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COVID-19 coup de grâce for banks

Banks - 26 March 2020

Ingham Analytics has warned in several notes that the poor fiscal situation has repercussions for the big four banks in South Africa. They advised that as an asset category they were not in favour of banks and could see more potential for share price weakness than appreciation. Now, if the fiscal situation and beaten down economy wasn’t bad enough for banks, COVID-19 adds insult to injury they say. A lower interest rate of 100 bp, effective 20 March, if passed through in full, will also change the earnings picture. Share price falls are almost unprecedented. Can dividends be maintained?

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