South Africa's biggest retail bank Absa expects the retail banking sector to start recovering in the second half of 2009 but consumers will remain under pressure until early 2010, its CEO said on August 20.
-- Absa CEO sees retail banking sector recovery from H2 2009
-- Sees fully-fledged rebound early 2010
"I would expect quarter 3, quarter 4 next year for retail banking to start to regain some of the lost ground," CEO Steve Booysen told Reuters. "But no doubt, quarter 1 (in) 2010, I believe that retail banking will be a good space to be in," Booysen said on the sidelines of a function to honour former President Nelson Mandela in Cape Town.
Retail banking in Africa's biggest economy has been under pressure from higher interest rates and a slowdown in consumer spending. The central bank has raised interest rates by 500 basis points since June 2006 in a bid to tame rising inflation.
Absa, majority owned by Britain's Barclays, and its rivals Nedbank and Standard Bank all warned of rising bad debts and slower business in their retail units when they recently released their interim results.
"The consumer will be under pressure because of affordability levels way into the third to fourth quarter of 2009 and (I) expect consumer demand to rebounce early 2010, just in time for the Soccer World Cup," he said.
Booysen added that a political resolution in Zimbabwe would spur investment in the country, where inflation has hit 11 million percent, particularly from South African firms. "I have no doubt that if there is a solution to the political crisis that they have there, that a lot of South African companies will invest in Zimbabwe," Booysen said, adding that Absa's parent company Barclays had been in Zimbabwe for more than a century. Zimabwe's ruling ZANU-PF party and opposition MDC are in a deadlock over power-sharing talks to end a post-election political crisis.
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