Key Issues
This quarter we have updated a lot of the numeric information in the banking reports. We now have final banking statistics, sourced from the central bank/regulator or trade association, in relation to the end of 2006 for all countries other than Iran.
All of the commercial banking reports need to be considered in the context of a global environment that was benign for banks in the vast majority of the 59 countries for which have collected data. In 2006 the median local-currency growth in total assets was 17.2% (in Croatia). The median local-currency growth in total loans was 18.2% (in Bangladesh). The median localcurrency growth in total deposits was 16.9% (in Algeria). In almost all countries, local currencies were stable or rising, relative to the US dollar. Except in Venezuela and Iran, figures were not distorted by double-digit inflation.
Loan/deposit, loan/asset and Loan/GDP ratios all provide a rough measure of the development of the banking systems. Across the 59 countries for which we have collected data, the median loan/deposit ratio is 85.1% (in Thailand). The median loan/asset ratio is 54.8% (in Romania). The median loan/GDP ratio is 53.4% (in Kuwait). Across the eurozone, by comparison, the equivalent numbers are 126.4%, 50.6% and 119.3%. All three ratios are rising in most of the countries for which we have collected data.
The South African Reserve Bank (SARB) has needed to raise interest rates to contain a sharp growth in demand for consumer credit and to support the exchange rate. There is somewhat contradictory evidence as to the impact of these measures. BMI expects another rate rise in June, with the SARB having held off on further increases in April.
The good economic conditions and in particular the boom in consumer demand have led to strong growth figures for loans and deposits.
South Africa is home to a sophisticated, profitable and large banking sector.
In general terms, the economy is growing at a rate of around 4.5% and is thought to be resilient enough to continue growing even as strong consumer demand is restrained by monetary policy. Continued growth in construction, manufacturing, and exports (with a weaker rand) should maintain that satisfactory growth.
Based on the best available data, BMI expects the growth trend in the commercial banking sector to continue through to 2010, with an average growth rate of 18% for total assets and deposits, and a 21% increase in total loans.
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