South Africa Financial Services

In a move that bucked broader trends on the Johannesburg Stock Exchange (JSE), South Africa’s banks saw their share prices jump in 2016, underpinned by a recovery in the commodities market, higher interest earnings and a vote of confidence from ratings agencies.

A cooling economy and reduced spending is expected to limit growth in South Africa’s insurance industry through to the end of the year, with operators likely to struggle to increase market share and maintain revenue levels.

Bucking the trend of the country’s subdued economy, South Africa’s banks have again posted solid earnings, as they continue to strengthen their position through improved risk management practices and robust capital adequacy levels. 

The Johannesburg Stock Exchange (JSE) enjoyed a good year in 2013, with its growth far outpacing that of the overall South African economy. However, with capital flows to emerging markets exhibiting some volatility in recent weeks, and domestic challenges such as continued labour disputes a possibility, 2014 may see more modest performance, although potential IPOs may give it a welcome nudge.

An overhaul of South Africa’s financial regulations, already considered some of the most robust worldwide, is likely to result in a shake up for the insurance sector. While the new system will strengthen oversight and boost transparency, it is also expected to push up the cost of compliance, which in turn could lead to industry consolidation.