South African banks have come out tops in the latest Moody's Global Banking report.
The report described the country's banks as stable, reflecting "a concentrated and well-regulated system" with good fundamentals. These positive factors are offset, however, by rising interest rates (400 basis points increase in the past 18 months), liquidity and funding issues (mainly as a result of the National Credit Act, which was implemented in June this year).
The cartel-like structure of the big four banks, First National Bank, Standard Bank, Nedbank and Absa, has yielded a technologically advanced operation of a significant scale. As a result South Africa's banking system is similar to that of an advanced country and not the emerging economy that it is.
There are 36 banks operating in South Africa, including 20 locally registered banks, two registered mutual banks and 14 local branches of foreign banks.
Total banking assets account for about 120percent of the country's 2006 gross domestic product, which is currently standing at R1,7trillion.
The report said the risk positioning of South African banks was affected by high credit concentrations, an issue faced by many emerging-market banks.
Vulnerabilities in the property market could potentially affect the banking sector.
Since 2000, property prices have gone up approximately 320percent.