“Compared to the third quarter of 2012, banks that are active in both retail and investment-type banking activities tightened, on a net basis, lending standards,” the Reserve Bank said in its Financial Stability Review released today in the capital, Pretoria. “The number of banks that tightened investment banking lending standards increased from zero to 29 in the fourth quarter of 2012.”
The tightening in lending rules may undermine consumer spending and the recovery in Africa’s biggest economy. The government has urged lenders to improve access to finance to South Africans in a bid to boost economic growth and curb joblessness.
The central bank has kept its benchmark interest rate at 5 percent since a half percentage point cut in July. The banking industry’s total impaired advances dropped 5.1 percent in December from a year earlier, according to the report.
FirstRand Ltd. (FSR)’s retail unit, First National Bank, is restricting mortgage lending, favoring loans to its own customers, and other consumer banks including Barclays Plc- controlled Absa Group Ltd. (ASA) have slowed lending, mainly in home loans.
South Africa’s banks are also facing more regulation. The country’s top five lenders, including Standard Bank Group Ltd. (SBK) and Investec Plc (INVP), agreed to a code of conduct on calculating the Johannesburg interbank agreed rate. This follows a review of money market rates to avoid manipulation.
“The Jibar code of conduct became effective on March 1,” the regulator said in today’s report. The central bank “will be responsible for supervising compliance with the terms and conditions” of the code, according to the report.
South Africa’s banks, which increased assets 7 percent to 3.65 trillion ($400 billion) in December from a year earlier, remain well capitalized and will have “little difficulty” meeting most of the requirements of Basel III banking rules, the regulator said.
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