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19 March 2021 PwC

SA’s major banks feel the effects of an unprecedented operating environment

Combined headline earnings of R43.6 billion declined 48.4% against FY19, combined ROE of 8.3% (17.8% at FY19), net interest margin of 387 bps (426 bps at FY19), credit loss ratio of 180 bps (80 bps at FY19), cost-to-income ratio of 56.4% (55.6% at FY19)

Operating under severely constrained macroeconomic conditions and considerable uncertainty, the major banks delivered a financial performance in FY20 that reflects the challenges of an unprecedented year. Anchored in anxious public health concerns related to the COVID-19 pandemic, depressed business and consumer confidence levels combined to produce the largest annual fall in domestic economic activity in nearly seven decades.

Many of the central themes we highlighted in our 30 June 2020 Major Banks Analysis prevailed throughout the year, as unpacked below:

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