The head of Standard Bank's South African business said on Tuesday 2009 was proving "tougher than anybody expected" as bad debts at its corporate and retail business continue to rise and trade slows. Sim Tshabalala, who is also one of the group deputy CEOs of Africa's biggest bank by assets, told Reuters in an interview he expected bad debts to continue throughout the year and said business would start stabilising from 2010.
"It's tougher than anybody had expected. Bad debts are high, volumes are low, so people are transacting less and borrowing less. Frauds are ticking up. Trade has slowed down. Clients of ours in several industries are battling," he said. However, Tshabalala said a comment by Standard Bank CEO Jacko Maree in March that flat 2009 results would be an acceptable outcome "still holds true".
South African banks have all been hurt by rising bad debts at their retail and corporate units as consumers battle with higher household debts after a string of interest rate hikes up to June 2008. Job losses are also rising as the economy deteriorates.
The country's fourth-biggest bank, Nedbank , said last week that 2009 earnings would be lower than previously forecast. Standard Bank is expected to issue a trading update on May 28. Its shares were trading 1.57 percent lower at 81.30 rand by 0932 GMT, in line with other local banking stocks.
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