Coalition Reforms Expected To Boost South African Banks

Banks performance in South Africa is expected to improve under the government of national unity, according to a report from S P Global Ratings.

The firms South Africa Banking Outlook 2025 said that credit conditions in South Africa are set to ease gradually through 2025 amid moderating inflation and interest rate cuts.

The outlook for the sector is further bolstered by planned economic reforms led by the GNU, a coalition government comprising the African National Congress and its long-time opponents in the more pro-business Democratic Alliance,which largely focus on addressing the countrys longstanding infrastructure deficits.

We forecast that growth in credit to the private sector will accelerate and hover around 8-9 in 2025, mainly stemming from investments in infrastructure, including logistics and renewable projects. Private sector credit to GDP will slightly increase to about 80 from an estimated 76 in 2024, the authors write.

The report said that opportunities opened up by the GNU in infrastructure spending will offer lending opportunities for the banking sector.