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South African and Kenyan banks may beat Nigeria to post-Covid recovery

By David Whitehouse
Posted on Thursday, 8 April 2021 20:57

Equity Bank's Chief Executive Officer James Mwangi is seen during a Reuters interview in Nairobi
Equity Bank's Chief Executive Officer James Mwangi in Nairobi, Kenya November 11, 2020. REUTERS/Jackson Njehia

African banks that have raised their loan-loss provisions to reflect the impact of Covid-19 may be best placed for a quick recovery once the worst of the pandemic is over, analysts say.

Research from McKinsey says that in South Africa and Kenya, banks have already increased loan-loss provisions by more than 200% since 2019 and so may see improved results in 2021. But McKinsey argues that banks in Nigeria may still need to further increase provisioning levels in 2021.

We spoke to local analysts who picked out possible winners in losers in each of these three markets.

South Africa

South Africa’s highly regulated banking system helped it to enter the pandemic crisis with better balance sheets than was the case during the financial crisis which began in 2008, says Dudu Tembo, portfolio manager at Argon Asset Management in Cape Town.