts on the banks’ books remain very low with Barclays coming in at 0.96%.