Still wary of bank­ing

Finweek English Edition - - Market Place -

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%.

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