South Africa’s big banks recorded bumper earnings in 2025, with the country’s five biggest lenders raking in nearly R150bn in profits in the year that signaled a turnaround in sentiment towards the economy.
The lenders that have a significant exposure to the rest of Africa, where some economies are growing at a much faster rate than South Africa, have fared better.
South Africa’s removal from the Financial Action Task Force grey list, the first sovereign upgrade in 20 years, and the higher rand helped set the scene for improved investor sentiment, while the lower interest rate environment saw generally lower impairments.
Capitec, the latest of the big banks to report annual results this week, continued to grow strong fundamentals and a return on equity (ROE) that grew ahead of competitors.
The group posted a 31% ROE and a 23% increase in headline earnings to R16.8bn in the year ended February 28, 2026.
It paid former CEO Gerrie Fourie, who retired in July 2025, a handsome R154.4m package, which included R145m in long-term incentives (LTI). The group said the LTI took into account the delivery on the underlying ROE and the performance of the bank’s headline earnings per share performance, coupled with the growth in Capitec’s share price.
Local banks are expanding into the rest of the continent, where they are tapping into the youthful population, and the rising levels of financial inclusion are adding to demand for financial services
Capitec’s share price has grown to R4,743.54 a share at the end of February 2026 from R3,074.37 a share in 2025. It was R2,074.35 a share in 2022. The group’s market cap surged to R550bn in 2026 from R356bn in 2025 and R240bn in 2022.
Keagan Higgins, investment analyst at Anchor, said Capitec’s ROE of 31% is well ahead of its peers, mirroring a combination of strong cost discipline and scale, with the bank operating at a meaningfully lower cost-to-income ratio than its peers.
He said Capitec’s earnings base has become increasingly diversified. “Over time, it has also been one of the clearer outperformers in the sector. The market has been willing to assign a premium rating, given the consistency of delivery and the structural growth story, particularly around ecosystem expansion. In a market where meaningful growth has been scarce, investors have been willing to pay up for it,” said Higgins.
With the share price nearer to R4,400, the “risk-reward equation” was more attractive again, especially if Capitec continues to deliver high-teens earnings growth over the next few years, he said.
Capitec, the biggest retail bank with 26-million active customers, has pivoted its income streams from solely personal lending and transactional banking to include insurance, fintech, and a business banking segment. Its fintech portfolio includes cross-border money transfers, now available to 26 countries in Africa, Asia and Europe via the banking app.
Local banks are expanding into the rest of the continent, where they are tapping into the youthful population, and the rising levels of financial inclusion are adding to demand for financial services. They’re positioning themselves to become part of the solution for Africa’s infrastructure and energy needs through extension of finance and advisory services.
Standard Bank, the biggest bank in Africa by assets, is a case in point. It derives 40% of its headline earnings from Africa Regions and has set bold growth targets for 2028, which tap into infrastructure and energy expansion opportunities on the continent.
Its Corporate and Investment Banking (CIB) segment, with offices in 21 countries, delivered record headline earnings growth of 18% to R24.1bn and a ROE of 22.4%. Group ROE was 19.3% in 2025 from 18.5% a year earlier and 18.8% in 2023.
The bank paid its CEO Sim Tshabalala R106m in 2025 after the group reported an 11% increase of R49bn in headline earnings in 2025, as South Africa grew by 8% growth and Africa Regions recorded 23% growth. Standard Bank with a R483bn market cap, closed 2025 with the group’s share price at R290.40.
The banks still offer attractive fundamentals — solid capital positions, good returns on equity, and relatively defensive earnings profiles. We still like the sector, but the opportunity set is more about selectivity and stock picking — identifying those businesses with clearer structural growth drivers
— Keagan Higgins, investment analyst at Anchor
FirstRand recorded a 10% increase in headline earnings to R41bn in its year ended June 2025 on the performance of its FNB, Wesbank and RMB brands. The group’s FNB commercial and WesBank corporate divisions delivered strong growth, increasing 10% year on year. The group’s ROE increased to 20.2% from 20.1% a year earlier.
FirstRand will likely pull out of the UK after MotoNovo, its motor finance business, was among those found liable for incorrect disclosures after increasing the impairment provision to R17.7bn. Absa paid CEO Kenny Fihla R148m in the 2025 financial year as headline earnings increased 12% in 2025 to R24.8bn, supported by higher revenue and a fall in impairments.
There were strong operating performances from the CIB and its Africa Regions, which contributed 31% of group earnings.
The group ROE inched to 15%, up from 14.8% a year earlier, with the group targeting an ROE of 16–19% over the 2027 to 2030 period. The group’s total shareholder return grew to 34.4%, up from the 24.3% in 2024.
Nedbank recorded an ROE of 15.4% in 2025 — above the cost of equity of 14.6% — and was lower than the 15.8% a year earlier, with headline earnings increasing 2% to R17.2bn.
The bank restructured its Retail and Business Banking (RBB), and Nedbank Wealth Cluster, in 2025, completing the 21% disposal of Ecobank, the West Africa-based bank, to reallocate capital to core growth opportunities in SADC and East Africa.
Commenting on the broader banking sector, Kiggins said while a meaningful portion of the near-term upside has already played out, returns are likely to be more earnings-driven than valuation-driven.
“The banks still offer attractive fundamentals — solid capital positions, good returns on equity, and relatively defensive earnings profiles. We still like the sector, but the opportunity set is more about selectivity and stock picking — identifying those businesses with clearer structural growth drivers,” he said.
Business Times
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